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WHY VALUE
INCREASES
Very few people have lost money in real estate ownership. The reason is simple. More often than not, real estate values increase as time goes on.
There are many reasons why property value will increase such as: bettering the property, changes in zoning, etc., but one which happens all by itself, with little help from the property-owner, is inflation. Why does this happen?
To begin with, real estate is typically heavily reliant on borrowed money. Borrowers benefit from inflation because they are able to repay their loans with cheaper dollars.
Inflation can also benefit a real estate investment by generally allowing owners to increase rents by amounts greater than the expenses increase. This disproportionately increases the cash flow. The reason: Rents start out higher than expenses, and the loan payments normally remain fixed. Remember, the value of investment property is always a function of its income. A dramatic increase in income should result in an equally dramatic increase in value.
If there is anything we can do to help you in the field of real estate, please phone or drop in at EILEEN M. DAY, Realtor, The Clopton House, Washington, VA. 22747. Phone: 675-3400. We’re here to help.
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