Investing During Inflationary Times

October 5, 2022

(It’s good news, I promise!)

Portland and Seattle

The latest economic news is pretty dismal...30-year fixed mortgage rates jumped from 2.65% in January of 2021 to 6.28% in September of 2022, while inflation rose from 1.4% to 8.3% over the same period. These numbers have a huge impact on investing strategies, driving a need to de-risk investments and generate cash flow. “Don’t remind me! No more bad news!” I hear you saying. But for a savvy investor, it doesn’t have to be bad news. While we wait for the economy to reach rock bottom and then rebound, you do have options (cue the good news)!  Investing in multi-family housing offers an excellent way to de-risk and diversify your portfolio – and even generate positive cash flow.  

What makes multi-family housing a good investment during inflationary times? 

For starters, the supply of renters is significantly higher. First-time home buyers who might have been planning to purchase a home and exit the rental market are being forced to continue renting while they wait for the economy to stabilize, and for inflation and mortgage rates to go down. In addition, inflation also increases development costs, which, in turn, slows down development and the supply of new housing. This increased demand for rental housing combined with flat supply leads to higher rents and positive cash flow for investors. This is another major reason why multi-family housing is a strong investment during inflationary times: rental income can generate much-needed cash flow at a time when other investments aren’t producing returns.  

Lastly, when the economy is heading south, investing in real assets like property and buildings is a great way to de-risk a portfolio and avoid some of the ups and downs of the financial markets. Remember: people always need a roof over their heads! So investing in multi-family housing represents an opportunity for a low-risk investment that is likely to generate strong cash flow and solid returns – even in a dismal economy.  Good news indeed!

By Alex Audie


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