Buying for Appreciation

[Brian Plajer]

Hello Everyone, 

I have three condo's in Charlotte NC that are rented and performing well. I understand the downside of condo's/HOA fees however, I live in PA so it works for me. With this aggressive market its tough to find properties that will cashflow so we changed our strategy to purchase a new construction townhome (3BR,3BA) in an area we expect to see growth and improvement so its basically an appreciation play vs a cashflow play. We still plan to rent it initially and see where the market goes. Its definitely a little more risky with potential higher reward. The demographics for Charlotte support continued growth. I'm curious how other investors feel about this strategy? thanks

[Jonathan Greene]

For new construction, I would prefer single-family developments to townhomes because in SF developments if you buy early in the build cycle you will have a lot of equity by the time it hits the end and the prices should remain above your early buy-in price. In townhomes, the prices still scale up, but not as much and oftentimes, depending on the heat of the market, new townhomes sell at the peak and then go down in value becuase there are always more being made and have less appreciation scale than SF. With that said, you will probably be ok. How does the rent to buy price look?