Author: Beck-Reit Commercial Real Estate This post originally appeared on Austin Commercial Real Estate Insight and is republished with permission. Find out how to blog with us on theBrokerList.
I am nothing if not a pragmatist. I like to look at everything from a “Boots On the Ground” perspective. Yes, it is fun to speculate, and a great deal of my day is speculating, but I always base it on HISTORY & TODAY.
See, I saw inflation creeping up in April 2021, then it took off into full sprint by the summer. The Federal Reserve kept saying inflation was in-line historically, everything was fine but then by June they announced that they would increase interest rates twice by the end of 2023
Keep It Simple – I have a basic definition of Inflation – “Inflation is when your Dollar is worth less today than yesterday”. That has been true since April.
So many factors are pumping up inflation. Pandemic, Shortage of Supplies, Supply Chain, Demand, Shift in Demand of Product Types, Worker Shortages.
How about some BOOTS ON THE GROUND examples!
Red Wing Boots:
Russ Becker purchases a pair of Red Wing Boots every 2 years. He has been doing this since 1982 :
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Dynafelx, steel toe, includes inserts. For the last 10 years, maybe longer the price has been steady at $189
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Last week he bought a new pair – $379
These are not luxury items, they are critical for construction workers. We have 24 employees that also buy these boots every 18-24 months. Boots wear out when working 50 hour weeks on Highways and Bridges. The motto at Beck-Reit & Sons – “Safety First”. DOUBLED IN PRICE
Dodge Ram Crew Pickups:
We have 9 in our fleet and generally put 40,000 – 50,000 miles per year on each. Therefore we rotate out at about 100,000 miles which means we buy several new ones a year. Coming out of the pandemic we are making our purchases for 2021.
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Dodge Ram 3500 Cab & Chais with TM Utility Bed
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Was $60,000 2020 – $80,000 2 weeks ago. AND BACK ORDERED
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$8,000 for the bed in 2020, $12,000 2021
Retail Gas Prices:
Let’s take a look at something very basic that affects us all :
“Retail gas prices – averaging $3.38 per gallon on Oct. 25 – have risen roughly 50% in 2021, surpassing pre-pandemic levels. Prices at the pump are increasing as global oil prices surge 70% this year due in part to a rebound in demand from pandemic lows.” Per CNBC
DeLea Becker’s most recent contribution to the Austin Business Journal went live in August. It is good to see the Economist at Federal Government are starting to see and report what many (ME) have been shouting for 8 months. “The Labor Department reported Wednesday that consumer prices were 6.2% higher in October than a year ago. That’s the sharpest increase since November of 1990.” You should be wondering. “Does inflation affect investing?” It does & e we have inflation investing advice for you.
Inflation: The Silent Killer and our Best Bet Against It
In the article, DeLea shares where and why she sees inflation creeping into the market, how inflation interacts with typical investment vehicles, and how Commercial Real Estate is one of the best places to safeguard wealth against it.
I don’t believe it is fair to drop a problem/issue on people, the world, etc, and walk away. We have to bring a solution. The simple truth is = there is money to be made in a market going up and a market going down. So, lets’ face we have inflation, Inflation and Investing go hand in hand and work with it. That is what I have been doing. Here is a highlight from the Austin Business Journal
Advice for Investors
Major corporations such as Tesla, Google, Facebook, Oracle, Apple, and Samsung have bet their futures on Austin by building headquarters or expanding here in Austin. Thousands of their relocated employees are arriving, driving the current fevered demand for real estate. The growth is staggering, and if you think real estate demand is strong now, the boom has just begun. I expect property prices and associated rents to continue climbing for the foreseeable future as people and businesses continue relocating to central Texas. Therefore, it’s my opinion that buying property today is one of the best strategies for beating inflation tomorrow.
If you own your own business, I recommend working toward purchasing your facility as quickly as possible to start building equity. If you’re an investor, get with a commercial broker to start looking at the options available to you. If purchasing a property on your own isn’t financially viable, that’s OK! You can join a group of investors as a silent partner in what’s known as syndication. Here, your investment will be packaged with other investors for partial ownership of the income-producing asset.
If you own your own business, I recommend working toward purchasing your facility as quickly as possible to start building equity. Click To Tweet
Regardless of your financial position, I recommend taking some time to consider a commercial real estate investment. It is a powerful and robust tool to build long-term wealth.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation. ~ DeLea Becker
