US Housing Market Is A Hedge Against Inflation

According to recent headlines, inflation is at its highest level in more than a decade, the situation is unstable, and the future is unknown. What, though, is the genuine tale? Why is inflation such a worry right now, and how can you safeguard yourself from its consequences?

We may put this increase in inflation down to Covid-19 or, more particularly, our return to everyday living at the speed of light, just like many other aspects of our existence that have been normal over the previous year. We’re on the road returning to work. There are open restaurants. 

The news of a recovering economy is terrific. But the potential repercussions are what worries economists. Spending too much too quickly could result in an overabundance of demand, which could then cause significant inflation if we party as if it’s the Roaring Twenties.

What Led To This Record-Breaking Rise In Inflation?

Have you ever heard someone whine about how two movie tickets and popcorn used to cost $5? They are referring to inflation, which is the gradual increase in the cost of goods and services.

It’s a naturally occurring economic phenomenon that typically increases gradually but steadily. However, that constant slope may rise to the height of a mountain in the face of a catastrophe like a global epidemic. For example, the Consumer Price Index (CPI), a gauge of inflation, has increased by 5% over the past year, according to the most recent report from the U.S. Bureau of Labor Statistics. 

It’s the outcome of several allegedly conflicting causes. The unemployment rate has decreased to 5.2% from 11.2% in June 2020. But, on the other hand, producers and retailers are reporting shortages of everything from diapers to chicken wings, and car rentals in some cities can cost up to $700 per day.

Overall, it presents a quick-changing, unstable economy characterized by high demand, low supply, and significant uncertainty: How long will this inflation last?

Including assets regarded as hedges is one technique to make sure that the solution doesn’t have a detrimental effect on your portfolio. A hedge, expressed simply, is a “just in case” investment that typically moves against the market or is not prone to extreme volatility. Hedging is regarded as a component of a diversified portfolio since it may be able to reduce losses if the market experiences significant swings in response to factors like inflation.

Various assets, including bonds, gold, other commodities, and real estate, are frequently recommended as safe investments against inflation.

How Real Estate Acts as a Hedge Against Inflation

The impact of inflation on debt comes first. The loan-to-value of any mortgage debt decreases when a home’s value increases over time, acting as a natural discount. As a result, the property’s equity rises, but your fixed-rate mortgage payments stay the same.

Given that increasing housing prices frequently translate into higher rent, inflation also benefits real estate investors who generate revenue from rental properties, particularly those in property sectors with short-term lease structures like multi-family buildings. As a result, it may be possible to put more money in your pocket if you can increase your rent while keeping your mortgage the same.

Finally, because property values tend to increase steadily over time, real estate can be an excellent hedge against inflation. For example, in less than ten years, the majority of the properties whose prices plummeted when the real estate bubble burst in 2008 had recovered to their pre-crash levels. As a result, real estate investments have the potential to outperform inflation in terms of value and can offer investors a possible source of recurrent income.

Purchasing a multi-family Property is one strategy to use real estate as an inflation hedge. Individual rental units often have annual lease renewals, unlike some commercial assets like retail stores or restaurants, which typically have multi-year company leases. As a result, you will be allowed to change the rent regularly as a building has more units.

Multi-family assets, such as investing in apartment buildings, are also a particular asset class since they are continually in demand (significantly when housing prices rise), but they also experience a high turnover rate of 47.5%. In addition, a restricted supply of structures or new construction projects may result from rising labour and material prices and increasing rental rates and property values. Together, these two elements result in a building that won’t be empty for extended periods and numerous chances to sign new leases or renew existing ones at prices that are in line with the market.

Another thing to keep in mind is that another lease component,—expense reimbursements—is another way real estate can keep up with inflation. No matter what kind of physical structure a property has, leases transfer part of the operational costs of that property down to the tenants. For instance, with a triple-net lease, the renter is entirely responsible for all costs associated with the property. As a result, landlords and owners may be partially protected from the effects on the property’s cash flow if utilities and maintenance costs increase in line with inflation.


We can’t prevent some parts of inflation, such as more incredible consumer goods prices and rising interest rates. The good news is that real estate is one strategy to protect yourself even if the prophecies come true.

Schedule a Free Strategy Call with Us if you would like to learn more about real estate investing strategies. Growth Capital Group can help you to achieve your investment goals today.

How To Start Investing In Apartment Buildings for Passive Income 

investing in apartment building

Do You want passive income but are unsure about where to begin? Investing in apartment buildings is a wise financial decision that might assist you in building money over time. However, you must first grasp the fundamentals and have a well-thought-out plan before investing. 

With the help of this detailed article, start investing in apartment buildings. To build your portfolio for passive income, learn how to make wise judgments, identify properties, and create a plan.

Investing In Apartment Buildings 

Real estate investing’s attractive and reliable returns are no longer a secret. You can pick from several investment possibilities today to help you achieve your financial objectives and desires. Investing in apartment buildings for passive income can be a lucrative venture. It requires careful planning, research, and financial analysis.

Apartment complex investing is becoming increasingly popular as people look for a promising asset class that offers less financial risk and a steady, reliable cash flow.

In urban areas worldwide, there is a rising demand for cheap housing. Apartment buildings are ideal for many investors, including busy professionals, medical professionals, lawyers, CEOs, young professionals, and singles who all need a place to call home.

Despite how promising it is, there are a few factors that passive investors should know before investing.

Why Should I Invest in Apartment Building

The advantages of multifamily properties over single-family homes include improved cash flow, lesser investment risk, and the ability to scale up apartment buildings. But that’s only the start! Here are a few more explanations for investing in apartment buildings.

  • High Demand for apartment homes
  • Strong and Stable Cash Flow
  • Scalable Property Management
  • Forced Property Appreciation
  • Tax Advantages
  • Create Generational Wealth

How To Start Investing In Apartment Buildings 

To get you started on learning the formula for apartment investing, we’re going to go over some secrets to creating significant cash flow in the apartment complex market. Understanding the approach to accumulating seven-figure wealth through real estate investing is essential.

Here are some tips for how to start investing in apartments:

  • Know Your Goals

Before even thinking about what kind of property you want to buy, it’s essential to have your goals clearly defined so that you can determine your investment strategy. If you want passive income, look at properties with high rents and low turnover rates (good for cash flow). If you want growth potential, look at properties with high appreciation rates and strong rental demand from local job growth and college enrollment trends (suitable for capital appreciation).

There are many different strategies when it comes to investing in apartment buildings. However, most investors have a specific goal to maximize their returns on investment (ROI) when buying a property. Here are a few common goals:

1. Cash Flow – A cash flow strategy ensures that the rental income covers all expenses and provides positive cash flow each month. This allows you to pay yourself back over time rather than selling the property immediately or borrowing more money to cover expenses during tough times.

2. Value Appreciation – The value appreciation strategy focuses on finding properties that will increase in value over time through the appreciation of real estate prices, not increasing income from renting apartments.

3. Rental Income – This strategy focuses on maximizing rental income by finding high-demand areas where rents are rising quickly and building up enough equity in your portfolio to take advantage of these trends by selling one or more properties at once or using them as collateral for further borrowing against them.

  • Syndication: 

Syndications raise money from investors wanting to play a passive real estate investment role. In this scenario, the person in charge of the syndication would be in the order of all meaningful choices about the selected apartment complex. You must add your funds to the collection to benefit from future gains.

  • Real Estate Fund: 

On a broader scale than syndications, real estate funds are similar. However, these funds frequently require more extensive minimum commitments and make many real estate investments at once. Additionally, you might not know how your money is being utilized, so learn as much as possible about a fund before investing in it.

  • REITs

An organization that handles real estate investments, which frequently include apartment buildings, is known as a REIT. Similar to purchasing shares in any other firm, you are investing in the company when you invest with a REIT.  Real estate investment trusts are a great way to invest.

  • 1031 Exchange :

A 1031 exchange is a tax-deferred exchange of a property for an equal or more excellent value. It allows you to sell one property and purchase another without paying taxes on the sale of your old property, as long as you reinvest the proceeds in real estate within 180 days. The money you receive from selling your old property goes into an exchange account, which is used to purchase a new property within those 180 days.

Read More: Benefits of Investing In Multifamily Real Estate

Final Thoughts 

Apartment complex investing is a significant undertaking that, when done well, may bring in sizable financial returns and even generate a stable passive income for you.

However, it is advisable to work with experienced syndicators if you want to create a passive income stream and benefit from portfolio diversification with this valuable asset class without having to take on the responsibility and time commitment of managing it yourself.

Related How Do You Find A Passive Real Estate Investment Opportunity?

Schedule a Free Strategy Call with Us if you’d like to learn more about how to create passive income streams by investing in multifamily real estate. Growth Capital Group is here to help you achieve your investment goals today.