<prompt> Human: I have saved a certain amount of money that I can either use to buy a very cheap, tiny property outright, or as a 20 down payment on a nicer house. Theyre both in nice areas where I expect values to raise at a similar rate.If I use the money as a down payment, the total property value will be much higher. Assuming the properties raise in values similarly, if I sold in a few years would I make more money on the more expensive property? Because 2 of a big number is higher than 2 of a smaller number? Or, would I make a similar amount of profit since my original investment was equal in both? How does the fact that I paid most of the price of the house with a loan affect the increase in the price when I sold?Edit: Thank you all.  <response>: The appreciation of the house has no effect on the amount you owe on your mortgage. So, if house values go up you can earn a tidy profit, and youre correct that you would gain more on a more expensive house, given the same percentage increase. The downside is if house values go down you can end up owing more than the house is worth. Essentially, the bank that lends you the money for the house lets you take on all of the risk of investing, but also allows you to pocket all of the profit.Generally real estate tends to go up, but that still depends on where you are in the country, and sometimes real estate goes down everywhere like it did in the financial crisis. 