Making the distinction between the improved portion of a property and the land on which it sits may seem trivial. But it is not until the real estate investor focuses on these differences that it becomes easier to find more efficient investments that provide the highest return for the amount of risk or capital invested. Because property prices are a function of local supply and demand,the appearance, functionality and maintenance of the physical structure will certainly impact value, but these factors have less impact than one may think. Understanding how location and the future prospects of land values influence property returns allows investors to make better choices between competing assets.
The reason that land is an appreciating asset is a simple one. It is in limited supply, and no one is producing any more. The demand for land is constantly growing as the population increases, and since its supply is limited, its price must increase over time. Unless something happens to limit demand for a given area or make it unusable (which is impossible), the grounds should be expected to increase in value over time.
The question is how much the land will appreciate and how much the improvements will enhance the overall value. As land ages, its value goes completely opposite in terms of value growth. Ever considered mastering the land price rates from last 2years,it’s simply unimaginable.
Be wise buy now don’t wait anymore.
Author; Matthew Muthui