How to Value Property

By Bruce Firestone | Uncategorized

Apr 15

There are many ways to value your real property—

1.       
by
completing a CMA, comparative market analysis, yourself or asking a realtor to
do one for you, comparing what other similar properties have recently sold for in the same general area within the recent past (aka “comps”)

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2.       by using a cost
approach—that is, determine the cost to replace/reconstruct an identical structure so that it
is comparable to your existing building less accumulated depreciation

3.       by using an income
approach—dividing expected NOI (net operating income) by the cap rate for this type of
property in that location

4.       by spreadsheet analysis
using IRR, Internal Rate of Return and comparing it to IRRs for other investment
opportunities

5.       by obtaining an
appraisal from an accredited appraiser

6.       by what a willing buyer
and willing seller agree to, both being knowledgeable and having adequate
access to reasonably complete information

7.       
by
looking at assessed value or by dividing realty taxes by the applicable mill
rate

8.        by using a residual approach (usually to determine land value) by subtracting the cost/yield of development from net sales to ascertain a price you would be willing/able to pay for a site

9.       by experience.

Read more, 

Real Estate Handbook by Bruce M Firestone.

@ profbruce @ quantum_entity

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About the Author

Bruce is an entrepreneur/real estate broker/developer/coach/urban guru/keynote speaker/Sens founder/novelist/columnist/peerless husband/dad.

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