Forced Appreciation

Value increase created through property improvements, better management, or increased rents—rather than market forces. This is the core strategy of value-add investing.

Key Points

Understanding forced appreciation is essential for evaluating real estate investments
This concept helps investors compare opportunities objectively
Our Free Snapshot tool automatically calculates relevant metrics for any property

Related Terms

Value-Add

An investment strategy focused on acquiring properties below their potential value and increasing value through renovations, better management, or repositioning. Value-add deals offer higher returns but require more active involvement.

Appreciation

The increase in a property's value over time. Market appreciation comes from broader economic factors. Forced appreciation comes from improvements you make to the property.

Net Operating Income (NOI)

The annual income generated by an investment property after deducting all operating expenses but before debt service and taxes. NOI = Gross Income - Operating Expenses. It does not include mortgage payments, capital expenditures, or depreciation.