How To Make Inflation Work For You - StoneCrest Equity Partners

MAKE INFLATION WORK FOR YOU

I wanted to share some positive information on something that might be on your mind lately—inflation. It’s all over the news, and it can feel discouraging. But I hope to shed some positive light on the situation.

Last week when I got my Costco delivery (love Instacart!) I was rather disturbed by my bill. It made me think of a saying that one of my mentors is always repeating: find the opportunity in every obstacle. Being the real estate nerd that I am, I of course looked at it from the perspective of how inflation affected my life both positively and negatively in my real estate business.

I am pleased to say that it was a successful exercise. I must admit that much of this I already knew; it was just sitting in my subconscious mind waiting for me to put it all together. But the bottom line is: if you’re investing in real estate with debt, inflation might actually be your friend. Sounds crazy, right? But stick with me, and I’ll explain why.

Debt Gets Cheaper

Remember that in investment real estate we primarily take out mortgages with a fixed interest rate. Well, as inflation rises, the real value of that debt actually decreases. It’s like paying back the loan with “cheaper” dollars over time. So, while everything else is getting more expensive, our mortgage payments stay the same, and we are effectively saving money.

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Property Values Go Up

Inflation usually means that property values go up too. As the costs of building new investment real estate increase, the value of existing properties tends to rise. So, the investment you buy today, could be worth a lot more in a few years, and you didn’t have to do a thing! This increase in value boosts your equity share, which is great news if you want to grow your wealth.

Rents Are Rising

With inflation, rents often go up too. Since we are renting out our properties, this can mean more money in your pocket each month. And here’s the kicker: while rental income goes up, the mortgage payment stays the same. More cash flow for you without any extra effort—that’s the kind of math I like!

Tax Perks

Inflation can even work in your favor when it comes to taxes. As a property’s value and rental income increase, so do your tax deductions, like depreciation. Plus, the interest on the mortgage is still tax-deductible. So, while inflation might be pushing our property\’s income higher, you’re also getting some nice tax breaks to offset it.

Real Estate as an Inflation Hedge

Here’s the big picture: real estate is a great way to protect your money during inflation. While the value of cash might be eroding, your real estate investments are likely growing. And if you’ve got those investments backed by fixed-rate debt, you’re really in a good spot. It’s like turning inflation into a tool to help you build wealth instead of something that just eats away at your savings.

So, What’s the Takeaway?

Inflation doesn’t have to be a bad thing. In fact, for real estate investors with debt, it can be a real advantage. As investors we are paying off loans with less valuable dollars, our property values are going up, our rental income is increasing, and we are getting some nice tax breaks along the way.

If you’ve got any questions or just want to chat more about this and how we our investments use debt at StoneCrest Equity Partners, give me a call. I’m always here to help you navigate this stuff. After all, we’re in this together!

Speaking of being together, consider joining StoneCrest Equity Partners Alliance where you will be the first to know about upcoming opportunities, get invited for exclusive site visits and receive even more in depth knowledge on syndications.

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This document is solely for informational purposes and does not constitute an offer to purchase a security. Securities will only be offered pursuant to a private placement memorandum in reliance on certain exemptions from the registration requirements of the Securities Act of 1933 (primarily Rule 506(b) of Regulation D and/or Section 4(a)(2) of the Act) and are not required to comply with specific disclosure requirements that apply to registrations under the Act.

Investing involves many risks, variables, and uncertainties. No representations or warranties are made that any investor will, or is likely to, attain the returns shown above since hypothetical or simulated performance is not an indicator or assurance of future results.