Hedge Against Inflation With A Real Estate Investment

With some fearing that inflation is looming, experts say adding real estate to your portfolio is a great idea. Of course, I always say that real estate is an exceptional investment but especially in times like these.

Typical investments like stocks and bonds can yield a great return but their viability is tied to the economy which means your returns will fluctuate, and sometimes drastically. A well-balanced portfolio hedges against inflation, helping to mitigate potential risk, and that portfolio should include real estate. It’s an investment that has weathered many market changes and because new generations of Americans still value home ownership, owning property is a pretty sure bet.

Lock in a Low Mortgage Rate

If you can get a low-interest, fixed-rate mortgage on your real estate purchase, you’re setting yourself up for success through any inflation event.

Americans have been enjoying very low mortgage rates for years now and while we can expect them to creep back up, it’s doubtful they’ll return to double-digital percentages, like they were in the mid 80’s, anytime soon. For example, the average mortgage rate for a 30-year fixed loan has been edging between 2.8% and just over 3% in the last several months. That’s exceptionally low and presents a massive opportunity for home buyers and real estate investors alike.

During the COVID-19 pandemic, the fed made adjustments to help keep interest rates low, which led many homeowners to refinance and either save or invest that money into home improvements.

Your real estate professional should be an ongoing advisor, letting you know when it’s a good time to buy or even refinance.

Why Pay Rent?

The costs of services to manage rentals can rise with inflation which leads landlords to raise the rent to cover the additional expenses. Owning your own home with a fixed-rate mortgage gives you some peace of mind during uncertain times.

Property Value Goes Up

Obviously, having more security during inflation is only one reason to buy real estate.

Long-term trends show that property values always increase over time. As our population grows and more people will need and want to buy homes, land will become scarce. Consider purchasing your own piece of land to one day either develop on or sell for a profit.

To determine what’s best for you, consult the experts including your real estate professional who has seen and done it all.