Forced Appreciation

When it comes to appreciating a residential rental property, whether it be a single family home, condo, apartment complex or a single unit within an apartment complex, I (and it seems most people) think of rehabs when it comes to forcing, or actively pursuing appreciation. In this case, a property would be rehabbed and it would become more desirable to live in, thus commanding higher rents from tenants who are willing and able to pay a higher rent. But while rehabs are certainly one of the most common methods for forcing appreciation, there are several other ways a property's value can be enhanced.

To back up, lets define appreciation: "an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates."

So in the case of apartment investing, appreciation can occur for the following reason, among others:

- increased income (raised rents, addition of laundry services, increased occupancy, etc.)

- decreased expenses (lowering utilities, lowering property taxes, etc.)

- Increased demand for apartment rental or increased demand for apartment purchase, both external market factors.

In the next blog post, I'll dig deeper into the specific ways we look to force appreciation in our properties, specifically through increased income.

Thanks for reading!

Zane