In this webinar, Leo Backer and Jill Homan discuss Pinnacle’s unique approach to multifamily...
Why Investing in Multifamily Properties is a Hedge Against Inflation
It’s no secret that inflation has dramatically increased over the last year. With everything seeming more expensive and wages staying the same, you may feel lost as to how to hedge against this.
One of the best ways investors are hedging against inflation is by purchasing multifamily properties. Rather than letting your money sit in a savings account and watching its value decrease over time, you can protect yourself against inflation and invest that money in multifamily properties.
What is Inflation?
The Fed controls inflation in the United States at an average increase of 2% a year. There are a lot of factors that go into inflation, including how much money is available, the employment rate, and the federal funds rate. However, we’ve seen the consumer price index increase by 8% over the last year. You’ve also probably noticed the increased prices of groceries, fuel, and general everyday items.
So, how do you combat inflation and stop your money from losing its value over time? You can invest in multifamily real estate.
Keep Up with Current Market Values
Investing in a multifamily property helps to increase the value of your money at about the same rate as the current market. For example, you can increase the rental price of your property every six to 12 months, depending on the terms of the lease with your tenants, as opposed to a typical commercial real estate lease.
Investing in a multifamily property allows you to make the most money and hedge against inflation.
Stable Investment Over Time
There will always be a demand for housing, which makes a multifamily investment strategy a great opportunity.
With the current economic situation, more people are choosing to rent as opposed to buying homes. Therefore, there are more renters in the market and potential tenants for your investment to generate revenue.
Enhance Your Investment Further
You can take your multifamily property investment strategy up a notch by looking for projects in Opportunity Zones. These zones often come with great tax benefits, such as deferred capital gains tax payments and tax exemption on your investment.