Archive for July, 2006
Large Lot
When I am looking for real estate what makes my mouth water. Huge cathedral ceilings? Updated kitchens? Recessed lighting? Nope. I love big lots. The bigger the lot the more I get excited. Why do I love big lots.
Over time large lots tend to appreciate faster. In real estate one of the cardinal rules is that generally land increases in value and general structures decrease in value. Why does a structure tend to decrease in value? As a structure gets older it tends to get farther away from safety codes.
But generally properties tend to increase in value because the rate at which the land appreciates outpaces the rate at which the structure is decreasing in value. When you are hoping to sell your property for more in a few years its best to look at the dirt and not the house.
Because land tends to appreciate I usually prefer properties that have more of the current value in the land than in the structure. This means that a property in a new subdivision where the structure account for 70 of the value is not appealing. For instance properties close to a city center can have 65 to 70 percent of the value is in the land.
Of course what is even more appealing is a centrally located 5 acre lot with say a 500 square foot house. Lets run the numbers on a few scenarios to see what I am talking about. Lets assume that land appreciates at 7 percent a year and structures depreciate at 2 percent a year.
First let us look at a property where 70 of the value is in the land.
Year Structure Value Land Value Total Value
0 10 90 100
1 9.6 97.2 106.8
2 9.216 104.976 114.192
3 8.847 113.374 122.221
4 8.493 122.444 130.938
5 8.154 132.240 140.393
In the end the differences between these two properties is pretty significant. What I find surprising is that alot of buyers that are concerned about appreciation will buy a house on a small lot on the far outskirts of the city. They look at the upgraded countertops and other amenities as a sign that they will see significant appreciation. What they don’t realize is that alot of these features that are currently in vogue might not be popular in a few years.
I want to be clear I am not saying everyone should buy a property where land value accounts for most of a properties value. In many cases people enjoy nice amenities that come with a house and the idea of living in an older home holds little to no appeal. But if your primary concern is investment when you are evaluating a potential property you should pay more attention to the lot than the house.
About the Author:
Ki is a realtor working in the Austin Texas Real Estate market. If you are looking for properties in Austin they provide information on their Austin Real Estate Blog along with offering visitors a free Austin MLS search.
Article Source: ArticlesBase.com – Why In Real Estate Big Lots Are Good
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Lego Lot Of 10 Large Dark Red Quarter Round Panels $2.99 |
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Large Lego Bionicle Lot ~~ lots of pieces ~~ Look!!!! $9.99 |
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Large Lot of Non-Sports Collectors Cards – Take a Look! $75.00 |
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POLO RALPH LAUREN Turtleneck Top LOT L large $14.95 |
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Large lot 32 body wash perfume makeup hair products $9.99 |
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LARGE LOT 67 PC STAMP PADS AND INK NEW ARCHIVAL WHISPER $51.59 |
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Lot of 5 Ralph Lauren Polo Blake Shirts L/S Mens Large $48.75 |
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LARGE LOT OF ASSORTED SALMON FISHING TACKLE $20.50 |
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Large Boys 2T Summer Lot- Shorts, shirts, Pajamas! $6.79 |
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Wholesale Lot 2 Hard LARGE Women’s Sunglass Cases NEW $9.99 |
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Large lot 20 Lego minifigures ALL STAR WARS + extras $152.50 |
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LOT of 5 – OIL COLOR PAINTS LARGE 120ml TUBES PIGMENT $5.99 |
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1940s LARGE LOT OF LEAD ARMY FIGURES NICE CONDITION $31.59 |
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1940s LARGE LOT OF COMPOSITION ARMY FIGURES AND OTHERS $9.99 |
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NEW NWT LOT of 2 Tank Tops Charlotte Russe LP Large L $18.99 |
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#1635 LARGE ANT’D S/P FLEUR DE LIS W/RING – 6 Pc Lot $6.50 |
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Womens Dress Career Clothes Lot Size *Large 14 16 $1.99 |
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LARGE LOT OF ASSORTED SALMON FISHING TACKLE $21.00 |
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Large Lot of 11 Sleepers 3-6 mo. CUTE. Dogs, Monkeys.. $11.07 |
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LEGO SHIP VEHICLE BASES WINGS LARGE BODY PARTS MIX LOT $3.99 |
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Dungeons and Dragons books and modules large lot $94.87 |
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Collection of Foreign Large Size Topical Stamps Lot #1 $1.04 |
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Large lot of buttons w/designs in the middle of button $2.25 |
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Wholesale Lot 2 Hard LARGE Women’s Sunglass Cases NEW $9.99 |
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Lot of 2 Military Surplus Athletic Shorts Extra Large 2 $9.99 |
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LOT OF SIZE LARGE WOMEN’S SWEATERS $5.00 |
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Large Lot of GI Joes (12 inch) and accessories $26.50 |
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LARGE BATMAN COMICS LOT!! TEN ISSUES 411-554 $0.99 |
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Lot of 2 Women’s Tank Tops Shirts sz Large $4.95 |
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Maternity clothes lot size LARGE! $8.50 |
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Maternity clothes lot of 3 shirts size X-LARGE! $7.50 |
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LOT of 3 different American Motorcycle LARGE T-SHIRTS $23.73 |
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LOT of 2 DENVER BRONCOS size LARGE T-SHIRTS football $19.93 |
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HUGE WOMENS CLOTHING LOT– 58 PCS. LARGE L / 8-11 $58.09 |
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LOT of 2 NEW ENGLAND PATRIOTS size LARGE T-SHIRTS $18.04 |
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HUGE WOMENS CLOTHING LOT: 56 PCS EXTRA LARGE XL : 12-15 $61.00 |
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LOT of 2 United States ARMY adult size LARGE T-SHIRTS $18.98 |
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Beautiful 1.5 large leather dog collar! Lots to choose! $17.99 |
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Beautiful 1.5 large leather dog collar! Lots to choose! $17.99 |
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#26-the CARE OF HOUSE PLANTS- LARGE-BOOK-lots info $7.35 |