Is Building Appreciation Important When Investing in Property?

Posted by on Apr 4, 2016 in Blog - Commercial Investment Properties | 0 comments

Is Building Appreciation Important When Investing in Property?

 

When a potential buyer comes to us looking for assistance in securing an investment property, they are almost exclusively focused on long-term income potential as compared to immediate resale value as a house flipper would be. Investment property is more about the long haul, improving building conditions to maximize monthly profit and having a full capacity of reliable tenants. That being said, what happens when an investor wants to ‘get out of the game?’

If an investor has a profitable property, there are rarely instances when they would want to sell said building. Property investing is wise well into retirement and it is one of the true passive income opportunities that actually pay off. Then again, an immediate need for large sums of cash or the failure to find reliable property managers could have the headaches outweighing the benefits and it may be time to sell the property.appreciate

This raises the question of how much resale value and building appreciation should be taken into account when buying a property? All things being equal, it’s a no-brainer to choose the property that exhibits high resale value factors such as:

  • Proximity to schools
  • Great views
  • Location near parks, shopping centers, golf courses, and other areas of attraction
  • Situated in safe neighborhoods
  • Future development availability (positive and negative)
  • Strong history of property appreciation

Should a building that doesn’t exhibit these factors be a reason for not buying it though? Remember that these factors aren’t important to every tenant and property in these locations are going to have a higher price tag to begin with.

Another thing to remember is that building appreciation isn’t entirely based on luck. You can create appreciation by staying up to date on repairs, making building improvements over time, and leasing to quality tenants that will create a positive reputation for the neighborhood. Therein lies the secret of investing in property – buying a building, making ‘free money’ for the duration of ownership, then selling at a major profit from the initial purchase price.

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