How To Make Money From Inflation Using Real Estate
Inflation hits everyone. You feel it at the grocery store, at the gas pump, and just about everywhere else you spend money. But if you own the right real estate, inflation can actually start working in your favor. Here is how that math plays out.
The Part That Hurts
The Bureau of Labor Statistics puts the average family's annual spending on consumables, things like groceries, fuel, eating out, and household supplies, at around $45,000 a year. If inflation runs 10 percent, that is about $4,500 in extra costs just to keep living the way you already do. That is the part that stings.
How Real Estate Can Turn That Around
Now say you own a $500,000 property in a sought-after area. That same 10 percent inflation just added $50,000 to your net worth. Subtract the $4,500 you lost to higher living costs and you are still ahead by $45,500. Inflation still hit you, but you came out more than $45,000 richer because of it.
Not All Real Estate Is Equal
Not every property performs the same. Desirable properties, resort areas in particular, have historically outpaced the national average in appreciation. So in a place like Red River or Angel Fire, the numbers might look even better than my example. They will always vary, and there are other dynamics at play, so treat this as the simple version.
You cannot stop inflation. What you can do is own the kind of real estate that benefits from it. That is the whole point.
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Have questions or want to learn more? Give us a call at 575-613-4243. We're happy to help.
Rob Swan | Qualifying Broker | Swan Realty Inc.
