Crypto vs Central Bank Digital Currencies: Who Wins?

Central Bank Digital Currencies (CBDCs) are a new entrant in the world of finance, even newer than cryptocurrencies. They are a type of currency promising faster transaction speeds at a lower cost than traditional currency.

At their core, CBDCs are digital currencies that operate on the blockchain, like cryptos. So, are CBDCs a plot by Central Banks to replace crypto, or are they designed to work alongside one another?

This article examines CBDCs and cryptocurrencies and their use cases and investment options for physicians.

The Concept of CBDCs

The most common medium of exchange we are conversant with is fiat currency, typically in the form of banknotes and coins. A CBDC is the digital currency equivalent of fiat currency—it has all the functionality and utility of fiat currency but in a digital form.

97% of the money currently in circulation is in digital format, mostly from checking deposits. However, CBDC differs from normal digital cash because it is a direct liability to the Central Bank, like coins and paper money.

CBDCs operate like cryptocurrency—users utilize digital wallets for transactions, which are recorded in a blockchain database. Unlike cryptos, CBDCs are managed by Central Banks. This is aimed at enabling the government to manage money more effectively.

They eliminate the threat of private entities controlling a country’s economy. For instance, Alipay and WeChat Pay account for 94% of all Chinese online transactions, which could lead to anticompetitive tendencies.

The leading CBDC, e-CNY, digitalizes some of China’s physical coins and notes that are already in circulation. e-CNY allows users to make e-yuan payments even in offline stores or without a charged phone. Like fiat currency, CBDC systems don’t require intermediaries to process payments, boosting efficiency and lowering costs.

CBDCs offer the same convenience as cryptos, and since they are backed by the Central Bank, they are more trusted. Its inherent properties have led to more widespread research and adoption of CBDCs.

Rise of CBDC usage

Rise of CBDC usage


Benefits of CBDCs

1. Increased stability

Cryptos are highly volatile since they are subject to market sentiment, and there is no regulatory body monitoring their performance. On the other hand, CBDCs have a central bank monitoring and regulating them, ensuring price stability.

For instance, when the US faced 40-year high inflation rates of 9.1% in June 2022, and the dollar index hit 20-year highs of 112.12 in September 2022, the Federal Reserve (The Fed) raised interest rates by 5.25% points between 2022 and 2023 in a bid to stabilize the dollar.

These measures have seen interest rates cool down to 3.36% in April 2024, although it is still not at the Fed’s target rate of 2%. The dollar index has since lowered to 104.43 in April 2024. A central bank can do the same for a CBDC since it controls it.

Cryptocurrencies have no entity controlling them, so their prices can rise and fall seemingly on a whim. For example, Bitcoin’s price hit $69,000 on November 10. 2021. By December 31, 2021, it was trading at $46,208. In January 2023, its price was $16,530, but it rose to $42,258 by the close of that year.

Bitcoin’s price swings

Bitcoin’s price swings


2. Easier integration with traditional finance

Central Banks have designed CBDCs to operate seamlessly with the available cryptocurrencies and blockchains, which could enhance interoperability between digital and traditional finance systems.

3. Legitimacy

Cryptocurrencies are plagued by legitimacy concerns since no one controls the blockchains in which they operate. CBDCs are a cure for this as central banks regulate them, encouraging more people to invest in them as there is a familiar entity to ensure fairness in dealings.

A poll covering 13 countries found that most respondents prefer digital currencies issued by their central banks rather than private entities (by 13 percentage points). They also inferred that safety and privacy are the most essential features of a digital currency, even more important than convenience. 

4. Regulatory compliance

Since CBDCs are developed by Central Banks, they are more likely to adhere to regulations. The banks give clear guidelines on their usage, eliminating uncertainty.

Regulators are still coming to terms with crypto, so they keep on enacting laws that could be detrimental to their development and operations.

5. No need for a bank account

6% of US adults are still unbanked and often rely on costly alternatives like money orders and payday loans. CBDC eliminates the need for a bank account to transact. All you need is a smartphone and a smart wallet to access your cash and transact at much lower fees.


1. Centralized

CBDCs are subject to government control, unlike decentralized cryptocurrencies. The disadvantages of centralization include:

  • Vulnerability to cyberattacks and hacking. The servers are in a centralized platform under the control of a single entity, so the information could be easily accessed once breached. Crypto, on the other hand, is stored in several decentralized ledgers under no one’s control, and the data is immutable. Any unauthorized changes to the data are rejected.
  • Lack of transparency. The Bank decides what information on transactions it will disclose, unlike cryptos.  
  • Manipulation by the Central Bank. Centralized monetary systems can be controlled by a central bank. They can make decisions in their best interests instead of letting market forces dictate pricing, as happens with cryptocurrencies.

2. Privacy concerns

They also come with the baggage of diminished privacy, which is hard-baked into cryptocurrencies. Moreover, CBDCs offer none of the finality or privacy protection of hard cash. The Bank does not know what dollar bill a person has. However, it can access information on the users of each CBDC and use that information as it deems fit.

How Can Physicians Invest in CBDCs?

CBDCs operate like cryptocurrencies, so most of the investment avenues applicable to crypto will likely work on them. Although CBDCs have limited investment opportunities since they are a relatively new concept, they present prospects for direct and indirect investments.

China launched e-CNY in January 2022 in 11 pilot areas, with special emphasis on trials in venues used in the Beijing Winter Olympics in February and March. Following its success. The central Bank has now run test pilots in 23 cities.

As of October 2021, 123 million individual and 9.2 million corporate wallets were operational, with a cumulative transaction value of about $8.8 billion. Although they have not released official figures, Central Bank officials estimate that by March 1, 2022, 261 million wallets were in operation, with transactions hitting approximately $14 billion.

Since then, the central bank governor says transactions grew to $249.33 billion by the end of June 2023, up from about $13.8 billion in August 2022. This growth was spurred by 950 million transactions. Interestingly, this only accounts for 0.16% of all China’s cash in circulation, so there’s still plenty of room for growth.

By buying shares in companies or projects that facilitate payment, growth, or asset management solutions for CBDCs, an investor could see their investment grow with mass adoption. For example, Project Cedar is developing a platform enabling cross-settlement of wholesale cross-border multi-currency payments.

Alternatively, you could invest in an organization that could potentially utilize the CBDCs. These include banks that have expressed an interest in adopting the new tech. FinTechs involved in digital payments are also likely to use it more often once it gains widespread usage.

Like crypto, an emerging investment class for CBDCs is exchange-traded funds (ETFs). These will track the price performance of the CBDCs, allowing investors to speculate on the price movements of foreign exchange and currency markets.

Like FX trading, users can buy and hold on to a CBDC in the hope that it will increase in value. If it does, the investor can sell it for a profit.

Though difficult, the key is to monitor trends, developments, and financial news to find the opportune time to make the investments.

What are Cryptocurrencies?

Cryptos are also digital currencies whose transactions are recorded, verified, stored, and run on a decentralized system of distributed public ledger called the blockchain. Before any transaction is recorded, it must be agreed upon by the nodes that maintain the ledger. Cryptos facilitate secure digital payments and can also be used for investing.

How Physicians Can Use Crypto to Manage Their Finances

Physicians can utilize crypto in several ways:

1. Savings for the practice

One of the underrated uses of crypto or the blockchain is its ability to minimize costs since no intermediaries are used to transfer the funds.

For example, the World Food Program implemented the Building Blocks blockchain pilot program in Jordan in 2017, which enabled the organization to save $2.4 million in reduced administrative and transaction costs.

2. Streamline operations

The healthcare industry faces widespread inefficiencies, with experts estimating it loses 25% in wasteful spending annually. Inefficiencies in the supply chain also add up to 50% in operational costs.

The blockchain can replace and hasten the manual inventory management process, which is error-prone and requires frequent upkeep. Using the blockchain might improve the tracing of supplies, and smart contracts can trigger supply chain operations like ordering supplies, reducing operation time and reliance on third-party verification.

Streamlining operations is such a crucial part of doing business that a survey shows that 70% of retail and manufacturing businesses have started shifting to digital supply chain operations.  

3. Yield farming

If you have some cash lying in a low-interest bank account and have the appetite for a high-risk high-return venture, try yield farming.

It is a form of investing otherwise known as liquidity mining, where you can lend your crypto assets or set a smart contract that automatically moves your crypto holdings to a blockchain network paying the highest interest. Yield farms can offer annual percentage yields (APY) of over 200% compared to Bank APY’s of 1-4%.

Since crypto prices are highly volatile, prone to interest rate fluctuations, and smart contracts can fail, this is a risky venture. Token pools like Venus, Uniswap (V3), Curve Finance, and PancakeSwap (V2) offer reasonable returns.

4. Staking crypto

Another passive way to earn some returns is to lock your crypto assets on a certain blockchain and agree not to sell or trade it (staking). For example, about 27% of all the Ethereum is staked as of May 30, 2024.

Biggest cryptocurrencies based on total staked value as of December 5, 2023

Biggest cryptocurrencies based on total staked value as of December 5, 2023.


You will receive interest or rewards in return. Data from Statista shows rewards can go as high as 19.7%.

Benefits of Cryptocurrencies to Physicians

1. Lower fees

Crypto transaction costs can be lower than traditional bank charges, especially for international transfers. A physician can take advantage of this when processing and paying for supplies from abroad.

2. Faster turnaround

Some payment options, like wire transfers, have long wait times, often lasting 1 to 2 business days. You can complete a transaction on the blockchain in a matter of minutes, even when sending money to offshore suppliers.

3. Immutability of records

Data is recorded on the blockchain, and it cannot be changed. This enables secure storage of sensitive information, like patient records, or data prone to manipulation, like inventory figures.


1. Limited acceptance

CBDCs are supplied by the country’s Central Bank, so they are legal tender. Some countries may limit the usage of cryptocurrencies, while countries like China, Bolivia, and Saudi Arabia have banned crypto usage entirely.

2. High risk

Compared to most other options, cryptocurrency investing is one of the riskiest. It is subject to extreme volatility and regulatory uncertainties.

Using a Two Sigma Factor Lens, not including the crypto factor, 90.76% of Bitcoin’s risk between January 2015 and March 30, 2021, is inexplicable. By comparison, the S&P 500 showed a less than 1% residual risk over the same period.

Bitcoin’s risk

Bitcoin’s risk


Final Word

The best investment vehicle for your particular case will depend on your risk appetite. If you are risk averse, investing in CBDCs could be the right move. The Central Bank is directly liable for it, and its value is usually pegged on the national currency, enhancing price stability.

If you have the stomach for higher risk, cryptocurrency investing is the way to go. Market forces dictate crypto prices, so there’s potential for higher returns. Besides investing, crypto could help cut transaction costs and streamline operations by automating some tasks in supply management.


Crypto vs Gold vs Stocks vs Real Estate: Which Should You Choose?

Gallup released a report on Americans’ favorite long-term investment options. The findings showed that the top 3 investment assets were real estate, gold, and stocks.

Investing in either one of these could prove a prudent decision, but which is best?

The statistics show at least 65.9% of Americans own their homes, while 61% own stocks. Only 38% of retail investors have ownership of physical gold. Considering a survey asserts that 40% of American adults now own cryptocurrencies, we’ll include it in this analysis.

We’ll provide all the top reasons for investing in each of these assets, possibly helping you determine the best option.

A. Why Invest in Real Estate

In the 2023 Gallup report, 34% of Americans thought real estate was the best long-term investment. And it’s easy to see why.

Real estate is often at the apex of passive income streams, as its value generally increases over time and helps its owners build equity. Further, real estate is a great hedge against inflation since a rise in inflation almost always means an increase in prices, delivering positive returns in the long run. Here’s why you should consider investing in real estate:

1. Appreciation

Fluctuations in interest rates influence the mortgage rate and real estate affordability, consequently impacting demand for real estate. The current 30-year fixed mortgage interest rate average of 7% is partly to blame for the stratospheric rise in housing prices.

Predictably, housing affordability has been on the decline. The National Association of Realtors (NAR) found that a 7.7% increase in monthly mortgage payments in March 2024 year-over-year (YoY) contributed to a 4.7% increase in the median home price.  

Despite all this, home prices continue to rise, reaching all-time highs of $552,600 in Q4 2022 and still persist beyond the half million mark to date. Even with the stubbornly high mortgage rates, home sales remain beyond the 4 million mark, only dropping below this once in 2023.

Real estate performance over time

Real estate performance over time


2. Hedge against inflation

Generally, a strong economy fuels housing demand as more people have the money to buy homes, and the opposite is true.

For instance, the US economy faced headwinds in the past four years, with the economy contracting for consecutive quarters in 2022 and 2023, hitting lows of -2% in Q1 2022. The Federal Reserve (Fed) instituted a series of interest rate hikes in a bid to tame runaway inflation.

Despite this, median rent prices hit all-time highs of $2,054 in August 2022. Home median sale prices also reached all-time highs of $432,525 in May 2022 and still lurk beyond the $420k mark to date.

3. Diversified portfolio

You might think the real estate industry is a monolithic investment path limited to buying and selling property, which is a preserve of the rich. However, it is much wider than this, enabling even investors of modest means to dip their toes in the industry:

  • Renting out property: Purchase and let rental property. Use the proceeds of the rent to pay the mortgage fees. Only 65.7% of American adults own their own home as of Q4 2023, so there’s still plenty of market for rental housing.
  • Real Estate Investment Trusts (REITs): Combines the liquidity of a stock with the ease of owning…a stock. Investors earn returns from real estate appreciation and dividends, too. National Association of Real Estate Investment Trusts data shows REITs outperform stocks on 20-50 year horizons, providing 12.7% annual returns vs 10.2% average stock market return from the S&P 500 between 1972 and 2023.

Nareit Performance

Nareit performance.


  • Real estate platforms: These platforms unite investors with developers seeking capital to finance projects. While some only allow accredited investors, some take advantage of fractional ownership, allowing investors to only purchase a fraction of the property. Fractional ownership has found some usage in the blockchain, enabling the tokenization of real estate properties.

B. The Case for Investing in Crypto

Cryptocurrencies have acquired a bad reputation for volatility, but high risk can come with great rewards. Understanding the characteristics of this emerging market could potentially hold the key to higher returns.

1. Potential for high returns

Most cryptocurrencies, like Bitcoin, have a supply cap. A limited supply creates scarcity, which might increase its value over time.

Bitcoin also has halving events, which slows down its rate of production. These halving events have historically led to increases in Bitcoin prices.

After the first halving event in 2012, Bitcoin’s price rose by 145% in the first 90 days, 982% after 180 days, and 7,851% a year after. On average, its price has increased by 2,908% a year after each halving. Even the most conservative uptick happened during the second halving, where the price appreciated 279% a year later.

Bitcoin has outperformed all other major asset classes in eight of the past ten years (2013-2023). Since its inception, Bitcoin has recorded 116.01% annualized returns compared to its nearest competitor, the S&P 500 index, which managed 13.48%.

Bitcoin vs. other asset classes

Bitcoin vs. other asset classes


2. Could be a hedge against inflation

Fiat currency is controlled by Central Banks, which can influence it to achieve a favorable outcome. Cryptocurrencies are different as they operate on the principles of decentralization, free from manipulation by any entity.

Cryptos like Bitcoin also go through halving events, which cut down their supply by 50% at set intervals. These measures ensure cryptos do not face the same inflationary pressures triggered by fiat currency supply growth, which could minimize loss of value due to inflation.

C. Why You Should Try Gold

Gold has held a special place in investors’ portfolios for a long time. It is the go-to investment in times of geopolitical and economic uncertainty for various reasons:

Gold reaches all-time high

Gold reaches all-time high


1. Hedge against inflation

Gold has a proven track record of holding value, making it the perfect medium to hedge against inflation in times of economic turmoil. It has an inverse relation to other types of investments, usually rising in value when the economy is on shaky ground.

For instance, while the value of the S&P plummeted by 56.8% during the 2007-2009 financial crisis, the value of gold rose by 25.5%. Its value increased by 101.1% between 2008 and 2012.

It’s also a great option when faced with market uncertainty. When the Israel-Palestinian conflict began in early October 2023, gold prices gained 6.8% within a few weeks.

While inflation has failed to dial down to the Fed’s target of 2% since 2021, reaching highs of 9.06% in June 2022, gold rose by 8.57% between February and March 2024, easing past $2,300 an ounce, an all-time high.

2. Store of value

Gold prices are relatively stable compared to other investment assets like stocks. Using the Dow Jones Industrial Average (DJIA) as an example, gold has outperformed it in 43% of the years between 1925 and 2015, despite only a 2.1% average return annually compared to 7.3% for the DJIA.

Even during times of recession, the two-year average return for gold is about 1.65%, while the DJIA dipped to lows of 55% during the Great Depression in the 1930s. Gold even remains stable in the good times, performing 13% better on average in 26 of the 65 years without a recession.

Gold’s performance over the years

Gold’s performance over the years


D. Reasons to Invest in Stocks

A 2023 Gallup survey found that 61% of Americans own stocks. Stock ownership, on average, was 62% between 2001 and 2008. The top 1% hold 49.4% (worth $19.7 trillion), while the top 10% own 93% of all stocks. What is the allure of stocks?

1. Potential for higher returns

While stocks might be perceived as high-risk investments, they also possess the potential for high returns. They certainly provide higher returns than conventional investment options like gold, treasury bonds, and bank deposits.

For example, stocks returned a 10.4% yearly average between 1989 and 2017, compared to just 6.1% for bonds over the same time. Returns from the stock market can go as high as 40% yearly, but beware—they can also dip by as much as 40%.

2. Beat inflation

While stock prices are volatile, they tend to level off in the long run. Therefore, they are a great option as a hedge against inflation for long-term investors. As studied over the past 35 years, the stock market shows a positive return in nearly every 7 out of 10 years.

The average inflation rate has hovered around the 2 to 3% mark for the past 20 years (2003 to 2023), with the long-term inflation rate at 3.1% since 1913. Large domestic stocks recorded an annualized average return of 7.7% (or 9.8% with the dividends reinvested) over the same 20-year period.

Historical performance of the S&P 500

Historical performance of the S&P 500


3. Promising short-term investment

Nevertheless, one of the biggest draws for investing in stocks is the allure of handsome short-term returns. With luck, investing in stocks can yield astronomical returns.

While extremely rare, it is not unheard of to see a stock’s price jump 100% in a single day. For example, Gateway Industries stock rose 18,000% in a single day in February 2011 following a takeover announcement. Currently, meme stock AMC rose by as much as 120% on May 15, 2024, while GameStop finished the day 60% higher.

4. Liquidity

Stocks are generally perceived as highly liquid assets since you can convert them into cash more easily than investments like real estate.

For instance, the Nasdaq witnesses more than 4.4 million shares traded daily, involving more than 31 million trades. This is several magnitudes higher than the real estate industry, which only experiences about 4 million units traded monthly.

Stocks also list on stock exchanges with nationwide coverage, which means investors usually have a sea of buyers willing to take the stocks off their hands, for the right price.

5. Variety

Investors have a wide array of stocks to choose from, each offering different benefits:

  • Common shares: The most common type of equity investment. It offers a chance for capital growth when prices rise, earning dividends, voting for directors who run the company, and advantageous tax treatment.
  • Preferred shares: Reliable income stream and dividends paid before common shareholders. It offers higher income compared to common shares, with some allowing investors to plow the dividends back into the company.

A qualified dividend is a common dividend that meets the qualification requirements set by the IRS. Qualified dividends are usually charged at a capital gains tax rate, which can be lower than the income tax imposed on some taxpayers.

Investor Considerations

There’s no one-size-fits-all approach to investing since every investor has a unique set of circumstances that make them suited to one investment approach over another. These should be your top considerations before choosing any of these investment options:

Risk tolerance

Before investing, ask yourself, “How much risk am I comfortable with”? Understand that every investment carries some level of risk, although some are less risky than others.

From the choices above, crypto and stocks are the riskiest due to their high volatility. Gold and real estate are far less risky, so choose what fits your risk management strategy.

Younger investors have time on their hands, so they can either try the riskier options or settle on safer, longer-term options and reap the rewards of compounding.

Investment horizon

How long do you intend to hold your investments? Some investment assets, like stocks and crypto, are excellent for short-term trading, while others, like real estate, only really work if you hang on to them for the long term.

Liquidity needs

If you have no emergency fund, invest in stocks, gold, or the most popular cryptos since they are more liquid. Real estate is off the table as it is less liquid.

Investment goal

What is your goal? Are you aiming for income, capital appreciation, or a combination of both? The answer to this will determine which investment option is best.

For instance, gold might be great for capital appreciation but not for income generation. Most forms of real estate investment offer both appreciation and income, and the same goes for some stocks and cryptos.

Liquidity needs

What is your goal? Are you aiming for income, capital appreciation, or a combination of both? The answer to this will determine which investment option is best.

For instance, gold might be great for capital appreciation but not for income generation. Most forms of real estate investment offer both appreciation and income, and the same goes for some stocks and cryptos.



Stocks, gold, cryptos, and real estate are desirable investment options, each with its own pros and cons. Cryptos and stocks can be great for the short term; gold generally retains its value, while real estate usually appreciates in the long run.

Remember, all investments carry some risk, although some are riskier than others. There’s no universal approach to investing, as the best investment choice depends on your specific goals and financial situation. Exhaustively consider your investment horizon and risk tolerance to make informed choices.

For your own good, consult a financial advisor for personalized advice, especially if you intend to spend huge sums.


Can Crypto Protect Your Savings Against Inflation?

The prices of goods and services were out of control in 2021 and 2022. Egg prices rose by 59.9% between November 2021 and a year later, with elementary and secondary school meals spiking 305.2% during the same period.

This was all thanks to rampant inflation.

The Consumer Price Index (CPI) hit 9.06% in June 2022 (the highest in 40 years), compared to just 0.12% in May 2020.

Inflation is a consequence of the price of goods and services rising over a sustained period, eroding the purchasing power of earnings and savings.

The inflation rate has since dropped off to a more reasonable 3.36% in April 2024, still some way off the Fed’s target of 2%. But if you think the price of goods and services is still unreasonable, you’re on to something.

Despite the drop in inflation, prices rose by 20.8% from February 2020 to 2024. Even the best high-yield savings accounts don’t provide such yields, so your savings would feel the pinch of the inflationary pressures.

So, could cryptocurrencies guard your savings against the ravages of inflation? Let’s find out.

Inflation Trend

The Threat of Inflation on Your Savings

It is actually desirable for the prices of goods and services to rise over a number of years. But inflation must be moderate for it to benefit a country.

High inflation is triggered by the rapid rise in prices, while deflation, where prices are falling, means the economy is stagnant, experiencing little to no growth. Moderate, stable, and predictable inflation is good as it allows business owners to keep growing and pay their workers higher wages.

When inflation rises, it erodes the dollar’s value, eating into the buying power of your money. If your savings do not grow at the same rate as inflation, you are losing money. You won’t have the capacity to keep up with the cost of living, as inflation curtails your ability to purchase as much as when you began saving.

If you are saving for retirement, you won’t meet your target unless you keep saving more to beat inflation. But that will be a lot harder since commodity prices will rise, making it more difficult to save an extra coin.

The only way to beat inflation is to place your savings in an investment offering a higher interest rate than the inflation rate, and that’s where cryptocurrencies could come in handy.

Characteristics Favoring Cryptocurrencies’ Inflation Protection

Normal/fiat currency is susceptible to inflation because it is subject to manipulation. A country’s Central Bank can print more money in the face of undesirable economic climates.

An example is when the US printed money in 2020 and handed out about $1 trillion collectively to individuals as part of the COVID-19 stimulus package. This partly contributed to the consequent 40-year high inflation rate.

Here are some features that make crypto the go-to solution for fighting inflation:

1. Limited supply

Unlike the case of a Central Bank printing a limitless supply of a fiat currency, most crypto have a predetermined maximum supply in their code. They are finite resources, creating scarcity.

Crypto scarcity is ripe ground for a potential hedge against inflation, as demand for the limited supply could lead to an increase in value.

Bitcoin, with a lifetime supply of 21 million coins to be mined by the year 2140, is a prime example. Research provides evidence that Bitcoin prices usually appreciate against inflation shocks.

2. Decentralization

Cryptos are also free from Central Bank manipulation. They operate on decentralized networks that are not controlled by any entity. This allows cryptos to operate independently. A Central Bank can implement fiscal control by printing more money, leading to inflation.

3. Transparency

The blockchain allows for transparency by displaying all transactions made using a particular crypto. Further, the transaction information is immutable (can’t be changed).

Independent parties can track and ascertain all transactions, making it harder to arbitrarily increase a crypto’s supply without detection. These measures ensure a stable operating environment, reducing the probability of supply inflation.

4. Deflationary tendencies

With time, cryptos are burned while in use. Others are locked in wallets and passwords are forgotten, never to be retrieved. This removes them from circulation, making the crypto deflationary and creating further scarcity.

A WSJ analysis suggests there are about 20% or 1.8 million “lost” Bitcoin worth nearly $20 billion, and it is highly unlikely they’ll be recovered.

How Has Crypto Performed During Inflationary Periods?

Yes, cryptos are volatile, but they have displayed some resilience in the face of high inflation. For instance, in the first half of 2020, Bitcoin rose by 27%, higher than gold, silver, and platinum, which have long been the traditional hedges for inflation.

Bitcoin outperforms gold, silver, and platinum

Despite gaining 16% during the same period and reaching 8-year highs in June, gold still underperformed the crypto by nearly 11%. Platinum and silver registered negative gains during this time.

This was during a recessionary period, with inflation rising from 1.6% in June 2019 to 2.5% in January 2020, then dropping sharply to 0.2% in May 2020 before rising to 40-year highs in 2022.

Gold performance vs CPI

For a while, cryptos did well despite rising inflation in 2020 and 2021, with Bitcoin gaining 60% in returns in 2021. Most cryptos were affected by high inflation rates due to diminished purchasing power and devaluation of the dollar.

But when inflation kept soaring and blew past the 9% mark in 2022, cryptos and even commodities felt the heat and plummeted in value. With investors seemingly scared of the riskier investment, Bitcoin lost 64% of its value in 2022.

However, when the Fed eased off its interest rate hikes in 2023, and the CPI cooled to a more manageable yearly average of 3.4%, the narrative changed. Bitcoin gained 156% of its value YoY in 2023, with prices rising to $43,700 in December 2023, up from lows of $16,529 in December 2022.

Overall, cryptos are too new to provide a definitive answer to their claim as a hedge against inflation. Research shows cryptos have positive real returns correlated to inflation but not nominal returns. This suggests cryptos can stop an investor’s money from losing purchasing power as a result of inflation.

Using Bitcoin as an example, the evidence for or against the assertion that cryptos are a hedge against inflation is erratic. Its price performance over time has not supported either thesis conclusively, as it remains relatively untested in diverse economic scenarios.

How do cryptos compare to traditional assets?

There’s no definite correlation between precious metals price performance and inflation. Sometimes, they lose or gain value, all dependent on market sentiment.

For instance, gold gained by nearly 600% between 2000 and 2011, when the inflation was relatively stable, but lost nearly half its value from 2011 to 2016, when the inflation rate was around the Fed’s long-term desired inflation target of 2%.

In 2021 and 2022, when the CPI was 7.2% and 6.4%, gold sank by -3.5% and -0.1%, respectively, but rose 13.4% when the CPI dropped to 3.3% in 2023. Gold reached an all-time high of $2,449 per ounce in May 2024, with inflation hovering around 3-4%.

An ETF that has been tracking the price of gold reported returns of 5.5% annually compared to 15.3% for the S&P 500 for the past 15 years. Although stocks typically perform poorly with rising inflation, they can act as a hedge against inflation in the long run.

Data tracking the S&P 500 shows the largest 500 capitalization stocks gained 10.7% on average since its introduction in 1957, but the average yearly inflation rate from 1914 to 2023 is 3.3%.

Bonds have also been perceived as a good store for value. They are a source of stable yet small gains. Although bonds yields steadily declined since the 80s, so did inflation, leading to sustained bonds yields over the years.

However, minor gains in bonds usually mean they will underperform in the face of strong inflation. If you invest in bonds with 4-6% yields, your investment will lose value faced with 8-9% inflation rates. As seen in recent years, investors have lost at least 1% of their bonds values annually from 2019 to 2023.

Bonds have lost value since 2019 after a bull market since the 80s

Crypto Portfolio Inflation Protection Strategies for Physicians

Investors must gauge the risk/return tradeoff before deciding which cryptocurrencies to invest in. Fixed income assets offer less risk but provide less returns compared to cryptos.

For example, Bitcoin has annual returns of 50% against 75% volatility, while Ethereum provides annualized returns of close to 80% and annualized volatility of 90%. By contrast, fixed-income investments offer less than 10% in annualized returns and volatility.

Using Monte Carlo methods and holding a 60/40 stocks and bonds portfolio, a simulation shows adding Bitcoin worth 5% of the total portfolio value offers the optimum Sharpe Ratio, a measure for risk-adjusted returns.

The Sharpe Ratio keeps rising until it gets to 5% before leveling off, showing no improvements in risk-adjusted returns after this mark. Although not entirely accurate, the results suggest holding 5% of Bitcoin in your portfolio is the optimal ratio for risk/returns.

Risk returns ratio

1. Diversification across cryptocurrencies

The best way to mitigate cryptocurrency volatility is to spread your investments across several cryptocurrencies and blockchain assets like NFTs.

This should guard against the risks of investing in a single crypto and reap the rewards of emerging trends. For instance, NFTs had a great run in 2021 through 2022, with the top 10 most expensive pieces being sold for over $7 million during this time.

2. Consider Risk Tolerance and Investment Timeframe

What are your investment objectives? Do you wish to gain wealth in the long term, or are you seeking the thrill of short-term gains? Your goals should help determine which investment strategy to settle on based on the volatility prospects of each asset.

Also, conduct an honest review of your risk tolerance to establish your comfort level. It will help you choose a crypto or asset aligned to your investing style and minimize chances of abandoning strategy mid-investing.

3. Investing strategies for managing volatility

  • HODL: This refers to the long-term buying and holding of crypto. The strategy aims to ride out the price volatility, which will iron out to the investor’s advantage over time. A study of Bitcoin’s price since its inception points to an upward trajectory if held over a long stretch.

Bitcoin’s price rise in the long run

  • Dollar-Cost Averaging: A practice where you make small amounts of recurrent purchases following a set schedule. This relieves the pressure of having to time the market or missing out on opportune moments to buy. In the long run, it reduces the impact of volatility. Investors may make extra purchases when there are significant market dips.
  • Active trading: If you have the time, score short-term gains by frequently buying and selling crypto to exploit crypto volatility. This strategy requires extensive market research and is the most high-risk tactic.

Considerations and Risks

The most common risks and considerations include:

  • Volatility: The bane of every investor. Cryptocurrencies are notoriously volatile, so prepare a strategy to mitigate this risk and avoid being swayed by emotions.
  • Security: There were 283 crypto theft incidents in 2023, with $24.2 billion received by illicit addresses. As of 15 January 2024, $8.37 million worth of crypto had already been reported stolen. Ensure you install sufficient security measures to prevent incidents of hacking and fraud.
  • Regulatory: It is still a relatively new market, so new regulations keep cropping up in different states as legislators come to grips with cryptocurrencies. These new laws may introduce unforeseen risks.

Can Crypto Be Your Inflation Shield?

Most cryptocurrencies have a fixed supply that promotes scarcity. Additionally, they are based on decentralization, suggesting they are prime candidates for inflation protection.

However, being new entrants in the market, they have not yet faced wide-ranging economic scenarios. The data on their performance amidst rising inflation is limited, so it is impossible to draw conclusions on their efficacy as solutions against inflation.

Like any other investment class, cryptocurrencies come with some level of risk. If you intend to spend large sums on purchasing some in an effort to beat inflation, it is in your best interest to seek the services of a financial advisor with crypto experience.


Health Spending Trends and What It Means for Physicians

Researchers from the Commonwealth Fund found that Americans visit physicians less often than citizens in other high-income countries and have one of the lowest ratios of practicing physicians and hospital beds per 1,000 people. Yet, the US spends 3-4 times more on healthcare than Japan, New Zealand, and South Korea.

Further, the US spends almost 18% of its GDP covering healthcare costs, yet its citizens are less healthy than those in peer countries. Strangely, the US spent 17.8% of its GDP on healthcare in 2021, nearly double the average spend of OECD countries, yet does not guarantee health coverage as other high-income countries.

health-expenditures-per-capita-u.s.-dollars-2022-current-prices-and-ppp-adjustedWhat does this mean, and how does this affect physicians? This article examines the economic pressures influencing health spending and how it impacts physicians. It also provides valuable strategies physicians can implement to combat the adverse effects of these healthcare spending trends.

Health spending growth

According to the latest national health expenditure (NHE) data, health spending topped $4.5 trillion in 2022, a 4.1% growth from 2021. This represents the total cash spent on health care and its related activities like research and administration.

The data also shows that the economy-wide inflation rate was higher than that affecting the health sector in 2022. Adjusted for inflation affecting the rest of the economy, health spending reduced -2.2% year-over-year (YoY).

However, the NHE deflator compilation data asserts that the real NHE grew by 0.9% during the period. The deflator takes into account the aggregate of consumer and producer price indices for services and commodities.

Overall spending on health in 2022 increased by $175 billion from 2021. Spending on health rose across most categories except federal and state public health, which decreased by $2 billion. The top three categories that registered the highest spending were prescription drugs, hospital expenses, administration costs, and physicians and clinics.

Federal spending on public health

The biggest victim of the pandemic-era spending cuts was federal health spending, which dropped in consecutive years. The data shows it fell from $101 billion in 2021 to $92 billion in 2022 (a 9% dip) on the back of expired federal policies supporting COVID-19 eradication.

This lower spend is still higher than in the pre-pandemic era, so there could be more federal budgetary cuts in the future. Conversely, local and state public spending rose by 6.3% over the same period.

Per person health spending

Research reveals that the US spends nearly twice as much on health per person as its peers. The average per person spend was $13,493 in 2022, with rising medical services prices the primary catalyst for the upward trajectory.

For example, Medicaid spending reached $805.7 billion in 2022. This 9.6% growth over the previous year represents an 18% chunk of the total NHE. Similarly, Medicare expenses were $944.3 billion, a 5.9% growth YoY, accounting for 21% of the NHE.

Private health insurance spending also rose 5.9%, costing $1.28 trillion, accounting for 29% of the NHE.

What is fueling the high cost?

Americans are paying more for similar services as citizens in 12 comparative countries in the OECD are receiving, paying as much as 15% more in some instances.

1. Administrative costs

Administrative costs have ballooned into the largest component of excess spending, representing the biggest catalyst of healthcare expenditure growth. US citizens are paying about 30% more in NHE administrative costs. For instance, hospital care expenses rose 2.2% to $1.4 trillion in 2022.

Further, the number of administrators has grown disproportionally compared to healthcare workers. According to data from the Physicians for a National Health Program using data from the BLS, the number of physicians grew 200% between 1970 and 2019 compared to a 3,800% rise in administrators during the same period.

While the physician growth rate is in line with the population growth, the lopsided increase in administrators has led to the current situation where there are 10 hospital administrators for every physician.Healthcare Administrators Far Outpace Physicians in GrowthAnd hospital bills on a per-person basis have followed the same trajectory, rising 3,100%. Healthcare costs were $353 in 1970 compared to $11,453 in 2019, adjusted for inflation.

Americans spend about 15% more on health insurance-related costs like rework, eligibility, submission, and coding. Additionally, they pay 15% more for human resources, general administration, accreditation, and quality reporting.


2. Nurses

American registered nurses make about 1.5 times their peers, translating to about 15% more than in comparative countries.

Travel nurses’ compensation has skyrocketed, with some out-earning physicians. While the median pay for registered nurses is $86,070 annually, travel nurses make $109,564 on average, up to a maximum of $543,048. This is higher than in pediatrics, geriatrics, occupational medicine, and preventive medicine.

The Commonwealth Fund pegs this down to higher educational debt and the context of the American labor market.

3. Prescription drugs

The US spends about double on retail prescription drugs per person than comparable jurisdictions. Further, retail prescriptions range between 2-3 times more expensive than similar offerings in peer countries in the OECD.

Branded drugs cost more and account for about 80% of retail prescription drug purchases. Generic drug prices are almost at par with comparable countries.

The start of every year usually triggers a run of price increases, and 2024 was no different. Research by 46Brooklyn Research reveals there’ve been 962 price hikes on all drugs by the end of March 2024, affecting 72% of all Medicaid brand name drug spend.

After the price changes, the cost per claim of brand-name drugs before the Medicaid rebate has risen to an all-time high of $1,348, up from $1,329 in 2023.

The reason prices are going up is because of rebates, which have been rising as well. Manufacturers’ take-home is shrinking as the average rebate is about 52%. Some medicine makers receive as little as $0.48 on the dollar.

Some manufacturers have been forced to reduce their list prices under the threat of severe penalties imposed by the American Rescue Plan Act. List prices for drugs like inhalers and insulin have dropped by 70%-80%. So, medicine manufacturers are raising drug prices across the board to stay profitable.

4. Per capita out-of-pocket expenditures

The OECD reports that the US fares favorably against its member countries under this category, with American patients forking 11% of health expenditure from their pockets compared to the 18% average across the OECD in 2023.

However, the latest CMS NHE data for 2022 shows out-of-pocket (OOP) spending rose to $471.4 billion (6.6%) in 2022, accounting for 11% of total NHE. This works out to about $1,425 per capita on average, a slight decrease from $1,428 in 2021.

Some OOP expenses, like durable medical equipment, dental services, and physician and clinical services, decreased in 2022, accounting for 34% of the entire OOP expenses.

Note that out-of-pocket expenditure does not include contributions towards health insurance premiums.

Health spending growth vs GDP growth

As noted earlier, NHE spending in 2022 stood at $4.5 trillion, representing 17.3% of the gross domestic product (GDP). Juxtaposed against the consumer price index (CPI), medical care prices rose 3% by June 2023 over the same period in 2022, according to the Bureau of Labor Statistics (BLS).

However, inflation outpaced healthcare prices. This went against the established trend of the past two decades, where medical care prices generally climbed faster than inflation.

Notably, prices for all goods and services, less medical care, rose 3.2%. Primary residential rent experienced the highest growth at 8.3%, with food (5.7%) and electricity (5.4%) the next biggest movers. Gasoline (all types) experienced the largest drop (-26.5%). Core inflation (food and energy excluded) stood at 4.8%.

CPI measures the average change in the prices consumers pay for goods and services over a yearly period. Similarly, Medical care CPI considers changes in medical care prices, including OOP costs and what insurers pay pharmacies and providers.

The latest data shows the CPI for all urban consumers (CPI-U) rose by 0.4% between March and February 2024, while the unadjusted 12-month CPI-U for all items in the year ended March 2024 was 3.5%.

The annual unadjusted CPI-U for medical care commodities as of March 2024 was 2.5%, while medical care services CPI-U was 2.1% over the same period. Overall, the medical care index rose 2.2%.

Tracking health price growth

Physician services CPI for urban consumers grew by 0.5% but was outpaced by prescription drugs at 3.1% and nursing home services at 3.3%. Still, these could not match overall hospital services at 4.2%, with outpatient contributing 5.7% and inpatient chipping in with 3.7%.

If anything, physician’s inflation-adjusted income has been on a downward spiral for an extended period. A national study by the Center for Studying Health System Change reported that physician’s incomes were reduced by 7% between 1995 and 2003, while other professionals saw their incomes increase by 7% during the same period.

Physicians’ Net Income from Practice of Medicine, 1995, 1999 and 2003, and Percent Change, 1995-2003

Notes: The Bureau of Labor Statistics (BLS) Employment Cost Index of wages and salaries for private sector “professional, technical and specialty” workers was used to calculate estimates for these workers. Significance tests are not available for these estimates. All inflation-adjusted estimates were calculated using the BLS online inflation calculator. The composition of the physician population changed between 1995 and 2003—a fact that makes some estimates of percentage changes in real income appear inconsistent (for example, estimates of income changes for all patient care physicians not falling between estimates for primary care physicians and specialists). These data patterns occur because the proportion of medical specialists steadily increased from 1995 to 2003 (32% to 38%) while the proportions of primary care physicians and surgical specialists both declined by about 3 percentage points.

Further, a Doximity survey carried out between 2017 and 2021 shows although physicians’ compensation across all specializations increased during the period, the 3.15% inflation rate throughout that period meant only 53% of specialties experienced real compensation growth. However, the 7% inflation rate in 2021 wiped out any gains from wage increases.

Physician Gender Pay GapHealth insurance CPI dipped from an all-time-high annual increase of 28.2% in September 2022 to -24.9% in June 2023. Overall, medical care prices realized the slowest decades-long price gain in June 2023.In 2024, BLS data shows the CPI-U for medical care services index went up by 0.6% in March, up from the -0.1% recorded in February. Medical care commodities were up 0.2% in March, higher than the 0.1% recorded the previous month, although this is not seasonally adjusted.

Urban care consumers experienced the best returns in medical care commodities in January as prices dropped by -0.6%. Physicians’ services index rose by 0.1%, hospitals by 1%, and prescription drugs increased by 0.3%.

Urban consumers’ CPI vs health services producer prices

Unlike the general trend for the past decade, urban consumers’ health services producer price index (PPI) rose faster than the CPI. The PPI measures the price change inflation in medical services by physicians and other providers paid by third parties like employers.

PPI considers the actual transaction prices when considering changes in output costs. From June 2009 to June 2023, medical services CPI rose 49.6%, while health care PPI has only achieved a 35.3% growth. This data does not consider medical equipment and prescription drugs PPI and CPI.

What this means for physicians

The growing cost of health spending can only mean medical care is becoming increasingly unaffordable. Patients must contend with medical inflation, rising OOP expenses, and a higher-than-expected consumer inflation rate.

A study found that 74% of Americans worried about their ability to pay off an emergency medical bill. Almost half of American adults surveyed said they couldn’t settle a $500 emergency bill without taking on debt.

Surprisingly, even those with medical insurance coverage or higher incomes are also feeling the pinch. 47% of insured adults say they are having difficulties affording health care costs compared to 85% for the uninsured. 21% of households with incomes over $90,000 reportedly struggle to afford their healthcare costs.

The steady increase in medical costs, especially OOP expenses, has diminished their ability to settle medical bills. For example, commercially insured patients used to be the rock-solid basis of providers’ payer mix, but this has changed drastically over the past few years.

In 2018, for instance, 11% of hospital’s bad debt came from self-pay insured accounts. That figure crept up to 58% by 2022.

Patients were encouraged to utilize OOP to offset rising copayment costs. Most decided to seek over-the-counter (OTC) treatments before visiting the physician. However, insurance premiums crept higher, leaving OTC as the only economically viable choice for patients keen on keeping premium costs low.

As employers delivered lower premiums to workers, this had the unintended consequence of increasing the medical cost burden on employees who needed more care than OTC could provide. This category of employers would be forced to take on co-insurance and higher deductibles.

Commercially insured patients took on more medical debt, which inevitably led to them opting out of essential medical care out of fear of incurring more debt.

What physicians can do to mitigate inflationary pressures

One way physicians can deal with thinning revenue is to stop providing financing in the first place. There are new financing models that take the pressure out of securing medical debts while safeguarding their pay.

These new medical plans safeguard patients from unusually high repayment plans while ensuring healthcare providers receive their full payments promptly. Moreover, the new approach also settles patients’ OOP costs.

Specialist medical payment providers streamline the payment process by paying providers upfront and assuming the long-term payment option with patients.

All this means physicians won’t have to follow up or hire additional staff and collection agencies to chase after bills.

Patients will also seek medical attention when they need it, not when their pocket allows it. This could lead to healthcare providers receiving a steady stream of patients, enhancing their revenues.

Final word

Americans are paying more for less, and physicians are paying the price. The unfavorable economic climate means fewer adults can afford medical care, so they avoid physician office visits even when necessary.

Physicians should adopt new financing models that shift credit risk to third parties who settle their bills upfront and have the expertise and resources to follow up on errant borrowers. This frees up more time for physicians to care for their patients.

To secure your financial future, enroll for our Real Estate Investing Course for Physicians.


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Navigating Risks of Real Estate Syndication for Physicians

As a physician or medical professional, you may be considering real estate syndications as an alternative investment to diversify your portfolio and hedge against economic uncertainty. However, it is crucial to understand the risks of real estate syndication before diving in. In this comprehensive blog post, we will explore various aspects of these investments and provide insights on how to mitigate potential pitfalls.

We will delve into the importance of trust between investors and sponsors, performing due diligence checks on deals and sponsors, mitigating market volatility risks through stable cash-flowing assets, reducing exposure through diversification and property selection criteria. Additionally, we will discuss navigating legislative constraints by partnering with experienced legal teams and ensuring adequate insurance coverage.

Lastly, we’ll examine the suitability and limitations of real estate syndications for passive investors like yourself – addressing concerns such as illiquidity issues, high minimum investment requirements, and limited control over property management decisions. By understanding the risks of real estate syndication thoroughly beforehand, you can make informed decisions that align with your long-term investment goals.

Table of Contents:

  • How Real Estate Syndication Works
  • Pooling Resources for Larger Investments
  • Partnering with Experienced Syndicators
  • Why Real Estate Syndications are Safer than Direct Ownership
    • Expertise of Seasoned Operators
    • Mitigating Market Volatility Risks
  • Real Estate Syndication: Pros and Cons
    • Diversification Benefits
    • Illiquidity Concerns
    • High Minimum Investment Requirements
  • Navigating Transparency and Communication Risks
    • Open Conversations with Sponsors
    • Reviewing PPMs for Informed Decision-Making
  • Assessing Market Fluctuations Risk
    • Diverse Employment Opportunities
    • High Median Household Incomes
    • Low Crime Rates
  • Proper Debt Financing Strategies for Real Estate Syndications
  • Legal Risks in Real Estate Syndications
  • FAQs in Relation to Risks of Real Estate Syndication
    • What are the risks of syndicated real estate?
    • What is the risk of syndication?
    • Can you lose money with real estate syndication?
  • Conclusion

How Real Estate Syndication Works

Real estate syndication is a popular investment option that allows passive investors to pool their resources and invest in larger, more lucrative properties like multifamily units.

Pooling Resources for Larger Investments

Multiple passive investors come together to raise capital needed for acquiring high-quality real estate assets, enabling them to participate in deals that would otherwise be inaccessible due to high costs.

Partnering with Experienced Syndicators

Working alongside seasoned professionals within the industry maximizes returns while mitigating risks involved in the process.

  • Diversification: Participating in multiple projects spreads financial exposure across various types of properties and geographic locations.
  • Economies of Scale: Investing alongside other passive investor partners provides increased buying power and cost savings related to property management fees or maintenance expenses.
  • Professional Management: Syndicators have a team of experienced professionals who handle all aspects of property management, allowing passive investors to enjoy the benefits of real estate investment without dealing with day-to-day responsibilities.

Real estate syndications offer passive investors the opportunity to invest in real estate deals without the hassle of property management or the risks involved in direct ownership.

Despite the potential issues, like changes in market conditions, rent control and Section 8 housing impacting returns on investment, real estate syndications remain a popular option for investors aiming to diversify their portfolio and generate passive income from rental properties.

Despite these risks, real estate syndications remain a popular choice for those looking to diversify their investment portfolio and generate passive income through rental properties.

For more information on real estate syndications and the risks involved, check out these credible sources:

  • Investopedia
  • Forbes
  • Bigger Pockets

Why Real Estate Syndications are Safer than Direct Ownership

Real estate syndications are a safer investment option than direct ownership because they allow passive investors to minimize risks by relying on the expertise of seasoned operators.

Expertise of Seasoned Operators

Partnering with experienced sponsors who have a proven track record in acquiring and managing properties reduces the likelihood of costly mistakes often made by inexperienced property owners.

Mitigating Market Volatility Risks

  • Diversification: Investing in multiple properties across different markets provides diversification benefits that help protect against economic downturns or localized issues affecting one specific area.
  • Cash Flow Stability: Real estate generates consistent rental income from tenants, offering more predictable returns even during uncertain times.
  • Hedge Against Inflation: As inflation rises, so do rents – making real estate an effective hedge against rising prices over time.

Real estate syndications offer strategies that can help investors navigate economic uncertainty while still achieving their investment goals.

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Real Estate Syndication: Pros and Cons

Real estate syndication can provide a good opportunity for passive investors to expand their investment portfolio, yet there are some difficulties associated with it.

Diversification Benefits

Spreading your investment across multiple properties can reduce the impact of any single underperforming asset on your overall portfolio.

Illiquidity Concerns

Real estate syndications tend to be less liquid than stocks or bonds, but this can be mitigated by focusing on deals with shorter hold periods or partnering with sponsors who offer secondary market options for selling your shares.

High Minimum Investment Requirements

  • Raised capital: Many real estate syndications require a significant initial investment, which could deter some potential passive investors from participating.
  • Potential pitfalls: Thoroughly vet each opportunity before committing any funds, even if it means passing on a deal with a high minimum investment.

Before investing in real estate syndications, consider your investment goals, market conditions, and potential risks involved, such as rent control, rental rates, and section 8 housing.

Navigating Transparency and Communication Risks

Real estate syndications can be risky due to lack of transparency or poor communication from sponsors, so it’s crucial to engage in open conversations and review Private Placement Memorandums (PPMs) before investing.

Open Conversations with Sponsors

Ask questions about the sponsor’s experience, track record, and the specific details of the deal to establish a strong relationship and avoid potential pitfalls.

Reviewing PPMs for Informed Decision-Making

  • Analyze financial projections: Look for conservative estimates and review rental income forecasts and property management expenses.
  • Evaluate market conditions: Assess factors such as rent control policies, local employment rates, or Section 8 housing regulations that may impact future rental rates.
  • Determine investment goals alignment: Ensure that each sponsor’s strategy aligns with your personal financial objectives by comparing how raised capital will be allocated across various deals.

By taking these steps, you can mitigate transparency issues and establish proper communication channels throughout your real estate syndication journey.

Assessing Market Fluctuations Risk

Investing in realty may involve hazard, yet there are ways to reduce exposure to market swings.

Diverse Employment Opportunities

Target properties in regions with a variety of industries and job sectors to maintain rental demand.

High Median Household Incomes

Properties in areas with high median household incomes attract tenants who can afford higher rental rates and are less likely to default on rent payments.

Low Crime Rates

  • A safer neighborhood attracts more potential renters and increases property value over time.
  • Tenants are more inclined towards long-term leases in low-crime areas as they feel secure living there.
  • Property management costs may be lower due to reduced vandalism or theft-related expenses.

Assessing market fluctuation risks is crucial when passively investing in real estate syndications. By focusing on properties located in areas with diverse employment opportunities, high median household incomes, and low crime rates, investors can better protect their investments from potential pitfalls. Real estate syndications can be a great way to invest in real estate without the hassle of property management, but it’s important to understand the risks involved and set clear investment goals

Proper Debt Financing Strategies for Real Estate Syndications

Using debt financing through floating-rate loans can accelerate returns on equity without jeopardizing financial stability.

Investors should ensure their chosen syndicator has a proven track record of implementing value-add strategies and adhering to conservative loan-to-value ratios (LTV).

Floating-rate loans provide flexibility in managing debt payments while maximizing potential returns.

Conservative LTV ratios reduce risks involved in case market conditions change unfavorably.

Investors should look for multifamily syndications where the sponsor maintains an LTV within the range of 60-70%.

Partner with sponsors who prioritize transparency and communication throughout all stages of your investment journey.

Stay informed about any changes or updates related to your passive investor status, property management, or rent control policies affecting your rental income stream. Debt financing can be a valuable tool for real estate investors, but it’s important to understand the potential pitfalls and risks involved.

Short-term rentals, rent control policies, and Section 8 housing can all impact rental rates and potential returns.

Investors should have clear investment goals and understand the potential risks before passively investing in real estate syndications.

By partnering with experienced sponsors and carefully evaluating debt financing strategies, investors can raise capital and achieve their investment goals.

Legal Risks in Real Estate Syndications

Legislative constraints may pose risks in real estate syndications, making it crucial for investors to partner with sponsors who have experienced legal teams on staff and appropriate insurance coverage.

A strong legal team is essential when investing in real estate syndications.

Partnering with a sponsor that has an experienced legal team ensures they understand the complexities of these transactions, minimizing your exposure to potential pitfalls.

It’s vital that your chosen sponsor carries adequate insurance coverage to protect against unforeseen events such as property damage or lawsuits from tenants.

Make sure you inquire about their insurance coverage, so you’re confident they have sufficient safeguards in place.

Passive investors should educate themselves on relevant regulations governing real estate investments to better understand how these factors could impact their investment goals.

By staying informed and working with experienced professionals, you can mitigate the legal risks involved in real estate syndications and confidently pursue this lucrative investment strategy.

Real Estate Investing For Physicians

FAQs in Relation to Risks of Real Estate Syndication

What are the risks of syndicated real estate?

Investing in syndicated real estate can be risky due to illiquidity, limited control over property management decisions, reliance on sponsor’s expertise, and market volatility. It’s important to perform due diligence checks on sponsors and deals, diversify investments, and ensure value-add strategies with conservative loan-to-value ratios to mitigate these risks. source

What is the risk of syndication?

Syndication risk refers to potential losses in a pooled investment vehicle like real estate syndications, which can arise from poor property selection or management by the sponsor, economic downturns, or legislative changes impacting operations or financing options. source

Can you lose money with real estate syndication?

Yes, investors can lose money in real estate syndications if properties underperform due to market conditions or mismanagement by sponsors. To minimize this risk, it’s crucial for investors to conduct thorough research on both the deal and the track record of its sponsoring team before committing capital. source

What are 4 major real estate risk concerns?

  1. Economic Risk: Market fluctuations affecting demand for rentals and property values.
  2. Sponsor Risk: Incompetence or fraud by managing partners responsible for project execution.
  3. Leverage Risk: Overuse of debt financing leading to increased vulnerability during downturns.
  4. Liquidity Risk: Inability to quickly sell an asset without substantial loss in value.


Real estate syndication risks can be reduced through proper due diligence, diversification, and careful selection of sponsors and investment properties.

While some investors may worry about relinquishing control over investments, building trust with sponsors and ensuring transparency can help ease these concerns.

It’s important to consider market volatility risks and the suitability of real estate syndication as an illiquid investment option, but stable cash-flowing assets and responsible use of debt financing can provide long-term benefits.

Partnering with experienced legal teams and maintaining adequate insurance coverage can help investors navigate legislative constraints that may arise.

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Blogs Property Investors Real Estate

Why You Should Be Thinking About Alternative Investments

In uncertain times, financial advisors often encourage investors to turn to low-risk, fixed-income investment options, such as CDs, money market funds, and high-yield savings accounts. They reason that these safe investments will preserve your assets as they provide positive returns. But do they?

Investing in the stock market and receiving a 60% loss is a no-no, so the financial advisors would rather you invest on a 10-year treasury yield, making 3.7%. While it may seem the investment is making you money, you have to consider that the annual inflation rate rose to 8.2% in September 2022. That means you are losing money (-4.5% annually).

While all investment options seem pointless at the moment, one criminally underutilized segment is viable during market downturns. Did you know you can make as much as 12% returns using alternative investing?

According to Prequin’s 2022 Global Alternatives Report, the alternatives AUM concluded at $13 trillion in 2021 and is projected to expand to 11.7% ($23 trillion) by 2026. This is a look at what alternative investing is all about.

What Are Alternative Investments?

Alternative investments have no basis on traditional financial products like stocks, bonds, or cash. Most alternative investments don’t receive as much regulation from the SEC and could be more illiquid.

Types Of Alternative Investments

As more and more alternatives become available to retail or individual investors, it pays for investors to have a solid understanding of these options. The following are some examples of alternative investments:

1. Private Equity

Private equity is a term that describes investments in businesses not traded on a public market like the New York Stock Exchange or NASDAQ.

The goal of private equity firms is to generate returns for their investors by making strategic investments in private companies with the assumption that the value of those investments will increase by a certain time. You can further break private equity down into these categories:

  • Venture capital
  • Buyouts
  • Growth equity

These asset classes typically require long-term investments of substantial capital, so only institutions and wealthy individuals can participate.

2. Hedge Funds

A hedge fund is a type of pooled investment partnership that trades liquid assets using various investment strategies to generate a high rate of return for its investors. Entrepreneurs can invest in a wider variety of securities, as hedge funds are not subject to the same regulations as mutual funds.

Compared to other alternative investments, hedge funds are notable for their high liquidity ratio. Because they have a higher concentration of liquid securities, you can liquidate the funds in minutes. Due to the high costs and risks involved, only wealthy individuals and institutional investors, like pension funds, typically invest in hedge funds.

3. Structured Products

Structured products are a type of investment that involves pairing a debt instrument (such as a bond or CDs) with one or more derivative instruments tied to an underlying asset class or a collection of assets such as stocks, market indices, currencies, or interest rates.

Despite their complexity and potential for loss, structured products allow investors to create a uniquely tailored portfolio to their needs. Typically, investment banks produce them and offer them to institutional, corporate, and individual clients.

4. Private Debt

Private debt consists of loans from sources other than traditional banks. Businesses often use private debt for expansion, working capital increases, or real estate construction and development.

Given the historically low returns on government bonds, direct lending to businesses can provide a sizable premium over the cash flows accessible from liquid fixed-income products. Private debt funds, the firms that provide the funding, make money through two main channels: interest payments and the eventual repayment of the loan.

A private debt fund may also focus on senior, junior, or mezzanine debt, among other strategies, such as direct lending, venture debt, and exceptional situations.

5. Real Estate

Many Americans already have a stake in this asset class because they are homeowners, making real estate the most viable alternative investment. Real estate investments can take the form of direct property ownership or indirect investments.

Properties like apartment buildings and shopping centers provide regular rental income to their owners, and they hope for price increases over time.

Investors who want a more hands-off approach might buy shares of private real estate investment trusts (REITs) through a broker. REITs that trade publicly do so through the stock market.

In addition to its diversification benefits, real estate offers investors a hedge against inflation and favorable tax advantages.

6. Commodities

Commodities are tradable items that have both direct and indirect economic uses. Examples of commonly traded commodities include gold, farm animals, precious metals, wool, oil, gas, wood, and uranium.

Given their relative immunity to fluctuations in the public equity market, investors often use commodities as a hedge against inflation. Commodity prices fluctuate based on supply and demand market forces; increased demand will lead to higher prices and greater returns for investors. You can invest in commodities in several ways, including:

  • Futures Contract
  • Stock
  • Physical commodities

7. Collectibles

When you invest in collectibles, you aim to generate a return on your money through long-term appreciation of the items you own. Some of the common types of collectibles include:

  • Books
  • Rare wine
  • Stamps
  • Antiques
  • Trading coins
  • Art
  • Coins
  • Baseball cards
  • Toys

To succeed in this alternative investment strategy, you need an extensive understanding of the sector and the patience to hold on to your investment for a long time. It is not easy to predict how much a work of art, or a collection will increase in value because both can decline in worth or get destroyed.

Some collectors treat their collections as investments on par with their homes or cars, and their collections make up a significant portion of their net worth. Adding collectibles to a portfolio is a great way to diversify your investment base and spread your risk.

Final Word

Many investors are increasingly looking to alternative investments to diversify their portfolios, maximize their returns, and accomplish other financial objectives. That is why it is so important for investors to have a firm grasp of the options they have to adopt alternative investments into their portfolios successfully.

Blogs Property Investors Real Estate

Why You Should Consider Buying Real Estate During A Recession

The inflation rate as of November 2022 is 8.202%, well above the long-term average of 3.26%. Mortgage rates are still rising, exceeding 7.44%, and there’s a good chance the Fed will increase lending rates by 50 to75 basis points in the December 14-15 FOMC meeting, and an additional 25 to 50 basis points in the January 31-Feb 2 2023 FOMC meeting. This could result in Mortgage rates close to 9% by February 2023.

All of these point to a intentional recession. If anything, TD securities think there’s a more than 50% chance the US will enter a recession within the next 18 months.

While a recession means people don’t have the money to purchase a home, it presents mouthwatering opportunities for a real estate buyer, as long as the buyer can maintain financial solvency through the 18 to 24 months of a recession. Keep reading to learn why buying real estate assets during a recession might be a good idea.

Advantages Of Buying A Real Estate During A Recession
Purchasing Real Estate during a recession has some benefits, such as:

A) Lower Prices
House prices usually fall dramatically during economic downturns. Such an economic environment means people can barely afford the bare essentials, so splashing hundreds of thousands of dollars on a home is out of the question. This has a trickle-down effect on the Multifamily real estate market and even other real estate asset classes.

A lack of interested purchasers can lead to prolonged selling times, so sellers may feel compelled to cut their asking prices to move the assets. Foreclosures also force homeowners to sell, increasing the supply of homes and further driving down prices.

While home prices have not dropped significantly as of August 2022, Moody’s Analytics forecasts that home prices in highly “overvalued” housing markets might fall by 15% to 20% should a recession hit, while nationwide home prices would decrease by roughly 5%.

B). Mortgage Is Cheaper
During a typical recession, business stagnates, so the Fed’s go-to solution to spur the economy and get people to spend is lowering interest rates. That typically leads to more affordable mortgage rates, which is your cue to hit the market in search of a home. This Fed pivot will not occur until we are firmly entrenched in a recession, and consumer confidence has severely been impacted, often seem as a reduction in the hyper liquid stock market open futures.

The National Bureau of Economic Research (NBER) still has not called this a recession despite two consecutive depressed financial quarters, which explains why the interest rates are still high.

If the economy does tip into a recession, expect mortgage rates to plummet, but only after the stock market capitulates and the average investor is running for the exits. That would be the perfect time to get a mortgage and grab a house.

C) Low Competition
In 2020 and 2021, homes were flying off the shelf, some site-unseen. Homes found buyers in as little as one week. A depressed economy, however, means people don’t have purchasing power, so expect little competition for home listings.

The high mortgage rates and exorbitant home prices also mean supply will increase, so you will have plenty of homes to pick from, if you can afford it.

Tips For Buying A Real Estate In A Recession

Here are some tips if you want to purchase a home during a recession:

1. Do Your Homework
Sure, property will generally be cheaper, but that doesn’t mean you can’t get a better deal. Scour the internet and visit local listings. You might net the bargain of the century and maximize profits if you decide to sell the home later.

2. Know When To Walk Away
Just because it’s your dream doesn’t mean you should compromise everything to get the deal over the line. If you find an asset that meets all your requirements but is too expensive, ask the seller to lower the price. If they can’t, walk away. There are plenty of gems like that waiting to be discovered. Take your time to negotiate.

3. Get Your Finances In Order
First, you need a budget, a limit of what you can afford to purchase any property. That will act as a guide whenever you’re conflicted about how much you should spend.

That also means ensuring you have a good credit score to secure a mortgage, pay all the taxes, and have enough savings to stump up the down payment.

4. Shop Around For A Mortgage Deal
Yes, mortgage rates are lower than usual, but you can still get a better deal than most people. Considering mortgages involve vast sums of money, you’d be surprised how much money a few changes in decimal numbers will save you.

Go around looking at the deals mortgage providers offer to find one that suits you best. That would also be a good time to enlist a mortgage broker as they know the best places you can land a mortgage deal after considering your financial circumstances.

5. Hire A Real Estate Agent
Hiring a real estate agent is a great way to expand your reach in the real estate market. Agents have access to more properties than you could find by yourself and know where to strike a deal. They can also provide valuable advice, offer guidance, and negotiate on your behalf.

6. Obtain Concessions
Due to the market downturn, you should take advantage of all the rebates and real estate deals that come your way. Owners are under pressure to sell their properties as quickly as possible due to the drop in prices. Consult with your real estate agent to request concessions from the seller, but keep in mind the agents goal is to generate a commission, their incentive is to generate a sale.

7. Avoid A Bidding War
One benefit of purchasing in a down market is obtaining a reasonable price. Don’t let your emotions get you into a bidding war, as that will mean spending more than you had anticipated. An excellent way to go about this is to set a budget and adhere to it.

8. Realign Your Investment Strategy
As you’ve probably noticed, it is a down market, so properties aren’t moving fast. Therefore, you should approach a purchase knowing that you may not offload for a long time. It would be best if you reassessed your investment strategy.

If your strategy is flipping property, that may not work in a down market, its akin to catching a falling knife. It would help if you thought of long-term strategies, such as renting the property. That entails gauging the viability of the property as a rental unit before deciding to purchase.

Therefore, don’t spend your last dollar on a property hoping to get instant returns. Since you’ll be holding onto the property for some time, you should also ensure you have the finances to take care of maintenance and taxes.

Final Words

For the right investor, purchasing real estate during a recession makes sense. While mortgage rates are forced up to control inflation and create unemployment, they typically fall during the recession; once unemployment skyrockets up and the stock market tanks. Further, there are a lot of listings to choose from as there’s little competition.

I recommend you use the stock market as an early indicator of economic duress, the housing market as a less volatile marker, and the multifamily market as a lagging indicator; unless of course, a black swan happens to swim by and we have major demographic changes.

If you have the financial liquidity, you can grab a once-in-a-lifetime deal, especially if you enlist the services of experienced guides who have navigated a few economic cycles. However, you may have to keep the asset for some time since it may be a prolonged down market.

Blogs Property Investors Real Estate

How Real Estate Investors Can Prepare For Turbulent Economic Future

Investing in the future is the smartest thing you can do now, considering the economy contracted for two consecutive quarters, the typical textbook definition of a recession. Although, the US is still not technically in a recession, as the National Bureau of Economic Research is the only body allowed to make that call (and they haven’t, yet…), the warning signs are there.

What can’t be ignored is that the economy is contracting while productivity is declining, so it’s best to prepare for the harsh economic days ahead. Because of the unpredictable economic behavior, this article will discuss how to invest in your future so you can ride through the hard times.

1. Create An Investment Plan

The first step to building a financially secure future is to create an investment plan. With such a volatile market, you need a guiding star to help you commit to the master plan and avoid panicked decisions. An investment plan lays down a strategy after gauging all the market variables. That way, you can recognize and weigh all the risks when investing, enabling you to fulfill all your obligations still. The plan should help you realize the best investment vehicles.

The key to creating a plan is to be realistic about what you can achieve. Note that creating an entire financial strategy for the future in one sitting isn’t going to work. Instead, break down each piece into smaller steps that are manageable and achievable. Once you’ve figured out the steps, write them down, so they’re easy to refer back to when needed.

2. Diversify Your Investments

As is often said, never place all your eggs in one basket. Diversifying is an excellent way to get the most out of your money, even in the most troubling economic slumps. It means spreading the investments across different asset classes so that if one class tanks, another will likely thrive. Markets you can try your hand at include:

A) Invest In REITs

Real estate investment trusts (REITs) are a great way to invest in real estate without owning any property. They’re publicly traded on stock exchanges and often pay out dividends from their rental income. In a risk-off environment such as the current one, REITs are typically the oasis of hope, and it’s easy to see why. REITs offer relative inflation protection and high dividends but bear a low correlation to the stock market and have low transaction fees.

REITs are excellent investment vehicles for the long term, typically outperforming bonds and stocks in some periods. If anything, REIT’s average yield is over 3%, more than double what you would earn from S&P 500 stocks. What’s more, REITs are liquid, so you can get your cash as soon as the market opens.

B) Home Flipping 

You don’t have to own an entire rental property to reap the benefits of investing in properties. A neat trick to try is home flipping, which involves buying distressed properties at discounts, renovating them, and selling them for a profit.

C) Sandwich Lease

In this arrangement, you enter a rent-to-own agreement with a landlord, then lease it to a tenant. It’s one of the most cost-effective ways to enter into real estate, as the tenant will allow you to purchase the property after several years.

3. Concentrate On Marketing

Investing in your marketing strategy is one of the best ways to create a sustainable business. Marketing will boost sales and build your reputation, increase your relevance and demand, and cements your place among customers, creating a loyal customer base.

One of the most potent forms of marketing is digital marketing. The main way of doing this is through search engine optimization (SEO) using keywords. You target a range of words potential clients use when searching for real estate properties for Google to drive traffic to your online sites.

Digital marketing could take many forms, such as email marketing, blogging—which 56% of marketers say is effective, and social media. Posting content on social media is exceptionally effective considering 82% of Americans use social platforms.

Whichever form of marketing you settle on, you should try videos. According to Wyzowl’s research, 86% of marketers said videos helped increase traffic and generate leads, while 81% said they directly helped increase sales.

4. Automate Your Savings

Automating savings is a great way to ensure you always have money available for whatever comes up. The best part is you won’t even have to think about it as it works in the background.

It’s also a great way to start investing in the future. You can set up automated transfers from checking to savings and then start saving with every dollar. It’s easy, painless, and will save you money in the long run.

To automate your savings, use an app like Acorns or Qapital. These apps allow you to set up automatic savings plans, plan, and invest without making withdrawals at specific times as traditional banks do.

5. Start Investing In Yourself

Another great way to prepare for the future is by investing in yourself. There are many ways to invest in yourself, such as:

  • Go to class: There are many courses available online or at local community colleges that can help you learn more about real estate and expand your knowledge in readiness for the future. Most of these courses have classes on various aspects of real estate, including how to market yourself, use social media, and manage your finances.
  • Subscribe to emails from industry leaders: By signing up for newsletters from real estate professionals or companies, you’ll stay up-to-date on changes in the industry and what you can do to adjust.
  • Listen to niche podcasts: Podcasts are another great way to learn about topics related to your industry—not just real estate. There’s a ton of valuable information on marketing, management skills, and more.

The Bottom Line – Invest In Your Future, No One Else Has More Of An Incentive

Just because the economy is tanking doesn’t mean you must sink with it. Since business is low, now is the best time to invest in the future and realign your business so you can reap big when the market turns hot again.

Some of the best tactics you can employ include concentrating on marketing, investing in your knowledge, diversifying your investment portfolio, and automating your savings. Before you set out, you must create an investment master plan to guide you through turbulent times.

Blogs Real Estate

Creating Cornerstone Content That Converts Leads Into Clients For Real Estate

Real estate investors often get stuck in a rut of creating text ads, which, while effective at generating leads, rarely convert them into partners.

You should consider cornerstone content to build your brand and turn leads into partners.

Write cornerstone articles to make the potential customers’ decision-making easier. The cornerstone content should be the go-to resource for information about your industry and business that people can hold onto for reference and use as they look for more information about your services.

For instance, the return on investment (ROI) on commercial real estate is reportedly 9.5% per annum. Use cornerstone content to show how much experience you have in helping people purchase or sell such property at an even higher markup. So, here’s how you can use cornerstone content to convert leads into clients.

What Is Cornerstone Content?

Cornerstone content is a post that provides in-depth and valuable information for your clients. It could be a series of your best articles that you intend to rank highest on search engines.

Since they provide exhaustive content that includes comprehensive information rather than sell products, they tend to be longer and more complex. It could be simple blog addition or a stand-on page.

Cornerstone content is vital because it’s ideal for building trust and credibility since the foundational content helps build traffic and brand awareness by establishing you as an authority in the industry. That is crucial to showing potential customers what you can do, making them interested in your services.

The goal of the cornerstone content is to create a positive first impression, making them more likely to convert into paying customers. For best results, create cornerstone content once or twice every month, depending on how often you publish new content on your site.

How To Create Valuable Cornerstone Content

Here are sure-fire tips for creating cornerstone content that will help your real estate agency grow:

1. Choose The Right Topic

It may seem mundane, but this is perhaps the most crucial step of the cornerstone content.

Before settling on the topic, you have to ask yourself a series of questions, chief among them is the major pain points or problems the target audience faces. Next, find out what hasn’t been answered sufficiently on other websites, then determine which issues you can answer competently.

It helps to ask members of your team if there are common questions they face. In addition, ask real customers too. That should allow you to formulate cornerstone content containing unique insight that addresses burning issues.

2. Keywords And SEO Optimization Strategies

It’s not just the real estate industry; the first page of Google is where all the action is. As 95% of web visitors rely on the first-page result, ensuring your website makes the cut and appears on the first page is essential.

One of the best ways to do that is through keyword optimization. It involves using words and phrases relevant to what you’re selling and what clients are searching for and answering the potential customers’ most pressing needs.

For example, if you’re selling a house in San Francisco, you might want to put “San Francisco” and “Bay Area” in your title tag and Meta description. You might also include those phrases in the body text of your page so that search engines will pick up on them.

Another strategy is ensuring your site is easily crawlable by search engines using proper coding standards and following web design best practices.

3. Be Consistent With Formatting And Style

Your clients will recognize your brand more efficiently if your content follows a similar pattern and uses familiar language and branding. Engaging, high-quality, consistent content impacts a potential customer’s decision-making more than any other technique.

4. Internal Linking

Send the most internal links to your cornerstone posts as this signals to search engines that they are the most important, allowing them to rank higher. It helps to use text links, that is, the keywords as the anchor text for links and then link within the text itself. Ensure you’re linking from pages with related content.

5. Call To Action

Considering you’re creating the cornerstone content aiming to convert them into clients, it helps to insert a call to action (CTA) at the end of the article. A CTA instructs the reader to take a course of action. You can do this by using call-to-action buttons at the end of your post.

CTA’s are highly effective, but the best performing is personalized, which HubSpot found to be 202% more effective than their basic equivalents. For instance, ContentVerve turned the phrasing in their CTA into the first-person point of view. Instead of writing “start Your 30-day…,” they wrote “Start My 30-day…” and realized a 90% rise in the click-through rate (CTR). So, how do you ensure your call to action is clear and compelling?

  • Tell Your Readers Exactly What You Want Them To Do Next: Make it clear what they need to do next. Use action-oriented writing instructing them to take action, such as clicking a link to another page on your site or even asking them to leave a comment with their thoughts. The key is to be specific, so there’s no room for confusion.
  • Ensure The CTA Is Visible And Eye-Catching: If your readers can’t see the button clearly, it won’t matter how good your copy is—they won’t click on it. Make sure that whatever design element you use for your CTA is highly visible, accessible, and super apparent where to find it. The goal of any call-to-action is getting people excited about taking action—and for that excitement to translate into clicks.

6. Promote The Content

You can create the best cornerstone content, but it will be pointless if your target audience doesn’t read it. Since it takes time for new content to rank organically, make a splash by promoting the content in the meantime.

Email promotion is one of the most impressive ways of doing it, with 4 billion daily users. It’s telling that 59% of respondents said email marketing influenced their purchasing decision.

Social media is another potent outlet considering 72% of Americans use social media daily. Focus on platforms that work best for real estate, personalize text and images for each platform, and share more than once.

7. Maintenance

Finally, you must maintain the cornerstone content’s health to remain evergreen. Monitor the performance, update information regularly, improve loading speeds, and give it a style refresh every few years to keep it looking up-to-date.

Final Word

If you’re a real estate investor, cornerstone content might provide the tipping point of turning leads into clients. You can do that effectively by researching suitable topics, conducting keyword research, and creating content with plenty of internal links and a personalized call to action.

Ensure you maintain consistent messaging and branding across the cornerstone content, promote the posts, and keep updating the content to keep them evergreen.

Blogs Invest In Large Multifamily Property Real Estate

How To Be A Successful, First-Time Homebuyer In 2022

Mid-2022 is probably the worst time to buy a home. Median home prices hit an all-time high of $440,000 in July, and mortgage rates are at 5.5%, almost double what they were last year.

While buying a home now may seem a terrible idea, there are ways to bag yourself a good deal. So, these are some tactics you can employ to ensure your purchase doesn’t become a financial nightmare.

1. Do Your Research
Before looking for a home, you must understand the market to know what’s within your budget. Sure, most home prices have skyrocketed over the past few months, but there are some places where it’s coming down.

For instance, according to Redfin, Salt Lake City, Boise, and Denver all witnessed at least 50% cuts in asking prices. Seven more cities, including Tampa and Sacramento, saw asking prices slashed by more than 44%.

So yes, you can still bag yourself a deal in the current environment, as long as you are willing to do the legwork and compromise on the places you wish to live in.

2. Build Your Credit History
It helps to build your credit history if you’re a first-time homebuyer. A poor credit score makes qualifying for a mortgage loan challenging or attracts high premium rates because financial institutions will view you as a risk.

If you have little or no credit history, you may need to take steps to build up your score. Here are some tips for doing so:

Pay all your bills in full and on time: Even if you don’t have any credit cards or loans yet, you should make sure that any bills you pay regularly (such as rent or utilities) are paid on time and in full. It will help establish your payment history and show lenders that you’re reliable with money.
Don’t open too many credit cards at once: If you decide to apply for a credit card, make sure that you only use one at a time so that it doesn’t hurt your credit score too much if the application gets denied (or approved but with a low limit).
Minimize utilization rate: Your balance-to-limit ratio (utilization rate) is just as important as payment history. It refers to the total balances racked up on all your credit cards divided by the total credit limit of all the credit cards. Aim to keep this figure below 30%.
3. Make A Sizeable Down Payment
Making a sizable down payment toward buying your home is vital. The down payment is typically between 3% and 20% of the home’s purchase price.

You want to make a large down payment because it will lower your monthly mortgage payments, saving money in the long run. Additionally, making a large down payment means avoiding paying private mortgage insurance (PMI).

PMI is an additional fee that many lenders require as part of their mortgage loan package. It protects them if you default on your loan—but it can add hundreds or even thousands of dollars to your monthly mortgage payment.

You can avoid PMI by paying more than 20% of the home’s purchase price as a down payment. Alternatively, you can avoid a down payment by getting a piggyback or 80-10-10 loan, which covers 10% of the deposit while you deposit the other 10% from your savings.

4. Get Pre-Approved For A Mortgage
When you’re a first-time homebuyer, getting pre-approved for a mortgage is one of the most important steps to ensure you find the right home.

Getting pre-approved means that a lender has reviewed your finances and determined that you can afford a home at a certain price range. Your agent will know how much house you can afford, so they don’t waste time showing you homes that are beyond your means.

5. Try Out For First-Time Home Buyer Grants And Programs
First-time homebuyers have several financial assistance programs that will soften the sting of the hefty payments needed to purchase a home.

A first-time homebuyer’s grant refers to financial assistance you may receive to purchase your first home. It typically covers a percentage of the down payment and closing costs. Since it’s a grant, you may not have to repay the amount. Examples include:

Downpayment Toward Equity Act
Good Neighbor Next Door program
Bank of America’s Home Grant
Chase Bank Homebuyer Grant
On the other hand, first-time home buyer programs usually come from federal, local, or state governments and take the form of tax credits, forgivable mortgages and closing costs, and down payment assistance.

You may qualify for the Housing Choice Voucher if you face financial challenges due to a low income and receive minimum earnings as stipulated by your local public housing authority. A clever way to use the voucher is to fund a rent-to-own program.

Similarly, you can apply for an FHA loan. These are Federal Housing Administration-insured loans made by private lenders, usually featuring zero-interest loans and deferred payment loans. Moreover, they typically have lower down payments and require lower credit scores than most other mortgage loans.

6. Use A Mortgage Broker And Agent
It pays to consult a mortgage broker in such a tight financial environment. They know the ins and outs of the mortgage industry, so they can find you a mortgage with lower fees, great rates, and financial perks and help you overcome borrowing challenges.

Similarly, procure the services of a real estate agent. Using an agent is one of the best ways to ensure a smooth process and a successful outcome. No wonder 87% of homebuyers used an agent in their home purchase.

Real estate agents or brokers know the market and can help you find your dream home at your price range. Ensure that the agent knows your unique needs so they can find the ideal property that fits your lifestyle.

7. Consider Variable-Rate Mortgage
A variable-rate mortgage can be a good choice at this point. You don’t want to go for a fixed-rate mortgage with fixed interest rate monthly payments throughout its lifespan, as the current mortgage rates are very high.

An adjustable-rate mortgage will have fluctuating mortgage rate payments, so you will pay lower fees when the interest rate is eventually lower. Further, an adjustable rate payment allows you to make higher monthly mortgage payments without penalty. That means there’s a chance you might pay much less than a fixed rate arrangement.

Additionally, variable-rate mortgages typically have lower initial interest rates than fixed-rate mortgages, which means they’re cheaper upfront. That could buy you some time until the interest rates finally dip.

Finally, you could refinance the variable-rate mortgage and exchange it with a fixed-rate mortgage when the interest rates eventually drop to reasonable levels and it makes financial sense to do so.

Final Word
Many potential first-time home buyers are postponing the purchase because of the hostile economic environment that has rendered homebuying virtually impossible.

Home prices have reached historical highs, and mortgage rates are double what they used to be in January 2022, with more hikes in the pipeline as the Fed is threatening more interest rate hikes.

If you must buy a home, try looking for one in states that have lowered their asking prices, utilize a mortgage broker and real estate agent to find deals for houses and mortgage rates, and build your credit history to score favorable loan terms.

Similarly, consider a variable-rate mortgage, make a sizable mortgage down payment to reduce your monthly mortgage payments, and try to secure a first-time home buyer grant or similar program.