Thursday, December 27, 2012

Identifying Value in Real Estate Property

Property market
Property market (Photo credit: Alan Cleaver)
It has been stated over and over that the key to real estate value lies in location. But this has misled many people into believing that there is really no other factor to consider when appraising the value of real estate property. There are a number of factors that must emerge when you consider the value of any real estate property. 

One of the chief factors that you must bear in mind is the age of the building. An older building can be a financial drain rather than an asset. Older buildings tend to require more laborious and expensive renovation projects and are more likely to fail inspections. These problems include faulty plumbing or plumbing systems that are now outdated and need to be replaced. The same goes for electrical wiring. Plumbing and electrical overhauls can be very expensive especially since they typically require that the walls be cut open to allow the contractor to access the pipes or wires.

But sometimes an older home can be a jewel. Older homes that are steeped in history can be potential money makers. Ensure that the claim to historical fame is legitimate before making a purchase however, because you want to ensure that when you invest in refurbishing the building you get your returns. These types of golden opportunities are far and few between however and you should count yourself lucky if you stumble upon this type of treasure.

Carefully look at the infrastructure that comes with the home. Look for things like alternate power supply solar water heaters and ornate decorations. Consider elements such as the stairs. The stair design adds flair and elegance to the inside of a building. But it also serves another purpose. It indicates how much time and energy has been put into the building. An attractive decoration goes a long way in enhancing the resale or rental value of the property.

Appraise also the land space surrounding the home. Is there a wide expanse of land? Or is the home close to others in the community? Ample land space leaves options such as a pool or expansive outdoor entertainment spaces on the table. Once there is space the potential to develop the property is limitless and simply depends on your vision and budget.

One of the first things that visitors notice about a home is its size and this element has a serious impact on the value of the property. A smaller house will leave you with the potential to do less. If you are planning on hosting large gatherings at home or having a big family, this home won’t give you the right bang for your buck. On the other hand if you find a fairly sized home you may be able to creatively use a section to make money. Depending on the neighborhood rules you may be able to manage and run a home business from one room or a large garage. Note also that a large garage may be a luxury that eludes you with a more expensive and smaller home, though it may be located in a prime real estate spot.

So yes, the location plays a significant role in the price of a home and its value. But don’t be fooled into thinking that it is the only factor worth considering. There are many other factors that help to determine what benefits the property will have for you and your family and chief among those factors should be the value that the house has for you when you consider your needs or your family’s needs. So essentially, the true value of the house goes beyond the cash required to make the purchase.

Karl has been using his background knowledge as a real estate investor to inform millions across the globe about wise real estate investment choices. He enjoys spending time outdoors and engaging in meaningful conversation.

1 comment:

  1. Excellent Job i really enjoyed reading your post thanks for sharing. Property Management.


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