It is my belief that for the next 6 months RE prices are likely to be lower than inflation. 

The fed has already all but committed to more rate hikes, and my own personal speculation is that inflation numbers will continue to be bad for at least the next couple quarters, which will cause the fed to clamp down further with higher rates.I suggest you create a "worst case scenario" financial model, where everything goes horribly wrong in your deal (i.e.; rates go way up, the property has major unexpected capex, vacancy is high, etc., etc.).  ...in fact, I'd say that ALL investors should create a "worst case scenario" model when analyzing any property...although that worst case scenario may not occur, knowing what it would look like will help you make a better decision.Good luck out there!

Due to inflation of prices, I found myself a little over budget in the past few rehabs. 

A well located and well run dry cleaner, convenience store, auto repair facility or juice bar can be a steady paying tenant for 20 years with rental increases covering the rate of inflation, or more.  

With rents going up and interest rates going up - long term rentals look like an excellent hedge against inflation.

Some are telling me to hold for the market to shift but, I'm not convinced we'll see the shift many are anticipating unless we see a flood of foreclosures due to inflation.

Add this huge demand/supply issue to the new risk identified due to COVID eviction moratoriums, high mortgage interest rates, high property values, robust job market, and significant general inflation and the rents in San Diego are very likely to continue to increase as a high rate.Note, at the average monthly rent increase, the rent per unit is ~$6k/year more than a year ago. 

There's always the possibility that the inflation will save the day by racking up the sales even though foot prints don't change.What would your advice be for this? 

Now, I know the cash flow is super-low per unit, but if it's rare to find something that cash flows immediately, if it's diversified across a good number of properties and if we could be in for inflation and potential rent rate increases, does this sound like a good deal? 

You are essentially pre-paying, at hugely inflated costs, a week or two's worth of hotel rooms each year.