In this YouTube video, Christian Osgood explains how the current high inflation environment (around 8.5%) is the result of massive government money printing during COVID and subsequent stimulus measures, which have devalued the dollar. He describes how inflation drives up interest rates as the Federal Reserve attempts to curb price growth, raising borrowing costs from historic lows (~3%) to the 5.5‑6.5% range. Osgood argues that despite higher rates, investors can still profit by leveraging debt because the real value of that debt erodes with inflation, creating a spread similar to the government’s own strategy. He outlines how inflation also raises landlord expenses (materials, gas, repairs) but these costs are passed to tenants, leading to higher rents and, consequently, higher property valuations—especially when rates eventually decline. The video positions multifamily real estate as a natural hedge against inflation and encourages viewers to responsibly use debt to enter the market, noting that current rates are modest compared to past double‑digit levels. Osgood promotes his website, The Multifamily Strategy, and a related course for deeper learning, and reminds viewers to subscribe for future content.
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Hello YouTube, it's Christian. Cody is still on vacation and this is a Tuesday. Now, if you follow this channel, which you should, by the way, if you don't, click it now, turn on the notifications. We post on Monday, Wednesday, and Friday. Monday are our real estate rules. Wednesday is Whiteboard Wednesday where we answer your 5 questions, and Friday is totally freeform. We talk about whatever we want, which is why Fridays are my favorite. However, I keep getting the question that I need to address. What are our thoughts on inflation? How does that affect multifamily investors? I'm going to go into that today. Here we go. So right now inflation is sitting at around 8.5%. The government likes that to be closer to 2%. Why did this happen? Well, the government printed an absolute boatload of money at the beginning and middle of COVID They continue to do this every time they run into any problems. They print more money. The problem is money is not backed by anything anymore. The only constraint on money is the amount in circulation. So when they wrote stimulus checks and all these other programs, they've pumped a whole bunch of money into the economy. People have spent this money, and now that money is out there. When there is more money available, dollars are now worth less. We have exaggerated the situation by continuing to print money past all of our problems. Now, the US government uses a ton of debt. The only way they can meet their obligations is to continue to print, which is why the value of money consistently goes down. That said, they try to target that 2% inflation— within 2% is the guidance that they like to aim for. Right now, we're in a very high inflation period. What does this mean for real estate values? Well, if the dollars are worth less and just assume that supply and demand are even. Now I know those go in cycles. There's more or less supply at certain times, demand fluctuates, but all things considered even, if you're measuring a house in US dollars and US dollars are worth less and demand is the same, price has to increase. It is worth more money when money is worth less. Now, the inflation has caused interest rates to hike, and the Fed is intentionally doing this. So with interest rates going up, money gets more expensive to borrow. Right now we're closer to 5.5%, 6.5% is a pretty typical window, whereas a few years ago you could pick up properties at 3% interest. Cost of debt is more expensive. But when money is losing value at 8.5%, you're still going to make a spread utilizing debt. And this is what the government does. You are playing the same game that the government and the banks play. You are just making a spread on the devaluation of money. It's that simple. The other thing we're going to see with inflation is costs do go up. Cost of gas is going up. Cost of materials, cost to build new inventory, cost to do repairs. These are landlord costs that have to at some point be passed on to the tenants, which means rents in periods like this are going to go up. As we see rents go higher, properties will be worth more, especially when the interest rates come back down. You're going to have properties with better financials, just higher rental incomes. And if we can see interest rates drop again, your values are just going to be higher and worth more on the investment front. If you are looking to get into the game, I know there's a lot of uncertainty out there and there are a lot of the gurus saying, hey, the crash is coming, the world's falling apart, interest rates are back to 6%. That's not that high. We've seen them much, much higher in the double digits before. We've just been in a very, very, very low interest environment. So if you are worried about inflation, it's probably because you're not in real estate right now. Utilize responsibly. Utilize debt as a tool. The government is currently devaluing debt at an accelerated rate. As a landlord, real estate is a wonderful hedge against inflation. So if you're not in the game yet, now is a wonderful time to get started. If you want to learn how, we share even more on our website, The Multifamily Strategy. We have a whole course on this. At the very least, follow this YouTube channel. Like, subscribe, and I will see you guys tomorrow for Whiteboard Wednesday.
