How to beat inflation through real estate investing

Real Estate is still one of the 3 best investment assets to beat inflation

“Everyone still uses real estate regardless of what the economy and markets are doing. Real estate can keep up with inflation because it is a necessity for everyday life.”

The truth is that people will always need to live in homes or apartments, and many businesses still want a physical location – and never in the rules of engagement has there been one (rule of law) that limits people to own only one of each.

Among the many advantages to investing in real estate, one of the main advantages is protecting your money against inflation. This is why the rich, and wealthy like and choose it for their portfolios consistently. You might have heard this enough times to think it a cliché but that is and will be your loss.

As an asset class, real estate offers intrinsic value and capital appreciation, provides consistent income through rents and it’s a natural inflation protector

In tough times and in line with financial hardship, the incomes to be realized might recede in returns, overall real estate is more stable with a pretty quick recovery.

Similar to commodities, the value of real estate tends to increase even more in an inflationary environment and this affects not just the costs for the acquisition of properties but so also the rents which tend to go higher with inflation so as to match the replacement cash value of the property.

Another key thing to note about real estate includes the awareness that it is a tangible asset, but it’s illiquid. As an alternative, you may want to consider co-investing which offers more liquid investments that can be bought, sold and/or transferred.

What is co-investing you might ask?

It’s the opportunity for people with like minds and goals to come together financially to own a property together. Think of it as how you could come together with friends to help finance a friend’s wedding or other family function.

A reason why people seek/get into plans like this is their desire to earn income from the investment – which is its actual value.

Personally, I believe that investors need to reconsider their property investments to include options that they don’t just buy to acquire but can also get as a long lease for up to 15/17 or 20 years (based on negotiation and terms).

Property investment options like these give investors a presumably shorter turnaround time to start earning and a more affordable buy-in cost. Where N2.5m would only buy you a plot of land in Lagos, that same amount could get you a studio flat in some areas of Lagos that are already in demand within the main metropolis.

See the image below as an example

For every investor, the goal should be to retire earlier than if you weren’t an investor and with a more viable cash flow portfolio. So whilst some people are smirking down on locations and/or type of assets you are trying to amass, focus on the returns that you are compounding as well as getting started with even though you don’t have the high cost of investment waiting for you.

Related Stories:

• 3 safest ways to beat inflation investing in precious metals
• Real Estate Investing Tips: Knowing when to buy, keep or resell
• Leveraging off-plan investing for wealth creation in real estate

This is where your mindset should focus on the business of real estate investing as a strategy for finding the deals you need and can afford.

Next week, I am going to shed more light on opportunities that exist within the ecosystem of the business of real estate that is not just available but low-hanging fruit to grab and get started with.

Till then, stay safe and keep investing in yourself and your mindset.