Getting a good return on investment is one of the key considerations in real estate investing. As such, knowing how to do a property valuation is important for investors. If you will not assess the subject property, you may not have a good return and may even end up at loss.
Property valuation is the process of ascertaining the economic value of the subject property. It includes the determination of the current fair market value (FMV), its condition, the repairs needed and the estimated price on how much a buyer is willing to purchase it.
Here are the 3 questions you must ask in order for you to have a better understanding about property valuation:
Question No. 1: What are the information and details of the subject property?
Property information includes the distance, recency of being listed, type of property such as subdivision, apartment, single-house, seller type, sold price, DOM Year built, square footage and price per square footage.
The property information is important because these are the details that clients usually want to know. Year built is also a key consideration. A property that is newly-built has good potential investment. On the other hand, an old infrastructure gives you an idea to allocate funds for repairs. If you know the property information, you can assess the necessary repairs ahead of time and do the needed flipping to make the property more valuable.
Question No. 2: Where is the property located?
Geographic location means that you must consider the location of the subject property. This includes considerations to the whereabouts of the environment such as the proximity of the property to the highway, parks, school, market, bodies of water and other infrastructures located around the property.
Question No. 3: What are the Conditions of the property?
The condition of the property is important for real estate investors to make a sound valuation. In determining its worth, you need to know and to classify if the property is high end, mid-grade or rent-ready. You need to look as well for its amenities such as the bedroom area, bath tub, number of storey, pool, garage, acreage area, construction type, roof, foundation, lot size and lot description.
Knowing all of these necessary details may consume your time and effort. In Real Estate IQ, we offer the automation tools you need in investing. You may check our Premium Deal Finding Suite and receive top off-market lists with the skip-tracing already done for you!
If you want to read more about real estate investment, feel free to visit our investment blogs.
Steve Liang is the Co-founder and CEO of Real Estate IQ. He is a national speaker and a member of the Real Estate Advisory Board of North Lake College. Some of his achievements include being the REIQ’s Market Leader in Real Estate Intelligence Augmentation; co-founder of Real Estate Deal Finders Meetup, which hosts over 20 monthly real estate networking and deal-finding training in Texas; and a goal-setter and motivational speaker that helps entrepreneurs to unleash their potential and achieve their goals. Steve has spent most of his career practicing leadership, management, marketing and strategy execution.