Hi,
I would suggest a different approach. First, never buy a property to bank on appreciation alone. Think of appreciation as the icing on the cake, not the cake itself.
A better approach, specifically if you have a timeline of 10-15 years until retirement is to use the BRRRR strategy and combine it with something I call the Rental Refi Ladder. BRRRR stands for Buy, Renovate, Rent, Refi, Repeat. Money is made in real estate when you buy, not when you sell. You need to buy low, which means the properties you should be looking for are not new builds but homes that need renovations. That way, you can take advantage of sweat equity.
The beauty of BRRRR is that you only need one chunk of money to start with and you can buy as many properties as you want. Once you buy, you have the property renovated up to "rental standards" - clean, updated, nothing super fancy because it's a rental. Then you rent it out and have your property manager manage the property for you. Once it's rented, you want to refi it at 75% ARV (after-repair value).
You can do this in one of two ways: wait the 6 month seasoning period and get a regular refi; or use delayed financing, which is an option if you paid cash for the property and get an FHA mortgage. Through the refi, you get your original investment back and maybe a bit more on top of that - at which point you repeat the whole process over and over again.
Let me give you an example of a deal I just finished - this should give you a better understanding.
1) I purchased a HUD home that was listed for $120K - I always bid 50% less than the list price. They countered and I got it for $68K.
2) The home needed about $10K in work - it wasn't too bad, just needed updating, painting, some drywall repair, yard clean-up, etc.
3) For me, I want to be all in (purchase price + rehab) for no more than 65% of the ARV (after-repair value). So going in, I knew I needed to get everything done for less than $80K or so.
4) I got a hard money loan for the purchase as well as the rehab.
5) Finished the renovations and had a tenant 2 weeks after that.
6) Because I didn't pay cash for the property, I didn't qualify for delayed financing, so I had to wait the 6 month seasoning period to refi.
7) At that point, the home appraised for $125K. Because this is an investment property, the bank will only let you refi up to 75% of appraised value, which was $93,750 ($125K x .75).
8) The hard money lender received their money, plus interest ($83K), and the rest of the money went into my pocket ($10K) tax-free because it's a loan, not a sale. Basically, I got paid $10K to purchase this home, and now am receiving about $250/month in positive cash flow from the property.
No where in this example did I mention appreciation because that's only icing on the cake. Because I received my entire initial investment back, plus an additional $10K on top, any return I receive from this property is infinite. And I have no plans on selling because I'm building my rental refi ladder.
I'll purchase three of these deals per year for the next 10-15 years. They are all on 30 year fixed rate mortgages, but I'm paying them off in 15 years. If I purchase 3 per year for the next 15 years, I'll have a portfolio of 45 homes.
On year 15, the first three properties will be paid off - free and clear. This is when I will refi those three for 75% of their value and use that as tax-free wealth in early retirement until I can access my retirement savings. This is the same concept as laddering bonds - except with real estate. Every year after year 15, I'll have 3 properties being paid off and mortgage free, which allows me to refi them and take the cash tax-free. You don't have to be so aggressive with 3 properties; you can just do one a year if you want. It depends on how much money you want to receive from the refis.
Just one way you could use real estate to fund your early retirement. I know I threw a lot at you there - if you have any questions, don't hesitate to ask.
~Dublin