Real estate investments gained popularity among the Australians in the first half of 2000s as financing options were made available as well as there were minimal down payment requirements at that time. So flipping homes became the thing. However, the great recession that occurred around 2007 affected all economic areas and did not miss the real estate, and came with it high unemployment rates as well as strict money lending standards by financial institutions, which inevitably affected buying and selling properties across Australia and other areas of the world. An alternative to selling and buying that is slowly gaining popularity in the real estate game is rental investments. But what troubles many people in Australia is how to value Caloundra real estate rentals. This article focuses on some of the ways that these rental investments can be valued to ensure profitability.
Sales comparison approach
Just as the name suggests this approach involves making comparisons with similar properties that have been sold or rented over a given time period. It’s great as it allows the investors to gather information on any emerging trends in the game. This approach usually relies on attributes so that a relative price value can be attached to a property. Therefore, if sunshine coast real estates properties lying on a 3000 square foot are valued at a dollar per square foot, then an investor will expect similar rental income for a property within the area.
Capital asset pricing model
This approach introduces the concept of risk and opportunity costs by looking at the returns on investment that are likely to be derived from rental income as compared to other investments that have no risk like real estate investment trusts. This means in simple terms that if the potential return on investment from a Caloundra real estate rental income is below the expected return on a guaranteed investment, then taking the risk to invest on a rental property is not worth it.
This is a common approach in commercial Currimundi real estate and uses the tactic of relating the potential income to the initial investment. It will determine the annual capitalization rate for an investment. Therefore, if a property costs 12000 dollars to purchase, then the monthly income that will be anticipated is 1200 dollars, and the annual capitalization rate will be 12%
This involves valuing a Caloundra real estate rentals property based on the kind of uses it will be used for. Therefore, the value of the land as well as that of the depreciated improvements will be put together. This approach is great when it comes to valuing a land that is vacant or for structures that are relatively new other than those that have been around for some time.
Real estates on the sunshine coast rentals can be a cash cow if investors learn how to value their property well. While the approaches discussed above can be of great help when it comes to arriving at a value, seeking the help of a real estate agent can be of equal significance.
For more information on the Caloundra real estate rentals, simply log on to the Internet.