As inflation continues to take a bite out of their portfolios, savvy real estate investors remain on the lookout for investment opportunities that are immune to its impact. But is there really such a thing as an inflation-proof real estate investment?
There are no guarantees in 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.
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1. Help with the affordable housing crisis
Finding affordable housing has been a struggle facing millions of Americans for many years. Now, inflation and high interest rates are pricing even more people out of the housing market. But this could represent an opportunity for real estate investors to benefit while helping to alleviate the burden.
Part of the Biden administration's plan to help involves making mobile homes more attainable through expanded financing options and reduced regulations around them. That means mobile home park investing could be about to get hotter than ever.
Mobile home parks offer a low-overhead investment model where residents own and are responsible for the upkeep of their own mobile homes. The investor rents out the lots, which the residents are also responsible for maintaining.
2. Follow population trends
The population is of course constantly shifting in a variety of ways. But there's one huge population trend in particular that could be of special interest to real estate investors: Over 45 million Americans are currently 65 or older. And in only eight years, that number is projected to roughly double to almost 90 million.
If you're a real estate investor looking to build a hedge against inflation, this shift represents an incredible opportunity. It strongly suggests that senior housing is not going anywhere anytime soon and is in fact worth a closer look. Inflation won't change the fact that millions of seniors will need somewhere to live. And by addressing everything from accessibility, and medical and social concerns to affordability and convenience, the senior housing sector is poised to meet that 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 all on its own, and it could be even more worth exploring given current inflation concerns. That's because regardless of what's going on with the economy 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 could lease it out as farmland, set up a hunting lease, sell the land to a developer, create a mobile home park as discussed above, or improve and sell a single lot as a future home site.
And you don't have to decide right now. You can simply hold the land, and its value will most likely increase over time.
Should you put these strategies to work?
None of this is to say that you should flee the tried-and-true real estate investment sectors. Most of them faced a trial by fire throughout the pandemic and proved that they are quite resilient by evolving in various ways to overcome shutdowns, social distancing, and other lifestyle changes that 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 harmed much -- if at all -- by inflation.
