Evaluating a Profitable income producing Property Yourself.
Real Estate is an imperfect market and this allows opportunities for the knowledgeable investor. There are three methods of evaluating any property purchase.
a) Replacement Value
This is comparing the costs of replacing the building with a similar structure at today's prices. It is simple enough to obtain as all builders normally have a 'per square metre' building price plus add-on finishing prices such as carpets, curtains, landscaping, carports, painting etc. All that is required is to add the block value and you now have an idea of its worth. Often sleepers, that are under priced, can be found as invariably the market value will catch up with replacement value in time.
b) Market Valuation
This involves finding and comparing similar buildings to the one you are interested in and simply comparing the selling prices. Note that I stress 'selling prices' because the 'asking price' is often inflated. You need to check recent sales made of similar properties - local agents usually have a record of this activity. You can also compare prices in the classifieds, as well as checking on rents received. However, remember when comparisons are made through an agent's records, they do not reveal the terms involved such as vendor's finance, reduced interest rates etc.
