Introduction to Real Estate Investment Analysis
Are you planning on investing in your rental real estate in the Central Valley for the first time? If so, you’ve come to the right place!
In this article, we will share with you several excellent tips on real estate investment analysis.
Determining the value of your real estate investment
Like I said, different properties are valued differently. Assessing a triplex the same way one might evaluate a single-family home leads to a wildly skewed value. Here’s what you need to know.
Single-family homes
Market “comps” determine the value of single-family homes, investment or not. These comps—or “comparables”—are nearby properties with similar characteristics. They share variables like floorplan, number of bedrooms and bathrooms, garage size, and amenities. A single-family investment home generally rises in value if a similar home is also rising in value—and vice versa.
Multi-unit properties
Larger investment properties—those with at least two units, and especially those with more than four—are priced and valued differently. The value equates directly to how much income or profit the property produces. It’s possible that an apartment building in a neighborhood where house prices are dropping could, in fact, increase in value.
You can’t just compare your apartment building to others down the street to see how much it’s worth. That’s why real estate investment analysis is so important.
There are several primary factors to consider, but cash flow and appreciation are the two most important variables. Cash flow is simply the money left after all the bills have been paid, and appreciation is the equity gained as the property value increases.
There are not a lot of great ways to estimate future appreciation without a crystal ball, so I generally choose to focus on the cash flow.
Contact RPM Central Valley
At RPM Central Valley, we can save you the time, money and hassle of managing your investment property yourself.
To learn more about the property management services that we can offer you, contact us today by calling (209) 572-2222 or click here to connect with us online.