Understanding theory is all well and good, but don’t get bogged down with it. Remember it’s just a model, meant to represent the real world. But it never does.
The classic example of failing to heed this is Long-Term Capital Management. So caught up in their fancy model they forgot it was just an approximation. Inflation is no different. A model of why prices go up with some truth, but mostly academic cannon fodder.
Prices and inflation are correlated but basing a strategy on it is a fool’s errand. As for the real world, real estate will go up, down, and sideways. Not up, up, and up like inflation. Recent times have proven that.
With real estate it’s always the fundamentals that win the day. Buying a house where the mortgage payment is twice what you can rent it for is silly. If you have true positive cash flow you will do just fine. So know the economic theory, toss it overboard, and focus on fundamentals. The rest will take care of itself.
Hamilton Property Management Company - Del Franco Inc.