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What I learned from others - Rent Vs Appreciation in Real Estate

18 April 2006 2 Comments

Today I found an informative post in richdad.com called “ The Appreciation and depreciation curve” and I learned 3 things from reading it. So I shared it here and make it as a note for Real Estate investment :

  1. If people moving in the area, demand for houses are high, so the price will go up and until it is too high to afford, at this point they will rent. So the rental will go strong until it make sense again for somebody else to purchase.

  1. If people leaving the town, the demand becomes lower and according to Fukun80 from Richdad.com, all we need to do is just reverse the formula above. Rental market goes down and we should start for sell or look for appreciation.

For me I definitely will look for market that apply note #1 where rental market is strong. This is because rent will become my monthly cashflow for me and I can easily use that money to get another property. What do you think?

Source : richdad.com

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2 Comments »

  • Dallas said:

    I agree with what said. I currently have around 3 properties I am considering to sell because it is a sellers market where I am at. Prices are so high that I can make a large sum of money off of the appreciation, and the cash flow end of my real estate is rather low, if not negative. My delima is figuring out when the market is high enough to sell to get top dollar, or if I should break even on the cash flow end and continue to rent them.

    # 2 May 2006 at 2:56 am
  • harrison (author) said:

    Dallas, thanks for commenting. I think for the time being you have to rent out your house. But is there any factors that block you from raising the rent? Although it is not negative, but I think it would be better if it is positive

    # 2 May 2006 at 9:03 pm

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