How do you know what your property values? Do you look at government statistics or look to local estate agents to tell you how much your property is worth?
Do you use online property valuation tools from high street finance companies, banks or property investment websites?
If so where do they get their information from and how can you make use of that information yourself.
Perhaps you get a valuation from a property surveyor prior to purchasing your investment property, or if you are a property investment entrepreneur, you rely on your own experience to tell you whether a property is valued correctly, and thus whether or not you can make a decent return on your investment.
Whether you agree with the given value of the property you are about to purchase or not, you must have an idea of what you are willing to accept as the base valuation in order to determine whether or not the investment is worthwhile.
Determining whether your investment property will make you money or not, will depend on what you are going to do with it. Will it be a buy to let property or will you buy, refurbish and sell on?
Buy To Let Property Values
If you are a buy to let investor, looking for property to hold for a long time, then you are probably less likely to worry about the present value of the property. This is because you will be buying the property to hold or 5 – 10 years at least.
During that time, you will be collecting rent that will pay any mortgage and hopefully be making you some profit in the meantime. Like most businesses where residual income is required, your profit margin will rely on you purchasing property in markets where renters are abundant and your investment properties will always have tenants.
After 10 or so years, you will have an investment property which has appreciated in value that you can sell and pay of any remaing mortgage, and move on to your next property. In the meantime, the interest on any mortgage will have been covered by the rent payments, and you will have claimed back these interest payments as taxable deductions.
The property value of this type of investment is less of a concern, once you have established that the incoming rent will cover the outgoing expenses.
Buy, Sell And Refurbish Property Values
Property value when buying an investment property to refurbish and sell on becomes more important in this type of scenario.
Once you have determined an interest in a particular investment property, then you need to get it valued or use your experience of the market (in that area) to determine how much you believe you can re-sell it for.
It is vital that you know the figures before making the purchase or you could find yourself in great danger of making a loss on a property deal worth thousands of pounds.
Property investments that are for re-sale after refurbishment rely on quick turnaround. You need to know that market place and your potential buyer will be there, once you have completed the refurb.
Don’t rely on hearsay, know the facts for yourself. Property values fluctuate and you cannot rely on a rising housing market to make your profit. You must be sure you understand the local property market and thus know whether your investment property will be successful.
Value your investment and it will provide you with a good return. Property value is only part of your investment strategy but it is an important one.
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