Greetings Real Estate Investors!
Today we are going into a little known topic that can be of vital importance to you: Micro Appreciation. Micro Appreciation may otherwise be known as Local or Localized Appreciation occurs when a small portion of a neighborhood appreciates at a faster rate than the homes in the rest of the neighborhood or area. It is important to understand because it can actually be easier to predict than normal appreciation because of the fact that it is usually caused by significant development or other events.
A Rising Tide Lifts All Ships
The concept is not difficult to grasp although it may not be something that most investors consider because it is usually something that only people who live in a neighborhood become aware of. Basically whenever something good is going to happen in a neighborhood whether it be the addition of a new park, a new development or some other significant improvement it is going to increase the value of the property in that neighborhood. The extent of the impact varies usually by the amount of the improvement and how long it is expected to last. A park for example that is going to last a long time would probably have a permanent effect on values whereas a new restaurant may only be temporary.
An Example
If you follow our Facebook or Twitter accounts www.facebook.com/rpmmiami and @miamirpm you may have seen a recent post about Nicklaus Children’s Hospital groups purchase of a shuttered hospital at NW 7th St and 59th Ave. We are bullish on this purchase because Nicklaus Hospital (Formerly Miami Children’s Hospital) has a proven track record of success and is currently on a rapid growth plan. We are certain that the plans for the hospital will be for aggressive improvement and more likely than now will involve some sort of children’s hospital. And since having a children’s hospital in your neighborhood is a major selling point we are certain there will be micro appreciation in the single family neighborhood that lies just to south of the hospital.
It Cuts Both Ways
Of course you also need to be aware of the opposite which is Micro Depreciation. This occurs obviously when something bad happens in a neighborhood. For example if a toxic waste disposal facility were to be built nearby it would definitely bring property values down. Similarly excessive crime events may cause property values to decrease in a particular neighborhood. These are not novel ideas however as an investor you should always be aware of ways you can capitalize on the up or down swings in a neighborhood.
Be Informed and Talk the Talk
The easiest way to find out about events that are either going to help or harm a neighborhood is to pay attention to the news and talk to the people in the neighborhood. Talk to your tenants they will know much more than you about early proposal that may affect your property. If you do not have tenants in the neighborhood you are in then you should just remember to talk to everyone you meet about your interest in the area. Another great way to keep informed is to follow our social media accounts www.facebook.com/rpmmiami and @miamirpm.
We hope you enjoyed this post, check back soon for more valuable investment advice…if you are interested in saving money and running your investment portfolio like a business contact us at 305-517-3900!
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