Taking Advantage of Appreciation

Foreign. Welcome back to another episode this week. Hope you're doing really well and getting a lot of value. If you're just joining us, check out our other videos. I'm sure most people are familiar with the concept of investment appreciating or increasing in value, but for some reason when it's brought up in combination with real estate syndications, people tend to get confused. Hey there, I'm Wayne with CRI Partners, and in this video I'm going to guide you toward a basic understanding of how real estate syndications appreciate and why this is a great attribute to look for in your next investment deal. Real estate has the potential to appreciate, especially when you're investing in a growing market where there are lots of jobs coming in, which leads to population growth. Because population growth leads to increased demand in real estate assets. So when you invest in a market like that with a sponsor who's got a great track record, you are maximizing your potential for appreciation. But you're probably wondering, what does that mean exactly? Appreciation is when the value of the property goes up. That can happen naturally if all the assets in the market increase in value because of demand going up, or it can be what's called forced appreciation. Forced appreciation is when the sponsor makes improvements that allows an increase in the rental rates and therefore an increase in the passive income you're receiving from that asset. While residential real estate is largely valued based on the community and surrounding property values, commercial assets are valued based on income that they can generate. As an example, consider a single family home. How do you know how much a single family home is worth while you look at its neighbor? How much did that house down the street sell for? Okay, well, the chances are this single family home is worth about the same. On the other hand, consider a commercial property that generates, let's say, $100,000 in income. Since commercial properties are valued based on the income they generate, this property, no matter its location or size, is worth far less than one that generates 200,000 of income even if they are right next to each other. Since the value of real estate syndications business model is literally based on adding value to the property so that tenants rates can be increased and the property generates more income. This is a great source of appreciation. The comparison between how residential and commercial assets are valued should give you a fresh perspective on how these different types of properties appreciate. What questions do you have about appreciation or real estate syndications? Comment below and let us know if you're interested in learning more about real estate syndications and how they can help you diversify your investments toward your financial goals. Join the CREI Partners Investor Club by going to www.creipartners.com today. You'll find a lot of great resources and a link to sign up to our Investor Club. And finally, if you like this video, hit that like button. Share with a friend and be sure to subscribe. I'm Wayne with CREI Partners. Thank you so much for watching.