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Real Estate Investing 101 – Appreciation & Principal Reduction

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If you’re an investor and you’ve found a property, but wondering how to determine if it’s a good deal or not, keep reading! Last time, we discussed cash flow and if you missed that video, you can find it here. Today we’re going to cover appreciation and principal reduction.

About Eren

Hey its your favorite local Realtor, Eren Millam w/ Premiere Property Group. I specialize in all things Lewis County because it’s where I live, work, & play. I’ve been in the industry almost a decade, much of that time spent setting the bar for customer service, social & digital marketing, and shattering pricing records.  I do 1-2 videos a week covering the market, reacting to real estate gurus, educating and informing you to make the best financial decisions when it comes to real estate. If you’d like to learn more about me, upcoming events in the area, or check out my weekly blog, you can visit my website,

The 4 Main Benefits of Investing

There are 4 main benefits to investing. Cash flow, Appreciation, Principal Reduction, & Tax Savings. In addition to that, there are 4 ways to quickly estimate your rate of return. These can also provide guidance into whether you should pay with cash or get a loan. While getting a loan is not the Dave Ramsey way, it usually pays better if you invest intelligently.


So appreciation is the value amount increase over time. For example, if you purchased a home in Lewis County in 2018, chances are you’d enjoy a near 100% appreciation as your home has nearly doubled in value. You can typically plan on about 4% YoY over the long term. Since 2013 when I started real estate, our average appreciation has been about 30% YoY. That’s why people like me say it’s always a good time to buy because not only do you get to make use of property, but you can also expect it to appreciate. It’s much different with vehicles, isn’t it?!

Principal Reduction

Now let’s talk about principal reduction. When you get a loan to purchase a home, the payments are spread out over 30 years. Essentially, if you buy a home at $400,000, you can expect to pay nearly $800,000 over the length of the mortgage. While that does sound incredibly scary, you have a home with no payments, used for 30 years and appreciated 30 years (120%). Think of it this way: How many other things can you buy on credit, use for 30 years and then sell it for more than you paid for it?

If you do this just once, you’re in good shape. Think about what would happen if you did this multiple times. Now think about if instead of you using the home, you rented it out the entire time. Your tenant pays the mortgage for you, all you did was the down payment. These are powerful benefits to investing and hopefully now you’ll see why no other investment vehicle has produced more millionaires!

What’s Next?

If this was helpful to you in any way, consider giving it a like so more people who have the same question can see it and consider subscribing to my channel so you don’t miss any need to know information about our current market. Again, I’m Eren Millam with Premiere Property Group, and remember, never settle for less than extraordinary!

If you’re thinking of buying or selling your home in the west Lewis County area, contact me today! I’d love to hear from you! Eren Millam – Managing Broker Premiere Property Group, LLC WA License No. 26933

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