#674: Do You Recall When Inflation Was Elevated and Interest Rates Were Increasing? [GREATEST HITS]

      Welcome to Greatest Hits Week – a five-day series featuring five episodes from our archives, spelling out F-I-I-R-E. Today’s letter R represents Real Estate. This episode first aired in May 2022, but the insights on long-distance investing remain pertinent for anyone who feels priced out of their local market.

      We address the five primary challenges of investing from afar, ranging from the fear of the unknown to the difficulties of managing contractors remotely. Additionally, we highlight four significant benefits that justify the effort, particularly in competitive markets dominated by million-dollar properties.

      ________ Remember when inflation was high and interest rates were increasing? What were the conversations surrounding real estate at that time? With the advantage of hindsight, how much of our previous understanding turned out to be accurate? If you're feeling uneasy, you're not alone. At this moment in December 2025, interest rates are decreasing, but not sufficiently. Inflation is largely under control, but it's still not ideal.

      The surrounding noise makes everything seem novel. When focused solely on the present, situations appear straightforward. However, looking back reveals underlying patterns.

      That’s why we're revisiting May 2022, a time of rising interest rates and near-peak inflation.

      What were we contemplating three years ago?

      We start with fundamental concepts: Why the Federal Reserve increases rates, the impact of higher borrowing costs on spending, and why declining stock prices often signify fear rather than indicating that housing prices must also fall.

      We clarify the distinction between recession and deflation, explaining why they’re frequently confused.

      We analyze what differentiated the housing market in 2022 from that of 2008. Inventory was limited, builders had not oversupplied the market, and many homeowners had fixed-rate mortgages along with record equity levels.

      These circumstances were significant then and remain relevant today.

      Next, we focus on equity, discussing cash-out refinances, HELOCs, and reverse mortgages, as well as the implications when homeowners borrow against growing values.

      You’ll hear how increasing rates may impede borrowing, the importance of that for inflation, and the risks that arise if some borrowers have trouble repaying.

      From here, we identify four possible avenues for investors if foreclosures increase: bank-owned properties, short sales, “subject to” agreements, and wraparound mortgages.

      The episode then transitions to long-distance real estate investing, addressing the real challenges involved: fear of the unknown, managing unseen individuals, disappearing contractors, and agents who stop responding.

      You’ll also learn what makes distance investing feasible: education, relationships, and local investor networks.

      We discuss how investors navigate uncertain conditions and why reflecting on the past enhances their perspective on future developments.

      Resources:

      Afford Anything podcast episode #379

      Timestamps:

      (Note: Timestamps may differ based on individual listening devices due to dynamic advertising run times. The provided timestamps are approximate and may vary by several minutes because of changing ad durations.)

      (0:00) Trade-offs and priorities

      (3:25) Fed raises rates

      (5:00) Explanation of inflation drivers

      (7:10) Recession vs. housing

      (9:05) Surge in home equity

      (11:05) Borrowing against equity

      (12:55) Foreclosures and options

      (14:10) Subject-to agreements and wraps

      (17:55) Transition to distance investing

      (18:35) Fear of the unknown

      (21:15) Education and networks

      (23:20) Selecting markets

      (27:55) Accountability challenges

      Thanks to our sponsors!

      Boldin: Model your retirement scenarios, explore every “what if,” and confidently take charge of your financial future. Start planning at go.boldin.com/afford

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