Is Real Estate Inflation Proof?
The real estate market is not exempted from experiencing inflation, just like every other sector. This is why the real estate network is an intricate one that should be carefully studied before venturing into it. Many people are too excited about investing in real estate or buying a property and forgot to do their research. Then at the end of the day, when they end up losing money. So to prevent loss of money during inflation, we will highlight how you can actually benefit from real estate. This is because some real estate investments are actually inflation-proof.
What is inflation?
Inflation is when an economy has a problem. This problem is a result of a steady increase in the price of goods and services. And at the same time, a decrease in the value of currency also occurs, which causes an imbalance in the economy. What this means is that there is less money in circulation, while the prices of goods and services go high. Therefore, there is a reduction in the purchasing power of the people.
Similarly, there is a problem if there is enough money, but the amount of services and goods available isn’t much. This type of situation is called scarcity of goods and services.
Other factors that cause inflation include scarcity of goods, decrease in supply, high cost of raw materials, and so on.
Who suffers most during inflation?
Financial institutions have conducted their findings and found that poor people have less consumption rates during inflation. How are they supposed to survive? How can they achieve financial security and have a roof over their heads?
What can be done to reduce inflation?
The government should first make a plan to know exactly what the problem is. This will help the government in designing all-inclusive housing measures for poor and middle-class families. This is why it is important for schools and the government to teach people about financial security, most especially, real estate investments. When an economy booms, it is credited to the government and related officials ruling that country.
Furthermore, trade with foreign countries will be stable and have a good impact on the economy.
How to make money from real estate during inflation
Have a rented property
A rented property is also an inflation-proof real estate investment for investors. Although you’ll need money to maintain and manage the property, you can still make a profit. To achieve this, you may tell your renters to pay a higher rent. Some people also escape inflation when they take long-term mortgages with fixed rates.
Owner occupied properties
Residential properties occupied by the owners are beneficial to the owners, especially during inflation. These properties provide financial security to their owners and protect them against inflation. Even when you incur a huge amount of money from building and operation costs, you’ll still get your money back.
Moreover, when you are ready to sell the property, its value will increase, and you will make profits. Hence, this type of real estate is suitable as an investment that protects you from inflation.
To sell your property, do a marketing campaign.
- Marketing Campaign to sell an owner-occupied house: It’s when you prepare your house for public viewing to attract buyers. To do this, take pictures of the house, and open the house for viewing. Your property agent will take care of all the steps to ensure that the campaign runs smoothly. Most campaigns only take four to six weeks before a buyer comes to buy the house. However, only a house that is in good condition can attract buyers during the marketing period.
Purchase a purchase as your retirement plan
Most people fail to plan adequately for their retirement, thus, failing to achieve financial freedom. They rely on pensions that have low interest to get by when they are old. Unfortunately, the reality is different when they realize their pension isn’t enough to live on.
What they don’t know is that there is an investment that will yield money even when they retire. It is called real estate, and this type of investment is profitable if done right. Additionally, it protects your assets and gives you financial security. Real estate investors make money even when the economy is bad.
Lastly, real estate is a good investment choice, no matter what, especially if you purchase your own house. It doesn’t matter whether you paid upfront for the property. Nor does it matter if you borrowed money or took out a mortgage to purchase the house. Once you pay off your mortgage, you are free of debt and don’t need to pay rent. You will have a roof over your head and may also decide to resell your property later on. And in the future, it will become a valuable asset you can rely on when you are old.