Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
General Real Estate Investing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 10 years ago on . Most recent reply

User Stats

136
Posts
76
Votes
Riley F.
  • New York City, NY
76
Votes |
136
Posts

Appreciation - how to factor it in?

Riley F.
  • New York City, NY
Posted

For buy and hold investors out there, how do you guys think about appreciation and how do you factor it in to your buying and selling decisions, if at all? What key factors do you use to measure the potential for appreciation and where do you find this data?

As an illustrative example, would you be willing to go down in CoC yield from 15% to 10% for the potential for appreciation, all other things being equal (I know that they never are).

Most Popular Reply

User Stats

17,995
Posts
17,199
Votes
J Scott
  • Investor
  • Sarasota, FL
17,199
Votes |
17,995
Posts
J Scott
  • Investor
  • Sarasota, FL
ModeratorReplied
Originally posted by @Elizabeth Colegrove:

I factor appreciation in the fact that I invest in areas that experience appreciation in both rent and market. It is important to me the area appreciate's more than inflation in order to keep my cash flow intact. 

To me, that's like saying, "I buy stocks that I know will go up for the next 30 years."

Sounds good in theory, but even Warren Buffett doesn't have the ability to predict company performance long-term -- which is why he buys companies and controls their futures.  The equivalent for a real estate investor would be to buy an entire city (and run the city council) in order to have full control over its growth and expansion.  Unfortunately, that's not feasible, which means real estate investors are -- for the most part -- at the mercy of market and political forces that they have little control over.

For example, many would say that northern CA (Bay Area, Silicon Valley) will continue to appreciate based on it being a technology hub where a disproportionate number of people make disproportionately large salaries and income.  Well, what happens if, in 20 years, Silicon Valley is no longer a tech hub?  It would just take a few big companies moving out of the area -- due to tax issues or the political climate -- to change the entire local economy.

You may think it could never happen, but are you willing to bet large sums of money on it?  Many people are.  I'm not.  To each his own.

Loading replies...