Knowing a home’s property value is crucial for real estate investors to make money. Without an accurate property value, a novice investor may lose money by overpaying for a property. When you’re deciding whether or not to make an investment, you’ll want to have an accurate property value close at hand.
Before you determine the value of a property, you’ll need to know some information about it. The neighborhood your potential investment is in makes a world of difference – school districts, distance from amenities and proximity to major roads can all change the valuation of your investment. If you’re investing in residential real estate, you’ll also want to know how many bedrooms and bathrooms the property has.
• Comparison value. The easiest way to determine the property value of an investment you’re considering is to look at the sale prices of similar assets in the area. If you’re thinking about flipping real estate, look at the sale prices of other homes in the neighborhood to figure out your potential profit. Smaller rental properties’ value can be figured out using the same method. You’ll typically want to look at properties within a one-mile radius of your potential investment.
• Income value. If you’re a commercial real estate investor, you can figure out the property value by calculating how much income the property will generate. Using this number, you can figure out how long it’ll take before the property becomes profitable.
• Hire a real estate appraiser. Hiring a real estate appraiser can cost money, but will give you the most accurate appraisal. Make sure you allow enough time for the appraisal – it can take days or even weeks to schedule and conduct an appraisal.
• Check out free Internet sites. There are tons of sites online that show you a reasonably accurate property value. Of course, this can cause you to over- or under-value a property, so don’t rely on the Internet alone to help you figure out a property value.
Real estate investors need to be able to determine property value to make sure they’re getting a good deal. Having an accurate property value can make or break your real estate deals, so make sure you have a firm handle on how much a property is worth before you complete your transactions.
