Investing in tokenized properties in times of inflation

Nowadays, the economic situation in Spain and, in general, in most countries, has suffered a recession due to the crisis caused by the pandemic that we have all experienced. To this economic situation must be added the effect of inflation, also called “the invisible tax”, but even knowing what the economic situation is like and, as much as it may surprise, right now we are in a good time to invest in the real estate sector.

In this article we will explain the concept of inflation, reasons to invest during an era like the current one and, of course, the importance of tokenize real estate in this scenario.

What is inflation?

To understand what we mean by the effect of inflation, and also to be able to determine that causes Feeding it is crucial for an investor of any level, from the most novice to the most veteran.

According to the European Central Bank, inflation is a general increase in the prices of goods and services:

“In a market economy, the prices of goods and services are subject to change. Some increase and others decrease. Inflation occurs when there is a general increase in prices, not just of individual items, which results in fewer goods and services being purchased today for every euro than yesterday. That is, inflation reduces the value of the currency over time.”

In order to have a general idea about the evolution of inflation, from Reental we recommend looking at the IPC (Consumer Price Index), which is updated monthly and provides a view of the increase in prices in several sectors. In addition to this, we can use the CPI to calculate the inflation that currently exists:

(Current CPI — Historical CPI)/Current CPI *100

Main causes of inflation

- Price adjustment: When an adjustment is made in prices, even if it is progressively and moderately, this affects the pockets of citizens and increases inflation.

- Supply and demand: If there is a high demand compared to a scarce supply, it can lead to a rise in the price of the good or service, which can affect other goods or services in the market.

- Preventive economic policies: If preventive or contingency monetary policies are not carried out against certain scenarios, certain situations that cause inflation can be negatively managed.

Once we have all this clear, let's see then...

Why invest in real estate during inflation?

Although it seems an unattractive scenario for the investment in real estate The truth is that quite the contrary, so it is advisable to invest in this type of active. This is because real estate is a Astivo Refugio, in this type of asset investors find an opportunity to protect themselves from the loss of purchasing power.

If you have any questions about the opportunities offered by real estate investment in Reental, we invite you to take a look at this paper in which two of our best investors talk about the advantages of investing in tokenized properties, including protection against inflation.

This “protection” is mainly due to minimum volatility that real estate assets have, compared to other markets such as the stock market or investment funds, in other words, the value of the asset is that of the property itself and, taking into account that this does not change, we can assure that capital will be protected from ill-considered monetary policies.

In times of inflation invest in real estate, a home for example, can be a very productive investment. Taking into account that CPI updates also affect rent, the landlord will be able to set a higher rental price and thus obtain more benefits. And not only that, even considering that inflation does not have cyclical stages, but rather it is increasing at the moment, the property will be worth more and more, which will entail a capital gain at the time of sale.

What are the advantages of tokenized properties?

First of all, we must know that one of the keys to making a good real estate investment is to find a property with a good future perspective, especially in terms of its profitability, in the case of Reental the investor should not worry about this aspect, because all our tokenized properties are carefully selected and operated as efficiently as possible.

La Tokenization of real estate is a step further in real estate investment, since at Reental we eliminate all barriers in this type of investment, from the minimum investment to the country of residence. Because of this, we recommend an investment of this type, not only because of the returns it offers, but because we enter the world of DeFi or Decentralized Finance it's a great opportunity for any investor to protect their wealth.

In order not to miss any of the opportunities we present, we recommend that you join our group of Telegram To get to know others Reentels and the whole team. Of course we invite you to take a look at our articles on the blog to continue informing you.

Welcome to the new way of doing finance, welcome to Reental.