Multifamily Real Estate As A Hedge Against Inflation

Inflation, like a boa constrictor, is squeezing us most noticeably at the grocery store and at the pump. Beyond tightening our budget, staying patient until prices eventually decline, and growing more passive income, what else can we do?

Today's post is sponsored by RealtyMogul, who writes how multifamily real estate may be used as a hedge against inflation.

Inflation is a double-edged sword for real estate. On the one hand, inflation acts as a tailwind for real estate prices and rents. On the other hand, inflation that is too high for too long will force borrowing costs to rise, thereby, cooling down real estate prices.

When inflation finally turns, appetite for risk assets will likely reappear. Therefore, while we wait, it's good to get educated about current and potential opportunities.

Recent Inflation Data Points

Inflation is a loss of purchasing power over time. The same goods and services you can buy for a dollar today may cost you more dollars in the future. And right now in 2Q2022, we are dealing with the highest inflation since 1981.[1] See charts below.

real estate as a hedge against inflation

To put this into perspective, here are a few examples from the Consumer Price Index.[2] These inflation data points show how this loss of purchasing power is impacting day-to-day expenses today compared to May 2021:

  • Groceries are up almost 12%
  • Dining out is 7.4% more expensive
  • Gasoline costs 48.7% more
  • Used cars and trucks are up 16.1%
  • Public transportation costs like bus, train and taxi fares are up 7.9%
Inflation figures CPI 2022
Source: US Bureau of Labor Statistics, CPI accessed 6/12/22

High Inflation And The Stock Market

In times of high inflation, stock market returns are usually down. In a paper entitled, The Rate Of Return On Everything, published in 2019, it charts the total rates of return for all major asset classes going all the way back to 1870. The researchers found that higher inflation has generally correlated with lower equity valuations, resulting in falling stock prices.[3]

We’re seeing this now. Year-to-date, the S&P 500 is down roughly 20%. In addition, we are seeing increased volatility. One out of every six trading days has closed with a gain or loss of 2% or more for the S&P 500.[4]

And it makes sense – investors are nervous by higher inflation. A recent survey by UBS Global Wealth Management found that almost half of high net worth individuals are highly concerned about a market downturn.[5]

Investors are trying to figure out where the economy will go next. Feeling uneasy, many are starting to stockpile cash and look for other asset classes to invest in.

But what type of investments might provide a hedge against high inflation or even perform better in periods of high inflation?

Multifamily Real Estate As A Hedge Against Inflation

Jilliene Hellman, CEO of RealtyMogul, shares her thoughts with us below. RealtyMogul is a real estate investing platform with members who have collectively invested over $915 million into more than $5.5 billion of real estate nationwide, including 26,000+ apartment units.[6]

With that kind of volume, it's intriguing to hear whether or not she things it still makes sense to invest in multifamily real estate during times like this.

Jilliene recently explained that during times of high inflation, multifamily cash flow and valuations can potentially increase. And this in turn can be beneficial to multifamily investors. Here’s why:

1) Increased demand for multifamily, but not enough supply

During times of high inflation, the cost of construction (materials and labor) typically increases. As a result, this makes building new housing units more expensive. This increases the potential for some developers to postpone building. And these delays can decrease the level of new supply and also make new homes more expensive.

Also, rising interest rates can make mortgages more expensive. The average new mortgage payment has gone up nearly 40% year-over-year.[7] But it's important to realize that the Fed doesn't control mortgage rates, the bond market does.

For the average homebuyer, high construction costs and rising interest rates can lead to more expensive mortgage payments. This can deter potential homebuyers from buying property and keeps more people in the rental market.

2) Rising rents pushed up by rising inflation

An increase in demand for multifamily real estate can potentially lead to significant rent growth in many markets. You have increased demand from baby boomers downsizing and increased demand from workforce housing.

According to, nationwide rent prices have continued their year-over-year climb. For example, rent for a one-bedroom apartment is up an average of 26.5%, while two-bedroom rents are up 25.7%.

This is being driven by a continued increase in demand for housing due to demographic shifts including more students graduating college. The continued trend of rising wages, which puts more dollars into the pockets of renters, also increases their ability to pay higher rents.

Rising Rents pushed by rising inflation - real estate acts as a hedge against inflation

3) Multifamily leases are short enough to ride or hedge against inflation

Multifamily leases are generally no longer than 12 months long. As leases expire, landlords can attempt to increase rents to existing or new tenants by at least as much as the annual rate of inflation. 

Rising rents help to offset rising operating expenses and can potentially lead to stable or increased cash flow and appreciation. This can potentially result in greater returns for investors and a potential hedge against inflation.

Challenges Of Finding Good Investment Opportunities

Despite inflation's benefits to multifamily investors, high inflation and a rising interest rate environment also has its challenges.

Many real estate companies pay for an interest rate cap on their floating mortgage interest rate. Given the rising interest rates, these costs have increased significantly and become a material cost item which could reduce returns to investors.

Separately, increased interest expenses can also squeeze returns and reduce cash available for distribution to investors. The hedge against inflation is tougher when you've got to borrow at higher rates.

There is also the additional risk of fire sales of assets with sponsors who did not factor a rising interest rate environment into their pro-formas. They may look to exit rather than hold assets through this period. Personally, I an holding onto my rental properties when inflation is high.

Be sure to do your due diligence before jumping into a multifamily real estate deal if your goal is to hedge against inflation. If you are an equity real estate investor, it's important to understand the capital stack as well.

Invest Passively In Real Estate And Hedge

Historically, investing in real estate was only possible with a sizable amount of money and a time commitment to property management. But the creation of real estate crowdfunding has enabled investors to gain exposure to real estate and potentially earn passive income without the hassles.

Through the RealtyMogul platform, you can get access to a diverse range of commercial real estate deals in markets across the country. Their offerings include multifamily, office, retail, industrial, self-storage, and more.

Each deal also includes transparent, straightforward financials to help you make informed decisions in pursuit of your financial goals. 

RealtyMogul also has two non-traded Real Estate Investment Trusts (REITs) available to investors. These REITs provide access to a whole portfolio of professionally managed properties.

Curious to learn more? Click here to see the latest investment opportunities on the platform. 






[6] Since inception through May 31, 2022.


This article is for informational purposes only. It should not be regarded as a recommendation, an offer to sell, or a solicitation of an offer to buy any security. Any investment information contained herein has been secured from sources RealtyMogul believes are reliable. But we make no representations or warranties as to the accuracy of such information and accept no liability therefor. No part of this article is intended to be binding on RealtyMogul or to supersede any issuer offering materials.

Investment opportunities on the RealtyMogul Platform are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. Past performance is not necessarily indicative of future results. For additional information on risks and disclosures visit

11 thoughts on “Multifamily Real Estate As A Hedge Against Inflation”

  1. If apartments are such a great INVESTMENT why is EQR the largest apartment Reit in USA down over 20% ytd. Please explain

    1. Inflation, higher mortgage rates, and a likely slowdown in the economy. See introduction.

      As a real estate investor, you have to go with the cycles. If you’re focused on cash flow and don’t plan to sell, then the price movements are less important. Public rates are also much more volatile them private funds. Which is one of the reasons why I like to invest in private funds. I have enough volatility with my stock portfolio. Related post:

      How are you investing? I’m personally trying to get funding to take advantage of opportunities.

      1. I worry about real estate investing. Are these properties leveraged. To get principle back how do they sell these properties with growing interest rates and borrowing costs. I had $350000 invested in 10 real estate limited partnerships throughout the country in the 80’s. All went bankrupt and I got zero dollars back.

        1. Oh wow! That’s pretty unlucky. Before you make any investment, it’s important to thoroughly research the capital stack between equity and dad and know where you are in the stack.

          Once you lost your money, how did you invest going forward? Did it make you much more conservative? I only started investing in the 1990s. So I would love more perspective from you. Thanks.

          1. My wife said we were lucky to lose money in our early investment years. After that I investing in municipal bonds and cds and now some 5 year fixed annuities . Munis pay too little now. After 40 years of saving much of our income I could retire at 65 and have plenty of money to live a great retirement life. Living a conservative lifestyle and conservative investing has worked for me. Getting 60 k from social security helps too.

      2. With stagflation and all risk assets in decline and possibility of an extended bear market will real estate be the the next asset class to fall as people panic. How high will the feds have to raise interest rates going forward to get their target inflation down to2 to 3 percent. Holding onto principle is my game plan now. More interested in return of principle right now verses return of principle.

  2. Can you compare Realty Mogul, Crowdstreet and Fundrise? When to use each or are they comparable?

  3. Man those are some crazy figures from the CPI. I knew inflation was bad but didn’t realize it’s actually that bad. Man. No wonder my credit card bills (mostly food and gas) are so much higher than 1-2 years ago.

    I have one rental property that I co-manage that hasn’t been the best investment. But I have been able to raise rents during the last turnover. I plan to again later this year when my current tenants move out and use that extra cash to pay for some renovations and repairs I’ve been putting off.

  4. Multifamily property has really been a beneficiary of rising inflation. I have been able to increase rents by on average 8% a year over the past two years for most of my units.

    I could probably raise rents by 12% or more, but I wanna keep my tenants.

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