The Silver Lining of Inflation

Inflation can be a scary word, especially when it's at its highest level in over 40 years like it is now. Many people are feeling the pinch as they spend more money on groceries, goods, and services than ever before, while wages struggle to keep up. This has caused a volatile stock market and a decrease in the US Gross Domestic Product (GDP) in the first two quarters of 2022.

But for those paying attention, there is a silver lining. This economic environment could be setting up one of the best multifamily real estate investing opportunities of our lifetimes. Here are three reasons why:

1. Inflation increases rent rates: As rent rates go up, so does net operating income (NOI), cash flow, and property values.
2. Inflation increases demand for rental housing: As inflation contributes to rising home prices, more people are being priced out of the market and have to turn to renting instead.
3. Inflation decreases new supply: Building new rental properties becomes more expensive in an inflationary environment, leading to a decrease in new available inventory and an increase in the gap between supply and demand. When supply can't keep up with demand, prices go up.

Overall, it's important to remember that as the value of your dollar decreases, converting it into assets that can grow faster than inflation is key to preserving and multiplying wealth. And multifamily real estate is well positioned to do just that.

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