Real estate as an inflation hedge

There are many who are concerned that we will be experiencing increased rates of inflation - maybe even high rates of inflation. The price of gold has gone way up over the past couple of years. But for those who are convinced that inflation is coming soon - maybe it would be good to consider quality residential rental real estate as an investment. Here are some points to consider:

1. Only consider real estate in quality areas that has positive cash flow. While that may be a challenge in some areas, it should not be too hard to find in my area (Indianapolis - Carmel Indiana.)
2. With some significant numbers of people being locked out of home ownership for a period of years, there should be an adequate pool of renters.
3. Even if there is no inflation, residential real estate in quality areas with good cash flow could still be an excellent investment. If the fear of inflation subsides, precious metals could see their prices tumble.
4. Part of the mortgage payment each month goes to reduce principal. If holding rental real estate for the long term, it can eventually be paid off free and clear.
5. If there is inflation, it might be possible to pay down the mortgage balance with inflated dollars.
6. Gold does not pay interest. Rental property has constant return on investment. (Of course there is no mowing to do with gold.)
7. Deflated currency in a bank account may have lost a significant portion of its value. Investment real estate will have some value as determined by supply and demand.

Don't get me wrong. I am NOT in favor of inflation. The purpose of this article is to discuss the idea that residential rental real estate might be something to consider - for those seeking an investment that can act somewhat as a hedge against inflation.

For information about Indianapolis - Carmel Indiana real estate investment, visit my website or contact me on my direct number, 317-709-2537