Invest in

Real Estate for

Inflationary Times
7 Tips for Success
A MOTLEY FOOL SPECIAL REPORT
 Invest in Real Estate for Inflationary
Times: 7 Tips for Success
Inflation is heating up, and it’s important to take steps to minimize these
consequences and prepare for the future. As an investor, now is the time to take
REITs into consideration when picking alternative stocks for your portfolio.

One way to do this is by investing in real estate. With real estate as an inflation
hedge, you can avoid the risk of losing money on your assets during periods of
inflation. Here are 7 tips for investing in real estate during inflationary times.

What is a REIT?
Ask anyone and they’ll tell you that buying a house was one of their most
memorable and proud moments.

The same should be said for understanding and creating a tactical REIT investing
strategy. Here’s how it works. When you buy an investment property, you’re able
to rent it out and make money from it, or use the equity to fund other purchases
or even retirement down the line. Another (and often forgotten) way to grow your
money is by purchasing REITs. REIT stands for Real Estate Investment Trusts.
They’re a type of company that invests in real estate, which means they take on
the risk of owning real estate properties and then make money by renting it out
or reselling it. Many REITs are publicly traded companies, and they’re one of the
most popular types of investments today. Think of them as stocks in real-estate
businesses.

Most REITs own and operate income-producing properties and pass the vast
majority of their taxable income and tax liability on to shareholders. They’re a great
vehicle for tapping into the profit potential of all kinds of real estate and can often
hedge against inflation by raising the rent on their properties, especially if they
have a tenant base that’s pretty inflation-resistant itself.

REITs can offer protection from inflation, which is why they’re a good investment.
To invest in a REIT, you need to understand how they work, how they’re different
from other types of investments, and what makes them an attractive buy.

1 Invest in Real Estate for Inflationary Times: 7 Tips for Success

 Why invest in REITs for inflation
protection?
If you’re preparing for a bumpy couple of months… investing in real estate is
a smart move. Real estate is an excellent investment because it’s a long-term
hold. This means that your money will not be tied up for months or years. It
also means that with real estate investments, you don’t have to worry about
market fluctuations or short-term fluctuations in the economy. With real estate
investments, you can expect steady returns and predictable growth over time.

Real estate can provide a solid return on investment for inflationary times like
today. For those who are concerned about inflation, real estate is one of the safest
investments to make. With real estate as an inflation hedge, you can avoid the risk
of losing money on your assets during periods of inflation.

What makes a good real estate

investment?
There are certain factors that make a good real estate investment. For example,
buying an office building in a good location will have a higher return than buying a
residential property. However, not all areas of the country are suitable for investing
in real estate. If you’re interested in investing in real estate, you should research
the local economy and neighborhood before putting your money into investments.

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2 Invest in Real Estate for Inflationary Times: 7 Tips for Success

 Where to find REITs
First, you’ll want to find a REIT. You can find REIT by going to an online search
engine and using the keywords “real estate investment trust,” or “REIT.”

Second, you should find a REIT that has the best deal for you. You need to compare
the different fees associated with each fund, as well as the performance of each
fund. If one REIT is performing better than others in your chosen industry, then it
may be worth investing in that particular one.

Finally, whether you invest in a single-family home, multi-family home, commercial

property, or even land and develop on it further down the line, it’s important to
diversify your investments. This will help protect against inflation and fluctuating
values of your investments. It also helps ensure that if one area of real estate goes
down in value quickly due to oversupply or market conditions like a recession or
bubble bursting, then at least another area of real estate is doing well.

How to research which cities are the

best investments?
The first step in investing in real estate is to research which cities are the best
investments. There are a number of tools to help you do this, including websites
like the National Association of Realtors (NAR), sites like Zillow or Nareit. And of
course, inside Motley Fool Millionacres.

Another way to find information on the best cities is by talking to people who know
more about them than you do. Ask them what they think are the top cities and
why they believe that’s right for you. Take into account all of their advice, even if it
doesn’t seem like it may be accurate for your personal needs.

Consider what your timeline is before investing in property. If you’re not sure
when you’ll need the money, or if you don’t have time for long-term planning, it
might be better to invest in something else so that you’re not left without options
later on.

3 Invest in Real Estate for Inflationary Times: 7 Tips for Success

 How to calculate your return on
investment?
First, calculate the inflation rate. This is the percentage change in prices over a
year. For example, if prices rose 3 percent per year and you invested $10,000 in real
estate, your purchase would be worth around $11,300 after one year.

Next, calculate the return on investment (ROI). This is what you expect to gain
back from your investment during the time period. For example, if you invest
$10,000 in real estate for five years and collect an ROI of 10 percent each year, your
investment would be worth around $50,000 after five years.

If variables such as real estate appreciation or inflation change during the investing
time period, then recalculate your ROI using those new variables.

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When to buy a REIT?

When to invest in a REIT? The best time to invest in a REIT is when the market
is at an all-time low. Do not worry about buying into a stock or any other type of
investment right now. Just focus on acquiring real estate that will allow you to
benefit from future inflation. When the market is down and the prices are low, it’s
the perfect time to buy up properties and make your money work for you.

4 Invest in Real Estate for Inflationary Times: 7 Tips for Success

 7 tips for successful REIT investing

1
Know the difference between public
and private REITs
Private REITs typically require large investments and are the province of well-
heeled individual investors and the firms they use for this kind of play. Then, there
are public non-traded REITs that can be bought and sold through brokers and
online crowdfunding portals. And then, there are more than 200 publicly traded,
highly liquid REITs on the major stock exchanges.

2
There are two major types of
publicly traded REITs
The publicly traded REIT world can be divided into equity REITs and mortgage
REITs (mREITs). Equity REITs own and/or operate the real estate that produces
the income shared with shareholders. mREITs make, buy, and sell mortgages and
mortgage-backed securities. There also are REITs that do combinations of both.

3
Rental and collections rates are
important to know
Retail wasn’t alone in feeling the pandemic pain. Office and senior housing REITs
were also hit by the shutdowns and are seeing uneven recoveries. Rent deferrals
and forgiveness, combined with companies that just went under or jumped ship,
dramatically lowered the take.

Look for rent-paid percentages of at least 90% in the REITs you’re considering.
Raising the rent is something to consider, too. Industrial REITs have been able to
do that at a healthy clip. So are a lot of residential REITs. Retail and traditional
office? Not so much.

5 Invest in Real Estate for Inflationary Times: 7 Tips for Success

 4
REITs invest in many sectors, sometimes several
REITs tend to specialize in a single real estate segment, some with other types
mixed in depending on the opportunity presented. The basic types you’ll see
include retail, office, industrial, residential, healthcare, hospitality, and timberland.
Subsets of those include multifamily, data centers, infrastructure (including mobile
towers), senior living, hotels and motels, life sciences, and more.

There are a lot of labels, and a lot of REITs have mixtures of property types. Office
and retail, for example.

5
Their investments could be local, nationwide,
or even global
REIT portfolios can be very regionally or even locally focused. There’s one, for
example, that owns one of the Big Apple’s most iconic properties and other NYC
metro office properties. Appropriately enough, it’s called Empire State Realty
Trust (NYSE:ESRT), and it generates a nice chunk of its income just from the
famous observatory atop its namesake.

Then there’s American Tower (NYSE:AMT), the largest of all REITs and owner/
operator of more than 185,000 mobile towers and much more around the world.

6
REITs can be found in many thriving sectors
Currently, industrial real estate -- especially warehouses -- has been growing in
importance alongside the growth of e-commerce, and global supply chain issues
have just made this sector hotter.

There are many flavors here, including coastal market specialist Terreno
Realty (NYSE: TRNO) and Duke Realty (NYSE: DRE), which focuses on 20
major logistics markets across the land. Depending on what’s happening among
industries and the economy, there can be others.

6 Invest in Real Estate for Inflationary Times: 7 Tips for Success

 7
Their occupancy rates can
provide great insight as well
Empty spaces make for empty coffers. That was especially the case for retail REITs
whose shopping centers and malls were hit by store closings that worsened the
shift from brick-and-mortar shopping to buying online that escalated sharply
during the pandemic.

Some went bankrupt, and even the biggest and strongest -- including companies
like mall giant Simon Property Group (NYSE:SPG) -- struggled before their
fortunes turned. Simon was big enough, in fact, to buy some of its own tenants, like
JCPenney. That’s something to look for, too.

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Inflationary times like this also tend to offer up a more-than-fair share of
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Conclusion
Investing in real estate for inflationary times can be a smart and even lucrative
move. REITs come with tax advantages and are easy to trade, so they are an
attractive option for investors looking for a way to diversify their portfolios.

If you take the time to research which REITs are the best investments, apply
expert-approved tips, and move forward with confidence, you might be able to find
success.

If you have any questions about real estate investing or are looking for a specific
city to invest in, reach out to the Millionacres team. They can help you figure out
which cities are best for your investment goals and give you insight into why Real
Estate Winners, Trailblazers, or Mogul may be the right choice for you!

7 Invest in Real Estate for Inflationary Times: 7 Tips for Success