Afford Anything Podcast: [R] Remember When Inflation Was High and Rates Were Rising? [GREATEST HITS]

Host: Paula Pant | Guest Co-host: Sunny Rao
Original Air Date: May 6, 2022 (Re-aired December 25, 2025)
Theme: Real-Time Reflections on Investing During Peak Inflation; Long-Distance Real Estate Investing: Benefits & Challenges

Episode Overview

This episode takes listeners back to May 2022—a period of intense uncertainty when inflation was peaking at 9% and interest rates were rising rapidly. Paula Pant and co-host Sunny Rao discuss the climate of economic anxiety, address fears around real estate investing during such volatile times, and deliver a deep dive into the benefits and challenges of long-distance real estate investing.

Paula frames the episode as a "time machine" to capture what it felt like to make decisions during moments of crisis and how hindsight can inform our approach during new waves of uncertainty.

Key Discussion Points & Insights

I. Setting the Stage: May 2022’s Economic Anxiety

[00:01–07:39]

• Peak Inflation Context:
  • May 2022 marked peak U.S. inflation at 9%, highest in 40 years.
  • The Fed aggressively raised interest rates to curb inflation, stoking fears of an impending housing crash and recession.
• Podcast as Real-Time Record:
  • Paula emphasizes podcasting’s value in preserving uncensored snapshots of what people actually thought and felt during periods of uncertainty.
• Hindsight vs. Reality Check:
  • Revisiting past anxieties reveals how perceptions change and warns against recency bias (“waiting for the next crash”) in decision-making.

Memorable Quote:

"We have a real-time record of what we thought in the moment. The uncertainty, the assumptions, the fears, the expectations...when we understand that past uncertainty, we can recognize patterns when new uncertainty shows up." (Paula Pant, 03:07)

II. The Macro Environment: What Was Happening in May 2022

[07:39–22:08]

• Market Movements:
  • Another Fed rate hike announced on May 5, 2022.
  • Worst day for stocks in 2022 so far.
  • Fears: Will higher mortgage rates crash home prices?
• Inflation Mechanics Explained:
  • Upstream supply chain disruptions and labor shortages persist.
  • Wage-price spiral: Wages up 5%, inflation 6–9%.
• Housing Market Dynamics:
  • Elevated home equity: Average mortgage holder had $185,000 in equity ([13:17]).
  • Worries about increased HELOCs, cash-out refis, and potential future foreclosures – but distinctions from 2008 outlined:
    • Tighter lending standards
    • More fixed-rate loans now (less risk from rate spikes)
• Potential Investor Opportunities if Foreclosures Rise:
  1. Buy foreclosed homes (REO or HUD).
  2. Purchase short sales.
  3. 'Subject to' financing—taking over existing loans ([15:55]).
  4. WRAP mortgages—layering new and existing financing ([18:02]).

Memorable Quote:

"The drop in the market is a reflection of investors being worried about the possibility of an impending recession. But a recession is not synonymous...with a decline in home values." (Paula Pant, 11:34)

III. Five Challenges of Long Distance Real Estate Investing

[25:52–48:51]

Sunny Rao and Paula Pant list and dissect five major challenges, with audience questions voiced by a third speaker (designated C):

1. Fear of the Unknown

• Investing far from home is daunting: “I am afraid of what I don’t know.” ([27:07])
• Antidotes:
  • Education (knowledge)
  • Networking (building relationships, especially with local investors)
• Paula’s personal experience: Chose Indianapolis not for market stats but due to strong local network ([30:19]).

2. Holding People Accountable

• Harder to manage and ensure reliability of agents, contractors, and property managers remotely.
• Solution: Leverage local investor networks for referrals and due diligence.
• Quote:

  "You wouldn't be able to [swing the hammer] anyway—even if you were local." (Sunny Rao, 37:13)

• Fire fast and ask for referrals from trusted local community ([38:23-39:19]).

3. Traction

• Slower perceived project progress; distance amplifies frustration.
• Solution: Use technology (e.g. FaceTime walkthroughs), set realistic timeframes, and accept some delays happen regardless of distance ([43:20]).

4. Stress

• Emotional toll from setbacks, especially at a distance.
• Approach: Recognize setbacks are normal, connect with others to share and process challenges, maintain reserves, and keep a long-term outlook.
• Quote:

  “I literally drank a bottle of wine by myself on the couch…until friends reassured me they’d all been through it.” (Sunny Rao, 45:45)

5. Relationships

• Harder to form rapport and trust remotely.
• Adaptation: Use digital tools (Zoom, WhatsApp), be intentional about outreach and nurturing connections even at a distance.
• COVID taught everyone to do business virtually ([47:08-48:23]).

IV. Four Benefits of Long Distance Real Estate Investing

[51:05–77:14]

Paula and Sunny break down the case for looking outside your own backyard:

1. Ability to Compete

• High cost-of-living areas are tough to enter, competition is fierce, and cash flow is often weak.
• Lower-cost markets (“the map opens up”) let you make competitive bids and gain hands-on experience with less capital ([52:33–55:28]).
• Quote:

  “Going from zero to one property is much more difficult…once you get traction in lower cost markets, the flywheel starts spinning.” (Paula Pant, 55:28)

2. Diversification (in four forms)

• Economic: Different local economies lessen risk from shocks—spread properties across regions, cities, or counties.
• Strategy: Flip in one area, buy-and-hold in another, pursue different property types.
• Business Cycle: Markets aren’t synchronized—one market may be booming, another recovering, a third stagnating.
• Asset-Based: For the same money, more units = less risk. E.g., 10-unit complex in Midwest vs. duplex in expensive metro ([69:04–69:54]).

3. Returns

• Lower-priced markets often offer better price-to-rent ratios and cap rates.
• Use of investor "rules of thumb" like the 1% rule discussed.
• Quote:

  “At the end of the day, you want to get a strong dividend on the asset you’re holding. That’s more feasible in investor-friendly markets.” (Paula Pant, 72:08–73:43)

4. Repeatability

• Developing systems allows you to “lather, rinse, repeat”—apply investment skills in multiple new markets.
• The first deal is the hardest; scaling gets easier with practice.
• Quote:

  “The first property is the training wheels property…The more you do it, the more graceful it becomes.” (Paula Pant, 74:51)

Quotes & Highlights (with Timestamps)

• On Real-Time Learning:

  "When we understand that past uncertainty, we recognize patterns when new uncertainty shows up." (Paula Pant, 03:07)

• On 2022 Anxiety:

  "People were worried that home prices were going to collapse." (Paula Pant, 01:10)

• On Investor Fear:

  "I am afraid of what I don’t know." (Sunny Rao, voicing audience, 27:07)

• On Overcoming Fear:

  "The antidote is knowledge…and networking—it’s making friends!" (Paula Pant & Sunny Rao, 27:41–28:33)

• On Local Networks:

  "Real estate is about people, not properties." (Sunny Rao, 29:02)

• On Scaling:

  “The flywheel starts spinning…going from zero to one is much harder than from four to five.” (Paula Pant, 55:28)

Important Segment Timestamps

• [00:01] – [07:39]: Introduction, May 2022 Economic Context, Concept of Hindsight
• [07:39] – [22:08]: Macro Environment, Inflation, Rising Rates, Housing Market Risks and Opportunities
• [25:52] – [48:51]: The Five Challenges of Long-Distance Real Estate Investing (fear, accountability, traction, stress, relationships)
• [51:05] – [77:14]: The Four Benefits of Long-Distance Investing (competition, diversification, returns, repeatability)
• [74:51]: “Training wheels property”—learning curve in real estate
• [77:14]: Episode wrap-up—announcements and resources

Tone

Practical, empathetic, and candid; empowering listeners to act despite market uncertainty. The episode uses approachable analogies (“training wheels property,” “opening up the map”), audience questions, and personal stories to ground its advice.

Summary Takeaways

• Market context matters—look back to truly learn from past fear and decisions.
• Don't let fear or distance hold you back. Knowledge, local networks, and technology can help you leap geographic barriers.
• Major challenges (fear, accountability, traction, stress, relationships) are surmountable with intention, education, and the right community.
• Benefits abound when you invest long distance: you get better deals, more diversification, higher returns, and can scale up faster.
• Start small, learn by doing, and remember: the first step is the hardest but most important.

For listeners or would-be investors anxious about “timing it right,” Paula’s core message reverberates: Don’t let recency bias or uncertainty keep you on the sidelines—be strategic, build community, and let long-term systems and diversification work for you.

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