Alas, nobody knows the answer to these questions and anybody who tells you they do should be avoided at all cost I’m not going to let the fact that no one actually knows for sure stop me from investing in real estate. Well, therefore, I’m actually taking measures of managing risks with my investments, including the risk associated with inflation and high interest rates.

This is how I am preparing for the portfolio in 2025 and the year that will come after.

• A Balanced Approach: Equity and High-Yield Debt

Bonds, which are fixed low-interest debt instruments are usually tender to affect during inflation.

For example, when inflation went up to 9.1% in 2022, the returns on treasury bonds with a 2% interest rate proved repellent and.triggered huge losses to bond holders.

On the other hand, the fixed income investments, like equities for instance stock and property, are relatively more immune to inflationary trends. There, companies can change the prices of goods, and the landlords enjoy the privilege of raising rents each time it feels like doing so.

I hold a majority of equity in real estates and stocks, minuscule amount of high yielded debts that are backed up by real assets. Despite the fact that inflation could help drive down the real returns on these debt investments, these still have a good fit within my strategy.

• The Financing Factor: Locking in Stability

In the last few years, our Co-Investing Club has not focused on short- or variable-rate money, which is often referred to as floating rate money.

Since it is very hard to predict how long interest rates will remain high, we focus on instruments that are protected in one way or another, it can be fixed rate loans or rate cap or even swaps. Also preferred is levered to situations that presents sufficient duration before debt maturities to sell or refinance when market is favorable.

• Cash Flow Takes Center Stage

Cash flow remains one of the key components of my investment process. Of course, appreciation is nice but, personally, I like putting my money in things that will give me a steady cash flow.

Why? Because it implies that flexible cash flows pay off during the reign of recession. For example, one that we looked at in the club level provides 8.6% of total returns in Year 1 increasing gradually to 12.7% in future steady state.

On the other hand, investments with low cash flows make them easily turn into a weak position where they become liquidations in adverse conditions. Healthy cash flow means that you do not need to sell right now because the cash is good, just wait for the market to be at the right position to pull out profits.

• Interest-Robust Investments

I quit simple things like trying to forecast each move that the Federal Reserve will be taking. Instead, I pay much attention to those investment options that can be operational even with varying interest rates.

For instance, one of our recent investments intends to be refinanced in 3-5 years with the purpose of getting back the initial investment. But even if interest rates stay high this asset produces good cash flow until the right time to refinance or sell.

We have also ventured into such markets based on opportunity such as a land-flipping fund that is not dependent on interest rates has been great booking low thirties returns. Some of other activities include house flipping and construction of speculative homes that are known to generate good returns in ‘any’ state of the economy.

• Risk taking and Capture of Opportunities in Distressed Market

Though risk management has and will continue to be pursued, there will also be investment on the distressed opportunity side.

More recently we were able to buy a property from a hedge fund who had to dispose of assets due to problems with their floating rate debt. Besides, this investment yields 8 pct today, and within a year, expected to be 9.5 pct, making annualized returns greater than 20 pct.

It or that is important to note that we judge these deals with the long-term outlook, in case the market fails to experience the improvements needed for these investments shortly.

• Diversification: The Foundation of Resilience

In contrast to trying to find what is popular at the moment, I aim at, and try to make, diversification. The properties in my portfolio include the following and are located in the following markets:

Market timing is one that I have decided to rule out all together being the toss of the dice it is. However, I promise myself to make regular monthly investments based on the agreed fixed amount though the Co-Investing Club.

Leveraging for duration not speed Summary Investing for endurance and not the flash receive more often than not, more profits and returns in the investment that is created.
However, the concept of diversification may not yet sound very inspiring, yet this is a strategy that has been known for a long time. I minimize the risks resulting from market fluctuations through diversification by investing an amount throughout different time frames, geographical locations, and asset types.

Some individual investment propositions may have problems, but a diversified strategy allows me to remain on the right track for the long run. Other players may cut away investments when the going gets tough, in other words, when there is a downturn my survival is geared to take advantage of the situation.

In investing, being wise or clever turns out as nasty as it sounds. But the real focus is to construct career collections which will endure.