Are you trying to protect your assets from the effects of inflation?
If the state of the economy has you worried about your investments, consider rebalancing your portfolio to take advantage of real estate.
Individuals who hold volatile assets may find themselves in a precarious position if inflation starts affecting the value of their portfolios.
Stocks, bonds, and fixed income investments may see decreased demand during periods of inflation. By comparison, demand for real estate is relatively stable, making it a great alternative to liquid investment vehicles during periods of economic volatility.
At Vantegic, we know the importance of stable funding when maintaining your home. We understand that keeping your investments safe is part of keeping your family safe. Below, you’ll find the most effective real estate investment strategies to help you protect your finances during turbulent economic periods. Use them to enhance your family’s financial security during times of uncertainty.
Strategy 1: Buy And Rent A Residential Home
If you own a lot of individual stocks or other volatile assets, watching your account values swing up and down during periods of economic turbulence can easily lead to anxiety. Transferring your assets into home ownership is an excellent way of increasing stability for several reasons.
First, homeowners don’t need to worry about paying rent. They can lease their home to someone else and make money by collecting rent each month.
Second, if they can secure a fixed-rate mortgage, they can also shield themselves from paying more due to variable interest rates, which often rise during periods of high inflation.
Finally, homes generally increase in value over time. They are much more likely to keep up with or outpace inflation than other forms of investment.
Buying a residential home is one of the most straightforward real estate investment strategies. It’s a great way to ensure that you remain financially stable during uncertain times while potentially turning a profit in the long run.
Strategy 2: Invest in Real Estate Investment Trusts
While it is a great investment vehicle, there are a number of reasons you might prefer not to purchase real estate, which requires a significant upfront investment.
If you prefer to keep your assets liquid, then it may be worth looking into Real Estate Investment Trusts, or REITs, as an alternative to owning a residential home.
These assets are highly liquid and trade similarly to individual stocks. However, they are often less risky because many REITs pay dividends. This makes them a strong vehicle for long-term investment.
Investing in REITs is also worth considering for those who feel more comfortable investing in stocks but still want exposure to real estate investment strategies. Because real estate values tend to increase with general price increases, REITs can help to hedge risk during periods of high inflation.
REITs are a great way to take advantage of the benefits of the real estate market without owning a home. Those that pay dividends provide a reliable source of income during inflationary periods.
Strategy 3: Buy Commercial Property With A Short Lease Duration
Maybe you aren’t convinced that the value of REITs or residential properties will remain stable enough to invest in either one. What if you could create a dependable income stream that could actually grow with inflation while reducing some of the risk associated with other real estate investment strategies?
Commercial property is traditionally considered one of the most effective ways to protect against inflation. Lease durations are typically shorter for these properties, and often include stipulations that allow landlords to increase rent at regular intervals.
It’s also worth noting that difficulties in supply chains that affect construction often lead to increased demand for existing commercial properties. And because commercial real estate tends to outpace the growth of REITs during periods of inflation, it’s another great way to keep your portfolio well-rounded.
Taking advantage of commercial real estate with annual rent increases in the lease terms is a smart method of keeping the value of your investments ahead of inflation. If you’re worried that REITs and residential property won’t provide strong returns, then commercial real estate is worth investigating.
Stay A Step Ahead
Regardless of where you choose to store your assets, the importance of analyzing and understanding market conditions cannot be overstated.
Residential property, REITs, and commercial properties are all solid investment vehicles during periods of inflation as long as they’re purchased under the right conditions.
While some investment vehicles confer advantages over others, all require upfront capital and present the opportunity to combat rising prices in the longer term.
Curious about available properties in the Colorado Springs area? Vantegic has been helping families purchase and invest in property for over a decade. We know that making the right investments today can lead to better outcomes for your family tomorrow. Schedule a call today to learn more about how you can use real estate to balance your portfolio.