Welcome to part 3 of this 4-part series on building wealth through real estate. The next crucial pillar in real estate investing is appreciation. Over time, property values tend to increase due to inflation, demand for housing, and the inherent value of land itself. This rise in property value means that the asset in which you’re investing grows in value, building wealth for you, the investor. While there are no guarantees in real estate, over the long term, quality real estate in good areas has historically gone up in value.
To break it down, let’s say your $325,000 property appreciates by just 3% per year. In the first year, the property would increase in value by $9,750. In the second year, your property would appreciate by another $10,042.50 (3% of $334,750), and so on. These yearly increases in value can build significant wealth over time, especially when combined with the other pillars of cash flow and debt paydown.
It’s important to note that appreciation isn’t guaranteed and can fluctuate based on the market, location, and economic conditions. However, the general trend over the long term is that property values tend to rise.
The Takeaway
While appreciation can’t be controlled, it’s a key factor in growing your real estate portfolio’s value and building wealth. Over time, the rise in property values, combined with cash flow and debt paydown, contributes to a solid foundation for your retirement.
In our next article, The 4 Pillars of Real Estate Wealth: Tax Savings, we will discuss the tax advantages of investing in rental real estate.
Interested in buying or selling real estate in the near future? I’d love to review your options with you. Call anytime!
Justin Rollheiser – REALTOR®
Keller Williams Realty | Diamond Partners Inc
13671 S Mur-Len Rd | Olathe, KS 66062
Direct 913-800-7653
Office 913-322-5878
Comments or Questions?