Inflation is out of control! Prices are soaring and the value of the dollar is declining rapidly! How do you defend yourself from losing what you have worked so hard to earn? You're about to discover the tried and true defense against inflation and 3 steps you can take now to protect yourself:
3 Reasons Commercial Real Estate is a Tried and True Defense Against Inflation
#1: Demand for Apartments Will Increase
One reason demand for apartments will rise is because when there's rising inflation construction gets more expensive. And when building costs go higher, contractors build less. With a decrease in housing development, the supply stays the same, but demand continues to increase. This leads to a greater demand for apartments. Another reason demand for apartments will increase is because during an inflationary period, interest rates tend to creep higher. And when interest rates go higher, borrowers will either need to buy smaller homes, or they will not get approved at all. So, if they're not buying a home, what are they doing? They're renting an apartment.
#2: Rents and Property Values Will Rise
Hand in hand with an increase in demand will be an increase in rents. As you know, when you increase the rents, you increase the NOI, and force the appreciation on your property and property values go up.
#3: An Income Engine that Outpaces Inflation
If you do one and two right, you will create a recurring income engine that outpaces inflation. Your apartment building is going to be in greater demand, rents are going to go up, the value will go up and you will produce a cash flowing engine that outpaces inflation.
3 Key Offensive Plays Against Inflation
#1: Acquire Commercial Real Estate Assets that are Housing
Apartments and mobile home parks are housing that is considered commercial real estate and these should be your main focus. As mentioned above, apartments are assets that will provide stable income and outpace inflation. Another great investment is mobile home parks. They are affordable housing and will continue to be in high demand. The third commercial real estate asset to focus on is storage – and yes, it is related to housing. If the economy continues to grow, then people will buy more things that need to be stored, and if the economy shrinks, people will downsize their living space and need storage. So, acquiring commercial real estate assets is the first key offensive play.
#2: Lock in Long-term Loans
Lock in long-term, low-interest rate loans now because interest rates will increase with inflation. The strategy here is to have a cash flowing asset that's increasing in demand, with the rents and cash flow going up, but the mortgage is staying constant.
#3: Don’t Watch the News
This offensive play might be the most important. Don’t watch the news because what you feed your mind determines your appetite. You see, the news won't help you achieve financial freedom, that's not their goal. Our goal at Commercial Property Advisors is to help you achieve financial freedom through commercial real estate investing. The media focuses on fear and the fear right now is that the housing market is going to crash. It may, or it may not. It doesn't matter. What matters is, that whatever happens we will adjust. For example, let's say the housing market does crash. What happens? People stop buying homes and they move into apartments. As a commercial real estate investor, you’ll be thriving while others are falling apart. So don't watch the news.
I have a video called Do You Have the Mindset to Own Commercial Real Estate. It will teach you what the right and wrong mindsets look like as well as practical strategies on how to replace the wrong with the right so you can be successful in commercial real estate investing and make sure your focus is in the right place.
Don't Miss Out! Use this Tried and True Defense Against Inflation
This is a unique time for commercial real estate investors. As a commercial real estate investor, you have two choices: you can jump into this great commercial real estate market or miss out on opportunities and remain poor. POOR is an acronym for Passing On Opportunities Repeatedly. You don’t have to sit on the sidelines with this tried and true defense against inflation:
- Buy cash flowing, in demand, commercial real estate assets like apartments, mobile home parks and storage.
- Lock-in long term, low interest rates.
- Zone out all the negativity and become the CEO of your life!