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Yeah, this is a really simple insight that's not obvious at first. I like the way it's stated in The Wealthy Renter: > The Golden Rule of Real Estate:... Build
by burke 9y ago
Yeah, this is a really simple insight that's not obvious at first. I like the way it's stated in The Wealthy Renter:
> The Golden Rule of Real Estate:... Buildings never go up in value. Ever. Period. ... Only land can go up in value.
I take some minor exception with the absoluteness of the statement (I could imagine a building designed by some architect who later became extremely famous increasing in value), but overall it's obviously true.
- paulsutter 9y agoThis is false. Vacant lots don't appreciate nearly as much as constructed and occupied buildings. A vacant lot in a downtown district has a lot of development risk associated with it. Look at how many years it takes to get plans approved and construction completed in a city like San Francisco or Manhattan. It's difficult to finance a project across that many years and you never really know what plans will get approved or how long it will take until you're well into the process. Look into the history of the LinkedIn building at 2nd and Howard for example (which was for many years a parking lot).
- burke 9y agoThe quote doesn't claim that you can't do things with a lot to cause it to appreciate less, just that a building won't appreciate more than the lot it stands on. I don't think what you said disagrees with that thesis.