Appreciate the Appreciation

“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security”

- Russell Sage

Real estate markets, like the weather, have their seasons. But unlike a trendy toy, houses tend to become more valuable over time due to high demand and limited land. While you may remember Beanie Babies, Pokémon cards, or even Squishmallows and fidget spinners erupt in immediate value when they first came out, very few still hold their value.

Unlike in the previous examples, in real estate, pretty much everything appreciates over time! It may take a while, like waiting for a tree to grow. The thing about this kind of market is that it ebbs and flows like tides. Sometimes, the appreciation that takes place is strong and fast, and other times, it’s gentler and slower. You have to have the ability to be patient.

An option that’s going to be a good, safe idea in the long run would involve buying property and waiting to resell or refinance it. The value will come, it just takes time. You might be able to sell your property at 200% of the price you bought it for, but that kind of thing is typically going to take some years to get in motion.

That’s alright! As long as you have that property, you can be making money through the numerous other profit centers of real estate, like cash flow. The trick with appreciation is that you need to be patient, and good things will come to you.

Another awesome factor in this is that, when you buy a property, you generally finance it through a bank, which can cover 75-90% of the cost of the real estate. So, when you buy a property worth 400,000, you might only put down 100,000 for the down payment (and closing costs, etc.) with the bank covering the rest. Let’s say that that property then appreciates by 10%. It gains 40,000 in value- that’s a 10% return on the total previous value of the property.

But it’s a 40% return on the 100,000 you put in. Nifty, yeah? Leverage and appreciation work together in wonderful ways.

But you’ll need to get started if you want to see the full effects. Since these things have such a timeframe, starting as soon as possible is key to watching your net worth grow and grow.

Real estate is a fantastic investment for the short and the long term. You can make money every step of the way. You just need to get started!