Rehabbing and appreciation

[Nick Ambrosino]

Newbie here (2nd post).  My partners and I are considering rehabbing an 8 unit mixed-use building in Greenpoint.  At what rate do we calculate appreciation for such a property?  Is that number a pure guess or is this a historical basis for calculating appreciation based upon geographic area.  TIA.

[Will Barnard]

On a buy and hold, appreciation is the gravy and really should not be part of your initial analysis on your deal. That said, appreciation may or may not be important depending on your strategy and goals. Some buy for cash flow while others buy for appreciation (like CA). What you intend to do with the property is vital. You can certainly "force appreciation" through value adds like renovations, decreasing operating costs, and increasing gross incomes. Increasing gross incomes can come from raising rents or adding other income streams like covered parking, coin laundry, storage, cell phone towers, bill boards, etc.