Essential Information When Analyzing Real Estate Value
If you have ever considered investing in real estate or are aiming to buy a home to occupy and then sell in the future, you might wonder about all of the property’s financial details and what they all mean, and whether you are getting a good deal out of it or not. Read on for more information when analyzing real estate value of your desired property.
Valuing Homes vs. Valuing Multi-Residential Property
As a rule, you can value single homes fairly easily by comparing them with similar properties within the same area. This may encompass similarities with the floor plan, the number of bedrooms and bathrooms, garage size, and other amenities.
If the vales of comparable homes increases, so does the value of the home under sale, and when these values decrease, the home’s value does so too.
This rule, however, does not apply to larger properties that comprise two or more residential units. These properties may range from two-unit duplexes to multi-residential apartment buildings.
Properties such as these are valued based on how much profit they make for their owners. So, even when housing prices come down, it is still possible that these properties’ value stays the same or even rises. This is where analyzing property values can get a bit tricky.
Collecting Information
Any form of analysis, whether in real estate or not, begins with the right information. That is why adequate, correct, and relevant information is paramount to getting a good analysis for any property. This information may include different components that all contribute to a property’s value.
Putting these types of information into an analysis will result in information telling you whether your property is a good or a bad investment.
To conduct such a fruitful analysis, you will need to have some valuable information such as:
Property Details
This includes the property’s design, size, number of units, utility metering, and the likes. You can get this information from the seller of the property, but if you want to get more accurate and comprehensive data, check out your local county records office. This information may be readily available as per request and with the aid of the property owner.
Purchase Information
This means the cost of the property and any additional rehabilitation costs you may incur along the way. It is understood that the seller may make negotiable terms when it comes to adequately pricing his or her property.
However, it is also equally important to take note of the possible maintenance, completion or rehabilitation that needs to be done in order for the property to continue its operation and maintain its market value.
To be able to ensure this, have the property inspected by a professional inspector so unearth any hidden problems that may warrant your attention. Properties in excellent condition usually require no extra cost.
Financing Details
This includes details of the finances pertaining to the property such as loan amounts, interest, and amount of down payment. You can get all these details when you apply for the loan. Your lender can provide you with all the necessary details of the loan – its cost, its terms, and the required down payment as well.
Income
This means the amount of profit that a property makes for its owner, such as rentals. Similar to the property details, you may obtain this data by asking the seller. This would not be too reliable of a source though.
If you want to be absolutely certain, you can contact the management company that runs the property. If the property is privately owned though, the seller would be your best option for information.
Expenses
Expenses are the maintenance costs of the property such as insurance and taxes. These details should also come from the property’s seller or the property management group running it.
Not only existing expenses should be taken into account, you may also consult a professional building inspector to advise you on upcoming major rehabilitation or repairs such as wiring upgrades, the need for a new roof, and the like.
It is important that the information you put into your analysis is sourced credibly and is accurate down to the last digit. The accuracy of the information gathered may be its most important characteristic.
Get more essential information when analyzing real estate value with Real Estate Development Coach today.
