Smart investors know that not all investments are created equal. Some are relatively safe but yield low returns; others may promise rapid growth but involve a high risk of loss. Investments that can offer both relative stability as well as solid growth potential are rare; those that have built-in protections against inflation are among the best.
Among the few investments that offer both stability and hedge against inflation, real estate is at the top of the list. Investors who want to protect their money from inflation as much as possible will find the answer in the single-family residential rental market.
Your Dollars Lose Value
Because of the way inflation works, a typical investment of $100 today (for example) will be worth less than $100 in ten years unless it continues to appreciate (grow in value). We can see a real-world example of this in the cost of everyday things. Just think about how much a gallon of gas cost twenty years ago (about $1) versus today (about $4). Because things cost more, what you can buy with a dollar becomes less and less, and the dollar loses value.
Cash stored in a bank account or stuffed in a mattress doesn’t appreciate – it is actually losing value each year due to inflation. Even if you’ve stashed your cash in an interest-bearing account or CD, interest rarely (if ever) keeps pace with inflation.
Real Estate Keeps Pace
Real estate is one of the few investments that reacts in proportion to inflation, making it an ideal avenue to grow your wealth. Inflation actually causes housing values and rents to go up, not down, and when added to the appreciation of the property itself, can result in an increase in value and yield a consistent profit for years to come. This is typically the case even after factoring in the effects of wear and tear on the property, property taxes, insurance, and other expenses. When done right, investing in single-family residences can protect your assets from the ravages of inflation.
Of course, it’s not enough to simply buy rental properties. The key to profitable investment in the single-family residential rental market is having the right property management team working for you. At Real Property Management, we understand what it takes to become a successful real estate investor. Our unique approach to property management will not only protect your investment but also maximize the value of each of your properties for years to come.
Whether you’ve just purchased your first rental or have been doing this for a while, make Real Property Management your next smart investment move.
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