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One of the main things real estate investors chase after when making and caring for their investments is appreciation.
But what exactly is real estate appreciation?
While appreciation is the process of an investment gaining value over time, there is more to it than that. So, if you would like to build a deeper understanding of appreciation and how it can impact how you approach real estate investing, you’re in the right place.
But first, if you are chasing appreciation for your real estate investments, you want a mortgage that you can easily manage and afford so that you can hold on to your assets long enough for them to gain value. So, to get started today, click the link below for a free strategy call with our team at LendCity to discuss your financing options.
What is Real Estate Appreciation? How Does it Happen?
In short, real estate appreciation is the process of property gaining value over time through various factors.
One of the main ways that property appreciates is over time through inflation and market growth.
Over time, inflation drives up the prices of most things – including real estate. This means that properties worth $300,000 one year may be worth $400,000 over the next few years without too much work simply because the market expanded and values were driven up.
You can also encourage appreciation in a property by improving various rooms, features and amenities that would make the property more valuable. This can be done by replacing old features like the sink or toilets, fixing and repainting the walls, redoing the landscaping and more.
The forced appreciation a property experiences through renovations is the primary source of profit that flippers pursue when working on a property.
How Appreciation and Equity Can Help You Invest Further?
Now that we’ve looked at how appreciation happens, it is time to look at how you can use it to invest further.
So, the increased value of your property is known as equity, and there are plenty of ways to use your equity to make additional investments.
The first and most straightforward method is selling your current property and using its new, higher value to buy something that is worth more than your initial investment or using the money to buy multiple smaller investment properties.
Another method is leveraging your equity using one of a variety of tools. These can range from a second mortgage to refinancing your existing mortgage to using a Home Equity Line of Credit (HELOC) to draw on your equity as needed.
What connects all these methods is that they allow you to use the equity you have gained through appreciation without letting go of your initial investment.
If You Are Ready to Invest
If you are ready to invest, let us help you qualify for the best available mortgage so you can spend less time worrying about financing and more time focusing on encouraging appreciation in your investment properties.
To get started today, all you need to do is click the link below for a free strategy call with our mortgage team at LendCity.