I get asked often about inflation and economic collapse hedges, and which one I think is the best for the average person. Once again, it seems to come back to the ownership of rental properties; and if our experiences over the past couple years haven’t convinced you, don’t bother reading the rest of the article.
Now you may think I’m just shilling my book, so to speak, but I got involved in the rental business exclusively because of its opportunity as QE ramped up last decade and as we approach the Great Reset this decade.
Hear me out and indulge me for a spell. How much is it worth to you to have the ability to house a family?
What is it worth to a family to be able to find a shelter? That value in nominal terms never seems to be dropping. It only seems to be rising. If an investor owns 10 or 12 SFRs, he or she owns a lot of wealth in that this investor has the ability to house 10 or 12 families. That is worth a lot of money, and if managed prudently with reasonable leverage, I can’t think of a better inflation hedge. I don’t get distracted with all the noise in the media regarding boom/bust cycles anymore with real estate. It’s clear that rents are only going in one direction and for the time being, this problem will be allowed to simmer and grow.
So I ask; what’s a better hedge against inflation? Is it gold, Bitcoin, oil, stocks, or having the ability to house a family? I think the answer is simple.
Think about all of the stories we’ve read over the years about professionals in countries like Argentina. Whether they were doctors, lawyers, or professors. Many of these well regarded individuals lost everything through inflation. They had notoriety and were well regarded in their communities, yet ended up selling tortillas in the streets and peddling stuff at flea markets to help make ends meet. That’s because they all took salaries and inflation destroyed them. The United States and the west are now suffering this same fate and all of these professionals who are now on the payrolls are going to lose everything through inflation, just like they did in Argentina. United States is now a second world nation and their labor pool is being priced as such.
So I ask you, what’s the best hedge against inflation? I think the answer is obvious and as the housing price to income multiples in the United States continue to rise, you’re going to be grateful that you owned rentals, which, in my book, is the best hedge against inflation.