Property Valuation Methods

To realise that an accurate property valuation is extremely important, you do not have to be an expert. The precision of this valuation is determined by the methods of property valuation that are used. It simply determines, at least, whether you can or can not buy a house. It determines how much you are willing to spend on it and it also determines whether the bank will lend you the money to purchase it or not. Property Valuation in Sydney offers excellent info on this.

The methods of property valuation and total appraisal are even more important for property investors. The valuation for a real estate investor will determine his or her ability to continue investing later on. The life blood of most property investors is equity and the ability to leverage it later. This is particularly the case with investments in residential rental property. This equity is determined by the initial price paid for the immovable property and the present value of the property. The property appraisal and valuation determine both of these.

The most popular property valuation techniques used are the market data approach to determine this value. This approach tries to compare the property and find the value that way with similar properties in the area. Other approaches to property valuation include the cost approach, which uses the building cost and the cost of the land to find the total value of the property.

Of all the property valuation methods available, investors will be particularly interested in the income or investment approach. To determine whether it is an effective property investment, this method uses the ratio between the cost paid for the property and the income from that property. For instance, the cost of a residential rental property can be compared to the rental income , for example.

In addition to gaining equity and leverage in a property, the income approach to a property assessment ensures that the investor focuses on the investment’s all-important bottom line as well.