“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised.”– Russell Sage
If you’re like me, you’re going to the store and you’re shocked at how much food costs.
Food prices are about 30%-50% higher than they were four years ago.
We predicted this happening when they created around 50% worth of new currency.
They did this when they didn’t have a corresponding level of increase in production.
That’s really what creates inflation.
You create all of this new currency and no new production to cover it.
COVID-19 and other current events also play a role in the current rise, according to this study.1
We’re seeing inflation affect many different areas, including gas prices.
Because inflation is everywhere, the question becomes:
Is there a way to use inflation to your advantage?
This is one of the big differences between wealthy people and the middle class.
The middle class will be hurt by the higher costs of inflation.
Wealthy people will find a way to use inflation to their advantage.
That’s what I want for you!
I want you to use inflation to your advantage.
Today, we’re going to talk about a few ways on how you can do that.
Let’s jump into it!
1. Appreciation
One very profitable way to get ahead of inflation is owning real estate.
Real estate values typically appreciate.
That means the property will increase in value over time.
However, you should always be aware of factors outside of inflation.
According to the Journal of Real Estate Research, appreciation is affected by:
1. Population growth
2. Income changes
3. Construction costs
4. Interest rates
5. Stock market appreciation
6. Fixed effects unique to the location2
There’s also a great chart on Mother Jones that shows rents and inflation going hand-in-hand.
If you’re renting out rental real estate, that investment is directly related to inflation.
Pay attention and see what opportunities are out there.
2. Debt Advantage
Another benefit is debt advantage.
You can own property using other people’s money.
Sometimes with single family house investing, they want you to put down up to 25% in order to own the property.
With multifamily, it may be a little bit higher downpayment, but you’re using the bank’s money to hedge inflation.
In 5-10 years, these assets will be worth substantially more.
For example, let’s just say you bought a $2 million house and put 10% down.
That’s a total of $200,000.
If the value increases by just 10%, that is also $200,000.
That’s not a 10% increase in equity, but a 100% increase in equity.
$400,000 worth!
Pretty amazing, right?
3. Raising Costs
A good friend of mine, Mark Moss, who is well versed in economics, believes in about five years, all real estate will be about twice as expensive.
He’s a great financial strategist and thinker, so I believe him!
The national deficit is increasing by about a trillion dollars every 90 days.
We keep spending with no plans to stop.
If that continues, we know for a fact there will be more inflation.
With rising inflation comes rising rents.
This can lead to increased cashflow for you.
Make sure you take advantage while you can!
4. Own Other Assets
You can also own other assets outside of real estate to hedge against inflation.
If you can use debt to own them, that’s even better.
We love precious metals.
They’ve had a monetary history for the past five thousand years, making them a safer investment.
Going back to real estate, there are many investments you can get debt for, including businesses.
A business that produces cash flow is great to own, especially if you can raise prices over time.
The more you can get on the investor side, the better.
And if you’re concerned about rates being a little bit higher, don’t worry!
The investments will grow in value over time.
Remember that appreciation we talked about earlier?
It’s like magic dust coating your portfolio!
Now I want to hear from you.
How are you planning to use inflation to your advantage?
Let us know in the comments!
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
Check out my bestselling book on Amazon!
Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
Works Cited
1. J. Stiglitz and Ira Regmi. “The causes of and responses to today’s inflation.” Industrial and Corporate Change (2023). https://doi.org/10.1093/icc/dtad009.
2. G. D. Jud and Daniel T. Winkler. “The Dynamics of Metropolitan Housing Prices.” Journal of Real Estate Research, 23 (2002): 29-46.
