Hey everybody, welcome back! Today, we’re actually going to be going over how inflation affects
real estate investments. If you don’t know me, my name is Sunny with Synergy, Real Estate and Property Management,
Bakersfield Maintenance and Construction. I own a portfolio of real estate, property management and construction companies,
and we’re here to bring you content on those fields. I look forward to providing value!
So basically the question is, we’re having inflation, so why are we having inflation?
What is this inflation thing? And so basically the way that I look at it is, you know, both camps of people are
currently saying we have an inflation problem. So doesn’t really matter why we’re having an inflation problem.
Chances are we’re probably going to or if not already have an inflation problem. So if we move on from there, we say, you know,
some say it’s because. Okay, well, we had, you know, the money printing. And so that’s devaluing the currency, which means you
need more to purchase, less. Some say it’s because of the pandemic and supply chain issues and things like that either way.
Like I said, both camps kind of are on a consensus that we are either in a high inflation environment or going into a higher
high inflation environment slash higher inflation environment.
So basically based on a Forbes article called How Rising Inflation Impacts Real Estate Investments, we’re looking at what they’re stating
in that article and they say, you know, real estate investors should not worry about inflation. And so basically, the thought process there is we
should see increases in real estate values. Right? And if you have an income producing asset, meaning that you collect from rent, which will give you a cash flow at the end of the month, then that will compound your rate as well, because in high inflation environments, generally you will see real estate prices go up.
Generally you will see rents go up. And so what should our strategy be, knowing that we’re going into higher interest rates, higher inflation,
and potentially, you know, we’re looking at property values that could be in a recession in the next 6 to 24 months, according to people.
So what is it that we do in the way that I look at it is, you know, as a real estate investor, we’re not kind of day traders, day traders.
They want to get in and they want to get out. They want to take their profit. And they do it in, you know, milliseconds in some cases.
So we’re not that way as real estate investors. For real estate investors, I feel like the best way to look at this is, you know,
we always want to keep buying. You want to increase your portfolio, we want to increase your cash flow. And
So if you’re purchasing real estate as an asset, meaning that this thing gives you cash flow, then I think that over time you just want to keep buying, right? Because what will happen is, okay, you’ll buy today. Interest rates are at six. You buy it next year. Interest rates are at seven. You buy the year after. Interest rates are back at six, you know, and so on and so forth. And over the next ten and 15, 20 years of your life, you would have dollar cost average essentially to a good interest rate or a decent interest rate. Then you just need to make sure that you can purchase cash flowing property for that. And so because of that kind of essentially as a real estate investor, you want to keep things going over time. And in in doing that, you are going to kind of be successful, right? You’ll be able to take advantage of the increasing market through property appreciation, increasing rents, but you’ll also be able to take advantage of kind of when the markets are down, you’re still purchasing properties, so you’re getting better values there and you’re able to maybe flip those properties or you’re able to refinance and take some cash out of those properties.
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Sanjeev (Sunny) Advani
– Realtor/Property Manager/Investor