How Does Real Estate Protect Against Inflation?

Real estate can potentially provide some protection against inflation due to its inherent characteristics as a tangible asset. Real estate is typically considered a hedge against inflation because it is a physical asset that has value regardless of the state of the economy or the value of the currency.

There are a few ways that real estate can potentially provide protection against inflation:

1. Rent increases: If you own rental properties, you can potentially increase the rent you charge to tenants to keep pace with rising prices due to inflation. This is same for RAL where room rates can be increased to keep pace with the higher cost of goods and services. 

2. Appreciation: Real estate prices tend to rise over time, especially in areas with strong economic growth or limited supply. This appreciation can potentially offset the impact of inflation on your investment.

3. Debt repayment: If you have a mortgage on a property, the fixed payments you make on the loan will be worth less in the future due to inflation. This means that the real value of your debt will decline over time, providing some protection against rising prices.

It is important to note that real estate is not a perfect hedge against inflation, and there are no guarantees that it will provide protection against rising prices. It is always a good idea to diversify your investment portfolio and consider a variety of different asset classes in order to manage risk. However, we have found owning RALs is a perfect hedge against inflation, and truly a very recession resilient investment opportunity with strong growth demand for decades to come!