When talking about the property price increase, we are not referring to the regular change in prices due to inflation. Typically property prices increase at the rate of inflation or around 1-2% above Property Management Cape Coral inflation. Based on the Case-Shiller home price index, the average annual home appreciation rate has been 2.5%.

Equity growth dwells on the prediction of the future and is responsible for massive increases in prices. Often policy changes occur, such as a new highway through the town, which can cause rapid growth in prices. Or the opening of a new sizeable stable employer such as a medical center or Amazon HQ2. Unless you have prior knowledge or get extremely lucky, evaluating a rental property investment based on equity growth is harder.

While it is possible to force price appreciation in an income property through value add, it involves a significant expense, especially for a first-time rental property investor. Extensive upgrades also have to be done on the property to increase equity quickly.

Without forced appreciation, the increase in overall property and land price value in the area is unpredictable.

You can, however, pull simple one-time levers to generate additional cash flow even with buying and holding long-term rental property.

For example, you rent a single-family house to a tenant. But the tenant is a hoarder and also pays for a self-storage unit offsite. You could install a shed in the backyard and charge extra for the shed. The tenant pays a lower amount compared to the storage unit and can access her stuff more easily. You get an increased cash flow every month. It is a win-win situation.

Or you might own a fourplex and decide to install a vending machine on site. The tenants don’t need to drive to the store for a quick snack, and you get additional income from your real estate portfolio.

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