Posted by We answer lots of questions about why it’s good to invest in real estate. We thought you might want to know our top four reasons for owning investment property!
This is part 2 of a 4 part series of blog posts:
1) Cash Flow
2) Appreciation
3) Paying Down Your Loan
4) Tax Benefits
Appreciation
We appreciate you reading our blog posts! But that’s not the “appreciation” we are referring to when talking about reasons for owning investment property.
Appreciation is the historical trend that properties rise in value over time. Sure, there are corrections in price when the economy is suffering like in 2007, but over the years, property values usually increase.
If you currently live in a home that you own, you’ve probably seen this happen first hand. You get a tax assessment every year and it’s rare that the assessed amount goes down.
Let’s say that you bought your home for $250,000. Ten years later, that home might be worth $270,000-$300,000 based on how well real estate performs related to the economy. If you sold your home, you would realize $20,000-$50,000 of gain (minus closing costs, etc.)
And that’s an example for just one home.
In the first part of this series, we talked about buying multiple investment properties and assumed that you were able to purchase 5 homes over a period of years. When you start multiplying appreciation gains across multiple investment properties, the numbers really start to add up. You could be looking at $100,000-$250,000 of potential gain after 10 years. (We say potential, because you won’t realize a gain until you sell the properties, and many investors choose to hold them for the long term.)
Next week, we’ll talk about the third benefit of owning investment property, Paying Down Your Loan!
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