Over the last few years people have been experiencing tremendous value appreciation of their properties across the country. It has become a day-to-day event where we hear every other person narrate stories of their homes having appreciated in value. This is actually not true. Houses do not appreciate in value. It is the land, on which the house is built, that appreciates. If not maintained properly the value of the house will only go down. The only thing you can do is take steps that ensure the appreciation of the value of the house.
In a hot real estate market, investors will only look for land, irrespective of whether a house is built or not. The land is the investor’s desire and the house built on this property may not be used at all. Owning a piece of land in areas where real estate is booming is like owning gold. If you are an investor, it is important to understand how property appreciates.
Understanding appreciation will bring a whole new perspective to the deals you have been trying to make. A small two-bedroom apartment that might look unattractive for a deal might actually be on land which real estate considers hot, making it a goldmine.
A simple matter of supply and demand will make a land’s value appreciate. The most sought after cities in the country do not have land that can be used for further development. This will lead to the appreciation of value of a house even though it is built on a smaller piece of land. Hence, it is very essential for an investor to understand appreciation.