Inflation is a risk that affects most investors at some point.
However, this naturally occurring increase of prices affects some asset classes much more than others.
If you’re investing in the right assets, inflation actually can make your portfolio grow and thrive. This is known as hedging against inflation.
For example, real estate investments outperform during inflation because rental income and property prices usually rise along with inflation.
Let’s dig into how inflation affects your various investments, which assets are known to perform well during periods of inflation, and how to hedge against inflation with real estate.
How inflation affects your investments
Inflation occurs over time as the value of the dollar decreases and prices of goods and services rise.
When you hedge against inflation, you are investing in assets that perform well during periods of inflation.
Preparing for inflation involves adding these types of “anti-inflation” assets to your portfolio. This is an act of diversifying your portfolio, to ensure it still can thrive despite market fluctuations.
Assets that are considered hedges against inflation include:
- Commodities, a term that includes oil, grain, electricity, precious metals, and natural gas
- Real estate investment trusts (REITs)
- Real estate income
Your steadier, lower-return investments will take a hit against inflation, because you need higher returns to balance the percentage difference.
Real estate and inflation pair beautifully, because property values and rental income rise along with inflation, while you still retain a stable investment option.
However, you don’t need to be committed to investing in actual properties, becoming a landlord, collecting rent, dealing with tenants, or other responsibilities.
When it comes to real estate investments, you can opt for a more passive approach.
How to hedge against inflation with real estate
If investing in real estate has never appealed to you because you have no interest in being a landlord or performing maintenance and repairs, you fortunately have other options.
Investing in real estate is an excellent way to diversify your portfolio for many reasons, including stable returns, the freedom to choose the property type, and the hands-off approach.
Property types might include:
- Single family
- Multi family
- Owner-occupied consumer or business purpose
- Non-owner-occupied consumer or business purpose
How exactly do you invest in real estate without purchasing an actual property? You can invest in real estate secured notes.
What are real estate secured notes?
A real estate secured note is essentially the remaining debt a borrower is paying that is secured by a property.
When an investor purchases these notes, they take over the role of the lender and collect the borrower’s principal and interest rate payments.
As the investor, you aren’t purchasing the actual property, just providing debt that’s secured by that property.
How is investing in real estate more secure than other investments?
Quality real estate secured notes from a reputable source allow investors to passively invest while gaining high yields.
This is a lucrative alternative to traditional fixed-income investments, because you have the stability of a fixed-income investment paired with the high yields you would expect from riskier investments.
When the real estate secured notes have the protection of a reputable funding group, this is even better. You can be sure these notes have undergone several steps through expert eyes.
Investing in stocks or bonds, on the other hand, often can only provide one or the other: stability or higher yields. Real estate secured notes can give you both.
How do I purchase real estate secured notes?
The best way to invest in real estate secured notes is to work with a funding group that specializes in private money lending.
In the last decade, Marquee Funding Group has successfully originated over 1,700 loans totaling more than $1 billion. Private lending has become a staple in the financial services industry.
Marquee offers private money loans in both the consumer and commercial marketplace, which provides investors with a diverse portfolio of real estate secured notes.
Marquee Capital Fund 1 is designed to provide investors protection through:
- Prudent underwriting
- Diversification via a pool of mortgage-backed securities
- Investing in a wide array of mortgage products
Marquee’s licensed professionals screen and underwrite loans with specific emphasis on principal and yield preservation.
Diversify your investments with Marquee Capital Fund 1
If you’re now considering hedging against inflation with real estate secured notes, we need to emphasize the importance of connecting with a group you can trust.
Not all private money lenders are the same. The right group wants to build a real relationship with investors so there’s a solid foundation of trust, respect, and accountability for all current and future deals.
Marquee Funding Group is committed to protecting investors. Each aspect of our loan requests depends on the following:
- Quality of the collateral
- Borrower’s financials and ability to repay
- Verification of title
We offer increased transparency to our investors with portfolio reporting tools, unlike financial institutions.
We also offer the following:
- Target returns 8% to 9%
- Tax-advantaged strategies
- Potential REIT status, which allows investors to deduct 20% of qualified REIT dividends from their income tax return