Appreciation of a property

[Nicholas Schwarz]

If you have a property and you increases the NOI from force appreciation does natural appreciation occur as well at the same time? Say if I held a property for 5 years, raised the rents and increased the NOI while appreciation in the area was 5% YOY.

[Greg Dickerson]

Originally posted by @Nicholas Schwarz:

If you have a property and you increases the NOI from force appreciation does natural appreciation occur as well at the same time? Say if I held a property for 5 years, raised the rents and increased the NOI while appreciation in the area was 5% YOY.

There really is no true appreciation anymore. Values are tied directly to supply, demand and interest rates. Commercial and multifamily are generally valued based on income but interest rates and demand have directly affected CAP rates and driven rices up exponentially the lady two years. Now even with low rates a lot of commercial properties will be vacant abs sold for a fraction of what they were worth a month ago.

Residential is all about demand and rates. As rates rise demand and values drop and as rates drop values and demand have risen.