You usually can’t build wealth or increase the value of a single home much. The physical house depreciates, but the land it sits on increases in value due to factors outside of the owner’s control. You are right though, that it’s a tax-free way of saving, and you can keep trading up using the gains and the leverage you have.
I’m not sure about that. A lot of people purchase run down homes and renovate them, often selling these homes for good profit. That’s not due to the increasing value of land?
Yes you are right. What my mate often does is add value through renovation and/or extension. For example, one house was very run down and was on a large plot of land. He renovated the main house, and extended it, building an extra bedroom and detached garage. He then divided the land and built a new house on a separate plot. Then sold both houses. His net profit was around £150K I believe. Other projects are smaller, such as just a straight renovation. On his current personal house he bought it for around £350K - it was very run down. He lived in a caravan on site for 18 months while he renovated and extended. He has since extended twice, and converted the barns into living accommodation. Estimated value now is around £2million. He owns another property outright that he rents out. Rental income around £1,400 a month net. That property is worth around £500K I would say.