As inflation continues to weigh on their portfolios, savvy real estate investors remain on the lookout for investment opportunities immune to its impact. But is there really an inflation-proof real estate investment?
There’s no guarantee investing, but let’s take a look at a few things you can do to select real estate investments that are poised to survive — and even thrive — in the face of inflation.
1. Help with the affordable housing crisis
Finding affordable housing has been a struggle that millions of Americans have faced for many years. Today, inflation and high interest rates are pushing even more people out of the housing market. But it could represent an opportunity for real estate investors to take advantage of it while helping to ease the burden.
Part of the Biden administration’s aid plan is to make mobile homes more accessible through expanded financing options and reduced regulations surrounding them. That means investing in mobile home parks could be about to get hotter than ever.
Mobile home parks offer a low overhead investment model where residents own and are responsible for maintaining their own mobile homes. The investor leases the lots, whose residents are also responsible for maintenance.
2. Track demographic trends
The population is of course constantly changing in various ways. But there’s one huge demographic trend in particular that might be of particular interest to real estate investors: More than 45 million Americans are currently 65 or older. And in just eight years, that number is expected to roughly double to nearly 90 million.
If you’re a real estate investor looking to hedge against inflation, this change represents an incredible opportunity. This strongly suggests that senior housing is not going anywhere anytime soon and in fact deserves a closer look. Inflation will not change the fact that millions of older people will need housing. And by addressing everything from accessibility, medical and social concerns to affordability and convenience, the senior housing industry is poised to meet this need.
3. Think outside the building
Many real estate investors remain focused on buildings of one form or another, from stores and warehouses to residential rental homes. But vacant land can be a solid investment on its own, and it might be even more worth exploring given current inflation concerns. Indeed, regardless of how the economy develops at any given time, vacant land will remain a finite resource.
As for what you would do with the land, the possibilities are nearly endless. Depending on the location and how the property is zoned or allowed to be rezoned, you can lease it as farmland, set up a hunting lease, sell the land to a developer, create a mobile home park as listed above , or improve and sell a single lot as a future home site.
And you don’t have to decide now. You can simply hold the land and its value will most likely increase over time.
Should you implement these strategies?
None of this is to say that you should shy away from proven areas of real estate investing. Most of them have faced a trial by fire throughout the pandemic and have proven to be resilient enough by evolving in various ways to overcome lockdowns, social distancing and other fashion changes. lives that have hit them hard.
That said, it can’t hurt to flesh out your real estate portfolio a bit with things that are unlikely to be affected much, if at all, by inflation.