Rising inflation has been one of the top concerns for investors in recent years, especially since the pandemic. In 2022, the Consumer Price Index has risen to nearly 7%, the highest level in three decades. Moreover, supply chain disruptions, energy crises, labor shortages, and rising costs of essential and discretionary commodities all contribute to high inflation with no short-term solutions in sight.

Most investors stick to traditional asset classes, such as gold, stocks, real estate, and mutual funds. Conversely, more savvy investors opt for newer investment options, such as crypto, real estate investment trusts, and fractional property shares, via tokenization.

However, real estate properties have always been the safest type of investment in both stable and unstable environments. The trick is to opt for the right type of real estate investments for hedges against inflation.

Therefore, in this post, we’ll share our top picks of the best property types you should consider for investment during inflationary periods.

5 Real Estate Investment Options for Hedges Against Inflation

1. Primary Residence

If you own a residential property, you’re already one step ahead in sailing the inflation storm. As inflation raises the prices of all essential and discretionary goods, assets, and commodities, the value of your primary residence will most likely go up. Moreover, you’ll be immune to rising rental costs since you’ve already agreed to a set mortgage rate and interest.

2. Multifamily Rental Properties

One of the best ways to protect yourself against inflation is to invest in multifamily rental properties, such as apartments and condos. These properties can provide stable returns in fluctuating environments. Moreover, the demand for rental properties rises as for-sale property prices rise. Furthermore, landlords can increase rent to keep up with or surpass inflation, especially if you opt for shorter lease/rental terms.

3. Real Estate Crowdfunding

Many brokerage firms allow clients to buy and sell publicly-traded real estate investment trusts. However, REITs are vulnerable to inflation, like stocks and other asset classes. As a result, real estate crowdfunding is becoming a smart alternative for savvy investors to increase their percentage shares in properties and receive higher dividends to increase their purchasing power.

4. Vacation Rentals

Vacation rentals, such as cabins, lodges, and resorts, are similar to hotels. The key difference is that they’re rented out on a weekly or monthly basis. Moreover, all amenities and furniture are provided by the owner. These properties are quite common, especially in vacation hotspots, such as waterfronts (lakes/beaches), mountainous regions, and deserts.

Therefore, they’re more expensive to rent out than average residential properties but generally cheaper than hotels. As a result, they enable investors to earn steady income and profit on resale. Plus, since it’s their property, they can choose to live in it, especially during vacations.

5. Land

Land has inherent value since it can be used for residential, commercial, agricultural, and recreational purposes. However, since it’s a limited resource, it becomes more valuable over time as more people populate the planet. Therefore, it serves as an excellent long-term investment for investors looking for an ideal hedge against inflation down the line.

Wrapping Up

Hedging against inflation is one of the most popular strategies investors employ to protect their capital and assets. It involves choosing investments that will increase their value or hold it. As a result, it’s no surprise that real estate makes a sound investment due to the long-term ROI on offer.

By opting for any of the real estate investment types above, you can combat the economic recession, high-interest rates, poor liquidity, and other inflation-induced problems in the future.

So, if you’re ready to get started, head to CHRE right away and explore our vast range of multifamily properties in Rio Grande Valley.