How to valuing the property for appreciation?

[Vivek Sapre]

Hi,

I want to get an idea from all those people who invest for appreciation on how do you guys calculate the worth of an investment.

What about current negative cashflows howmuch do you consider worth. Can you give some insight into this. 

do you have any worksheet to look at the calculations 

Till now I am only doing cash flow based investments so this will be helpful.

Thanks

[David Song]

I invested initially for cash flow only, but over the last 12 years, what I realized is that the main financial gain is from appreciation, not from cash flow. Right now, my main focus is a good balance between cash flow and appreciation.

Cash flow is something you can see right now. Appreciation is something you can not accurately see immediately. 

To estimate appreciation, I currently use the general inflation benchmark as a baseline, with a few extra point for the Bay Area.

As far as the exact appreciation percentage per year, that is not something we can control or accurately predict.

My gut feeling is that higher inflation will translate into higher appreciation. Therefore, in the next few years, the appreciation will be higher than normal.

Bay Area showed tremendous appreciation this year, as high as 30% compared to same period last year. Whether that trend will continue is up for debate. My bet is that it will keep going up as inflation pressure is there.