It doesn’t matter if you’re a cashier, lawyer, plumber, or retiree; if you spend US dollars, inflation impacts you.
Economists expect the effects of inflation, like a higher cost of goods, to continue.
Here’s what you need to know about inflation, how it impacts you, and how an investment in real estate can help.
WHAT IS INFLATION AND HOW DOES IT IMPACT ME?
Inflation is a decline in the value of money that can lead to:
- Decreased Purchasing Power: As prices rise, your dollar won’t stretch as far as it used to. So you’ll be able to purchase fewer goods and services with a limited budget.
- Increased Borrowing Costs: Interest rat rise. Prepare to pay more to borrow money for things like mortgages and credit cards.
- Lower Standard of Living: Wage growth tends to lag behind price increases. Therefore, you may have to make lifestyle changes and prioritize essentials.
REAL ESTATE: A PROVEN HEDGE AGAINST INFLATION
So where is a good place to invest your money to protect (hedge) against the impacts of inflation?
Well, real estate.
Real estate prices often rise with (or faster than) inflation. That’s one of the reasons so much capital is flowing into real estate right now. We believe real estate is the best hedge against inflation. Home prices rose 20% from 2021 to 2022, nearly 15% ahead of the inflation that occurred in the same timeframe. Plus, certain types of real estate investments can help you generate a stream of passive income.
Are Short Term (Vacation Rental) Investments Better?
Short-term rental properties offer temporary accommodations for vacation time. They can potentially earn you a higher return than a long-term rental and if done right can be both a hedge against inflation and a profitable source of income. As a bonus, when the home isn’t being rented you have an affordable vacation spot for yourself! Of course, you will want to limit your owner use in order to maximize your potential annual income.
Contact Us Today if you’re interested in exploring the benifits of purchasing a vacation rental property.