How does incipient high inflation influence your real estate investment strategy?

[Dave74]

Hello,
While I am comfortable with the local market fundamentals for a new investment, I`m not sure how to factor in the high rate of inflation that many are expecting over the next few years. My question for more experienced investors: how does incipient high inflation influence your investment strategies?

Thank you,
Dave.

 

[housingrental]

It`s a positive?
The leverage is a hedge against inflation

 

[GarthChapman]

Your real long term return on your investments of any kind are their return performance above inflation. Say an investment returns 8% per year over a period of years and inflation during the term averaged 3%. Then your real return is 5%. That means, in today`s dollars, you made 5% per year. If inflation were higher then you would want your investment to also have a higher return to stay ahead.

Real Estate generally will outperform high inflation times because rents normally increase in periods of higher inflation and thereby so do the values. That is one of the reasons it is such a good performer. And, when multiplied by 5-to-1 leverage Real Estate is very hard to beat.

Hope that helps,