Is the Threat of Rising Inflation a Concern for Real Estate Investors?

  • Signs of Inflation Starting to Appear
    • Many essential production materials remain in short supply due to pandemic driven slowdowns
    • The economic reopening unlocked pent-up disposable income to limited supply of products, pushing prices up
    • While rapid inflation is concerning, real estate investments have historically been strong hedges against inflation
  • Rising Rents Help Real Estate Stave Off Inflation
    • Long-term leases typically have inflation escalation clauses that lift rents based on an inflation measure
    • Apartment rent growth outpaced inflation the past 10 years as rents are typically realigned with lease renewals
  • Inflation Incited Appreciation Can Benefit Investors
    • Inflation drives up rents, which raises property values
    • Since real estate investors often use leverage, their return on the capital they put up is amplified
    • Real estate can serve as one of the better investments to ride the current bout of inflation

Discover more from eXp Commercial | Chicago Multifamily Brokerage

Subscribe now to keep reading and get access to the full archive.

Continue reading