My guess is that it’s not just buying real estate, it’s borrowing to buy real estate. Your best inflation hedge is long-term debt with a fixed interest rate. That allows you to pay back yesterday’s money with tomorrow inflated money.
That’s exactly what the federal government will do and what they did after WWII. That is the real 5th option. The debt to GDP ratio was higher then than it is now. That crisis was averted through high inflation. Today they have the additional asset of CPI that is a complete lie but keeps social security and welfare payments lower than the real rate of inflation. They are also committed to keeping interest rates low.
My guess is the best real estate is going to be low end housing that is highly durable and secure. Clean it up with a fire hose.
Hope I am not being a pain asking too many questions but would you pay cash for the houses?
The interest at the bank is so minimal. On a $100,000 house the return is about $650 a month after rental expenses (taxes, insurance, repair, etc.).
$100,000 return in 3 years from bank: $7689.06
$100,000 return in 3 years on rental house: $23,400.00
A friend said we should use the $100,000 to get three homes by putting down a down payment and then financing the rest. He said inflation on the three houses will be a far greater return.
I agree with you. Have as much fixed interest debt as you can carry and hoard US gold & silver coins coins. Then when inflation goes wild trade the coins in for cash to pay off your debt with money to spare.
The financial-dictionary name for that policy is "repression". It has been the policy of the United States Government, with few interludes, since 1946. Regulation Q held public passbook savings rates to 5.25% all through the 40's, 50's, and 60's. It was still in effect in 1976. Inflationary bursts in 1946, right after Korea, and during the Vietnam War (1968-9) and again beginning in 1974 and lasting until about 1983, depreciated the value of savings, effectively transferring large chunks of people's balances to the Congress and President Lyndon B. Johnson.
Google "repression" and you'll find the term defined properly.