Examples of Forced Appreciation

By Paul Branton, Director of Investor Services for Home Rental Services

It’s been another productive summer here at HRS! We’ve leased 80 homes to new tenants so far in 2019 and over half of those (43 to be exact) were leased in the months of May, June and July. With a total of only 64 business days in those months, that means we leased a home every other business day! Wow! (If we also included summer lease renewals, that 43 figure would jump to over 100!!) Double Wow!

So as this summer is winding down, I’m reminded of my post from about this same time last year where I wrote about ‘Real Estate Investing Lingo Defined – Part 2’ and referenced the term “forced appreciation.”

We put the principle of forced appreciation into practice this summer and I wanted to share three examples of how we helped our clients increase the return on their investments.

Forced Appreciation Examples

Example #1 (Haskins)

Kitchen Before and After

New updated countertops and a new vent hood

• Prior Rent Amount – $1,050
• New Rent Amount – $1,199
  • Forced Appreciation = $149/m

Example #2 (Gallery)

Kitchen Before and After

Basement Before and After

LVP Flooring, New Granite, Backsplash New Stove

• Prior Rent Amount – $1,625
• New Rent Amount – $1,745
  • Forced Appreciation – $120/m

Example #3 (Goodman)

Kitchen Before and After

Entry Before and After

Living Room Before and After

LVP, Carpet, Painting

• Prior Rent Amount – $1,299
• New Rent Amount – $1,399
  • Forced Appreciation = $100/m

I don’t know about you, but I much prefer the ‘after’ photos. Wait, who cares what I think! It’s all about the renter… and the current market of renters is willing to pay the higher monthly rate for an updated property.

So, the lesson to learn here is… If you make the right improvements, you can increase the return on your investment properties!

Happy Investing!