How to Value a Property

I apologize to long term readers of the forum if this topic has already been done.

I am keen on others commenting on how they value potential investment properties

a) Comparable sales ( from data available on internet )
b) Visit Multiple opens in a chosen area and get the feel of it
c) Formula based i.e. Land value per m2 in $ to see if you are getting a good deal.

I am not after a bargain so to speak because they are rare ( although would love one ) , but happy to pay fair market value on a property, question is how do i work out fair market value.

I am yet to come to terms with my investment strategy, to buy cash flow positive properties ( new houses on small blocks ). Buy close to CBD and go for a big block that is sub-dividable in the future. Or to do a purchase and renovate and then sell. My inclination is for long term hold on properties close to CBD with big blocks. I have already got two for cash flow in Northern suburbs of Adelaide. I would also be interested in hearing from people who have gone through the same dilemma's re strategy etc.

My only concern with the small block houses is that they might appreciate in capital value because of the vast abundance of land near these types of properties. Do others have similar investments of houses on small blocks in the outer suburbs from CBD and do they appreciate in value.

Regards

AK
 
Hi AK,

I normally find that over a period of time inspecting several OFIs and then finding actual sales of those properties that I can be fairly confident of determining value. Sites such as onthehouse.com.au are useful too for sale prices.
 
Ideally a 3000sqm block with no heritage listing/permit issues smack bang in the middle of the CBD. A price under $200k would be good too, but if it really came to it I'd be happy to pay up to 300k.

I hope that '3000sqm' is a typo. Good luck to anyone shopping for CBD land at $100/sqm......

Domain, not sure I like your basic formula without a bit of a warning. Make sure the rental figure is also acurate.

Arthur, there are plenty of good agents in your area. Befriend a few of them and get their advice too. They will be able to help you with comparisions and 'on the ground' knowledge.

I don't have the cash flow for inner city sub dividable blocks as they are fairly highly negatively geared. I prefer purchases in 5-10km from the Adelaide CBD. They are not too expensive (<$400k) and will have strong demand when the times comes to sell the developed homes or rent them.

Gools
 
I would also be interested in hearing from people who have gone through the same dilemma's re strategy etc.

Hi Arthur
I'm having the same dilemma right now. I have my PPOR plus 1 IP and currently looking at buying #2. I have some available equity in my PPOR which i'll use as deposit and purchase costs and also to cover reno on #1 and want to ensure I don't over-commit as #1 is negatively geared.
So my dilemma at the moment is - do I buy another negatively geared property (not preferable) or do I look at a neutral/positively geared one. And if that's the case how do I/where do I etc etc
 
hi Arthur Klassos
I will post a question and will try to give an answer to your question
my question is how do you value a liquor licence and the underlying assett
as the two are different
the asset for me is alot simpler
as its done of the value around
but the licence must have a formula and thats what I am working out
now
but back to your question.
for me its simple you go to site
you walk around and look at whats been sold
you talk to neighbours and fine out who sold what and what interest there was
you have a chat to real estate pick another property in the window and really low ball it.
if they bite its a very depressed area
if they show you the door then you are in an area that does not like low ballers.
I have not added to the value post for some time
just to busy.
the truth on value is only you set it
if you are a buyer set it wrong and your settings are wrong
but it really is smoke and mirror stuff.
price value and peoples idea of both
change daily
and who's eyes you are looking thru.

I start at a number I like and work from there
that number has to be worked out from on the ground
at site after talking to people there
the net is great but as a couple of people keep telling me there is no net that will do the same as pressing the flesh and seeing the white of their eyes over a coffee.
buying property is as much as people management,
knowing the signs similar to the guy out of lie to me,
understand if what you are saying is near the mark or miles off.
once you have a number that you have a 70% chance they are going to take.
then you look at the value and is it worth that.
the reason for my question is you can't do any of the above on a licence as it does not have feelings, its transportable so for me its a bit harder.

oh and yes I like to see how people react when offers are put in the way above
because YOU can have the shock of your life when the deals come back better then what you offered and your offer was a low ball
 
Before I purchased my first house, I paid someone $290 to do a "Sworn Evaluation". They did all the work for me. :D

Im in two minds to do this again though, depends how time poor I get.

Cheers

Mick
 
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