How to Use Real Estate to Beat Inflation in PA
In this video, Rob talks about why inflation is happening and how you can use real estate to survive and thrive during the crisis.
Inflation is here. The national debt has swelled to a level we can’t pay off, and the government’s exit strategy is inflation. Advancements like Amazon should have caused a decrease in the cost of goods, but we’ve actually seen prices increase despite these modern efficiencies. While some people may tell you that inflation isn’t that bad, it’s actually worse than it seems on the surface.
So how do you turn a profit during an inflationary period?
By investing in leveraged real estate.
How to Use Real Estate to Survive Inflation
Interest rates are low right now and inflation is outpacing it. Inflation will continue to outpace interest rates. Normally during inflation, the fed would move to raise interest rates, but there is a large national debt, so they can’t raise interest rates because then they can’t afford to borrow money. As a result, asset prices are high. In Philadelphia, for example, real estate prices are up by 17%.
Real estate and inflation go hand-in-hand because it’s a leveraged investment. You’re typically going to borrow 80% of the money you need to purchase a house. For a $100,000 house with a cash payment of $20,000, you have $80,000 in debt. During an inflationary period, your debt is decreasing with each monthly mortgage payment while your equity in the home is increasing. The value of the home outpaces inflation, and the debt is easier to pay off because the value of the money is less. People who invest in leveraged real estate profit during inflationary periods.
That being said, you have to be smart about it. You can’t just buy any piece of real estate at any price. You have to buy assets that will perform well and be profitable in ways other than inflation. A great example is house hacking where you buy a multiplex or rent out rooms in your home. The tenants are paying down your debt and creating cash flow while your property is increasing in value. That is an excellent strategy for building wealth during the inflation crisis.
Contact the Rob Lawrence Team
Based in West Chester, Pennsylvania, the Rob Lawrence Team is passionate about helping people in Chester, Montgomery, Delaware, and New Castle County achieve their real estate goals. If you are interested in learning how to use leveraged real estate to survive inflation, contact us today. We hold licensure in Maryland, Delaware, and Pennsylvania, and we are part of the Vanguard Realty Alliance LLC.
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