Secrets to Buying a Home that Will Appreciate Over Time

No one buys a home hoping its value will stay exactly the same for the next 30 years. In a healthy real estate market, most people just assume that their property will appreciate over time, even if only slightly. But, as many real estate investors already know, there are ways to pick out an especially promising one. While you and your family’s needs should always come first when it comes to choosing a place to live, keeping some of these factors in mind can help you pick a home that will appreciate over time.

“Location, location, location”

This is one cliché that’s actually spot on. Of all the things that factor into a property’s potential to appreciate, where it’s located and what surrounds it are easily the most important. Though it’s impossible to know how the area around your potential home will change over the years, you can make an educated guess based on factors like the quality of the school system and the things in the community. Is the house 30 minutes from the nearest grocery store? Not great—unless a new grocery store has just broken ground two miles down the road, in which case, the neighborhood may soon be more desirable. And just this happens all the time. Whereas Brooklyn was once just a scruffy, working-class borough a hectic commute away from the best jobs, a recent influx of young businesses and artists fleeing skyrocketing Manhattan rent have upped demand, spiking property values.

Appearances matter…

Location doesn’t just matter for convenience’s sake. A rundown neighborhood with unkempt yards can bring down the value of your property, no matter how nice it is. Also be wary if there are any foreclosures in the area. Though this doesn’t necessarily spell out doom for the whole neighborhood, foreclosures do tend to look rougher due to lack of upkeep. It's possible for the situation to snowball if those living near the foreclosure start to feel too apathetic.

…but not when it comes to your potential house

While it’s important that the property you buy has some potential, it’s okay if it isn’t in the best shape. In fact, you should be aiming to buy the worst house in a great neighborhood. The logic here is pretty simple. If your aim is to buy low and (someday) sell high, you have much less room for improvement in a house that’s move-in ready. Also, you can't change the location, but you can change the house.

Avoid a house that’s highly customized

For maximum appreciation, you want a property that will appeal to as many people as possible later down the line. So if a house you’re considering has a lot of customization or a very unique design, it may not make for a great investment, unless you’re planning to make significant changes. Pools are a great example, as they have a tendency to be divisive. While some people seek them out specifically, to others, they’re hazards and eyesores that require all kinds of upkeep.