You do not have to be an expert to realize that an accurate property valuation is extremely important. The accuracy of this valuation is determined by the property valuation methods that are used. Depending upon what the real estate comps tell you, this, at the very least determines if you can or can not buy a house. It determines how much you are willing to spend on it and it also determines if the bank will or will not lend you the money to buy it.

For property investors the property valuation methods and total appraisal are exteremly important. For a real estate investor the valuation will determine their ability to continue their investing later. Equity and the ability to leverage later is the life blood of most property investors. This is particularly the case with residential rental property investments. Equity is determined by the original price paid for the real estate and the current value of the property. Both of these are determined by the property appraisal and valuation.

Of all the property valuation methods available, the income or investment approach will be of particular interest to investors. This method uses the ratio between the cost paid for the property and the income from that property to determine whether it is an effective property investment.

Aside from gaining equity and leverage in a property, the income approach to a property appraisal ensures the investor is focusing on the all important bottom line of the investment.


Leave a Reply

Your email address will not be published. Required fields are marked *