Burt Polson’s Real Estate in the Napa Valley How to beat infl ation

REAL ESTATE IN THE NAPA VALLEY

How to beat

BURT POLSON burt@acresinfo.com

Ifind many things in our world challenging to comprehend, the number of galaxies in our universe, the wonder of the microscopic world of a cell, and the many factors balancing our nation’s economy.

I am not an economist, professor, or politician, but an investor trying to understand the economy so I can be ahead of the curve. There appear to be many factors seemingly out of my control in today’s economy,

BURT creating our tumultuous ride.

POLSON Provocative as it is, in my opinion, much of what we are experiencing today in our economy is new territory strewn with fear, uncertainty, and doubt.

WHAT CAUSES INFLATION?

Six factors lead to inflation. In my opinion, we are experiencing all six to some degree brought on by the government’s response to the pandemic, labor shortages, supply trade blockages, housing, and monetary policy.

The six textbook causes of inflation are, first, demand-pull inflation, when demand for consumer goods and services out-paces supply, causing an upward trend in prices.

Next is cost-push inflation, when a supply shortage combined with demand allows producers to raise prices. Wages and materials cost increases are often passed down to the consumer.

Third, increasing the money supply without increasing production results in too many dollars chasing too few products.

Fourth, the continual devaluation of the dollar, best represented by the major stock market indicators reaching an all-time high again this week, resulting in a significant overvaluation.

INFLATION

Lastly, rising wages and the additional policies and regulations placed on businesses usually result in increased costs.

WHAT CAN WE DO?

The best way to beat inflation is to invest in assets with inherent value. I prefer real estate, gold, silver, and cryptocurrency.

Real estate to consider would be residential and commercial investment properties, private equity real estate funds, short-term loans secured by real estate, and, yes, even a home.

Gold and silver are a store of value in themselves and a hedge against inflation. Both are good to include in your portfolio.

Cryptocurrency is beyond the scope of this article. The coin or token is either a store of value, or you are buying into a company’s use-case of a token, which can be lucrative though volatile.

Investment real estate such as a single-family home or a commercial building usually has a method to keep up with inflation in the form of annual rent increases.

Additionally, locking in your financing with a fixed-rate loan allows the borrowed dollars to be worth more as inflation grows. Plus, the property in itself increases in value.

Private equity real estate funds can be an easy way to acquire a large investment property with others through a fund offered by a management company.

The management company handles all facets of the investment while you receive a quarterly check.

Your home is not an investment, but by locking in your interest rate, you gain the same advantage as with an investment, plus the home is increasing in value. However, it can be argued that an increase in home value when triggered by inflation, is not an increase in true value.

Burt M. Polson is the CEO of ACRESinfo. com, a commercial real estate brokerage company, and CEO of StoneMarkerInvestments. com, a private equity real estate fund. Call him at (707) 254-8000 or email burt@acresinfo. com and burt@stonemarkerinvestments.com.

Burt M. Polson is the CEO of ACRESinfo. com, a commercial real estate brokerage company, and CEO of StoneMarkerInvestments.com, a private equity real estate fund. Call him at (707) 254-8000 or email burt@acresinfo.com and burt@stonemarkerinvestments.com.