Real Estate Investing for Appreciation 

Appreciation Real Estate

The recent real estate boom and bust cycle has seen many fortunes made (and lost!) through aggressive purchasing and selling of properties in hot growth markets.  While the aggregated national statistics now show prices falling, it is critical to remember that real estate is a local market investment.  Your property is in a specific market and sub-market that may or may not be following national trends. 

Beyond natural market appreciation, many real estate investors specialize in creating appreciation through several other strategies, including…

• Buying below market value (pre-foreclosure and foreclosure, tax liens, pre-construction, auctions, short sales, etc.)
• Remodel and/or rehabilitate ‘challenged’ properties
• Land banking and securing entitlements to increase value
• Improving operating results in commercial real estate properties (where price is directly related to net operating income generated by the asset)

Some opportunities are structured for individual investment, such as buying a pre-construction house at a discount to flip upon completion at market price.  Others are group investments in multi-million dollar projects that comply with all SEC laws and regulations.  The latter typically require accredited investor status to participate.

Holding periods typically are over one (1) year to ensure favorable tax treatment of profits (capital gain tax rate or 1031 exchange to defer all taxes).   Many deals are planned with an exit strategy within 2-3 years, while larger projects often stretch to five years or more.