Update — I need current income more than windfall!

Property investment can take a long time. If you can’t wait, then you may be disappointed, and it is better to focus on rental income in addition to appreciation.

1. I believe Alan Shi who said that capital appreciation is based on land size not square footage of the “superstructure”. Therefore it’s lower for non-landed properties, unless it’s a very urban location, where only high-rises are available — JC waterfront, NYC…
   1. Kenneth Lemus (bofa) also agreed that the appreciation is mostly due to the land
   2. However, the land appreciation can take decades, perhaps longer than your lifespan!
2. You can get a rough estimate of the 2 components in the valuation of a landed house by looking at the construction cost (perhaps 200k) vs the total price (perhaps 450k).
3. Alan pointed out the superstructure (like a car) can only lose value over time; but land appreciates, over a longer timeframe like 20Y. In most cases, the land appreciation dwarfs the superstructure depreciation. However, in some cases the land and the location depreciates!
4. I watched fixer upper. With a rundown landed property, you or next buyer could find contractors to tear down and rebuild [1] the “superstructure/上层建筑”, so the real thing that she bought is actually 1) location and 2) land size.

[1] at any budget you have

–Like in Singapore and HK (and Beijing, BGC, the Bridge…), high-rise condo can have capital appreciation too, if the location is such that only high-rise is possible. I have a tendency to emphasize and focus on condo appreciation because

• my investment experience in Beijing and south east Asia
• subconsciously I avoid driving (like I avoid fatty food or weddings), so I much prefer walkable communities with many shops and trains. Such locations tend to have no landed homes and only high-rise apartments.
• rental demand is much higher in those prime locations
• I don’t like to deal with repairs myself and rather pay a condo fee.

–In the cold light of day, I have to agree with Jack He that “In the same location, given the same unit size like 1500 sqf, a landed home always has higher value than an apartment“, because

1. the landed asset gives owner more freedom and control.
2. when it comes to repairs, you can do it quickly or slowly (delay just like condo), nicely or economically
3. basement, garage, yard space all have utility value. All derive from the lot size.

–Give up appreciation! Among the many personal preferences, I may have to pick one to let go. It may have to be appreciation.

In reality, if I buy in a SD or CC1 location, appreciation is likely, but within such a location, one unit might have comparatively lower appreciation potential, perhaps due to age, structure, or ethnic make-up etc.

Walk-up is less popular but perhaps OK.

Su (Taiwan) said “pick the ranch with higher appreciation potential, if you feel indifferent about everything else”. Big “if” in most cases! For example, houses have higher potential but requires more maintenance (See maintenance effort(I hate it): house^condo)

–My tentative conclusion — In terms of investment, given my limited budget, tiny rental condo in a popular location can be justified -vs- a landed home in a remote township [1]:

• condo could appreciate faster or less steadily than a remote landed house, over 15Y
• condo fee vs pTax? Not sure. Jack He said condo wins.
• rental income depends on location. A popular location may have more condos than houses.
• given my existing property investments (mostly in popular locations), I don’t have to sacrifice short term needs for long term investment returns, esp when the long term gain may not materialize in my lifetime.

[1] Bayonne landed house is a rare combination of landed investment near the city.

Lisa’s aunt (Mrs Huang) pointed out that in a down turn, a good location won’t drop much. I think when the market heats up, the good locations tend to rise faster — compare TPY vs Admiralty. I believe her when she said that you can improve the “superstructure” but you can’t improve the location. However, XR said his location didn’t appreciate much. West Windsor didn’t either.