What is Appreciation in Multifamily Investing?

In commercial multifamily real estate, there’s a language that is spoken when you are connecting with brokers, property managers and other investors in the profession. To avoid sounding like a novice, an investor must be fluent with the real estate terminology to be taken seriously. Let’s take a minute to breakdown one of those terms.

Appreciation is an increase in value of an asset over time. Two ways an asset appreciates is natural or forced through improvements. Natural appreciation occurs when the market cap rate naturally decreases. Forced appreciation is when the net operating income is increased by increasing the revenue or decreasing the expenses.

Appreciation is one of the factors in the 5 ways an investor is paid in multifamily syndications. Click here to learn more about the 5 ways an investor is paid in multifamily.

By learning these concepts and terms, you’re separating yourself from the novice investor looking to be more active than passive. Here’s where you can learn more multifamily investing terms.