Before going ahead and investing money into renovating or developing your investment property, it’s wise to find out how much your property currently is worth. By knowing the value of your property as it currently stands, you will then be in a better position to assess if the planned changes to the property, are actually worth it. You may find that you would be in a better position to hold off on the changes or that it might be better to put the money into different aspects of the property. For example, you may’ve thought that adding an en suite was a wise idea, but after assessing the value, it may in fact be better to install air conditioning instead.
There are a number of ways to figure out the current value of your property, and one of the ‘quick and dirty’ ways is to compare your property to recent sales in the area of comparable properties. Once you have an idea of what has been sold in the area, you can adjust the current value of your property by accounting for items that may or may not be included (air conditioning, appliance upgrades, etc)
There is a big caution with this method however, you have to be completely and utterly clinical about this process. When it is your own property you have a tendency to over estimate the value! If you are going to use this method to figure out the value of your property, keep in mind this is really only a ball park estimate only – a way for you to get a general idea of the value. You have no guarantees on how accurate you will be (especially if you are daily new to property investing.) You probably would only use the method if you were considering making small changes to the property.
To get more accurate information, you can contact your real estate agent. Many agents offer a no obligation free appraisal of the value of your property. They will also be able to give you a list of properties that have have sold in the area and also how long they were on the market before selling.
So if you want a ‘quick and dirty estimate’ to help make a quick decision about small upgrades to your property, then have a look at comparable properties yourself (but always keep in mind you might be off the mark). If you are looking at sinking quite a bit of money into the rental property, then getting some expert advice about the value of your property is a wise move. You may find that you’re in a good position as you are and it doesn’t need a major overhaul.
So what is your method for determining the value of your property? Do you always call in the experts, or are you a bit of a DIYer?