Guide to Valuing Your Investment Property
Understanding the true value of your investment property is crucial for maximising your returns, whether you’re buying, selling, or leveraging equity. As experienced mortgage brokers working with investors in Bondi Junction and Launceston, we’ve created this guide to help you accurately assess the value of your property.
Use Market Comparisons
The first step in valuing your investment property is comparing it to similar properties in the same area.
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- Recent Sales: Look at recent sales of properties with similar size, features, and location.
- Local Market Trends: Identify whether prices in the suburb are rising, stable, or declining.
- Key Example: A two-bedroom apartment in Bondi Junction may fetch a higher price due to demand and location than one in a less central suburb.
Evaluate Rental Yield
Rental yield is a key factor for property investors. It helps determine whether your property is providing a good return on investment.
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- Gross Rental Yield: (Annual rental income ÷ property value) x 100.
- Net Rental Yield: (Annual rental income – expenses ÷ property value) x 100.
For a deeper dive into this, check out our Guide to Rental Yields.
Consider Growth Potential
A property’s future value can often be more important than its current price. Factors that influence growth potential include:
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- Planned infrastructure projects, such as new transport links or shopping centres.
- Historical capital growth rates in the suburb.
- Demographic changes driving demand for housing.
Suburbs like Launceston with improving amenities and affordability often show significant growth potential.
Seek a Professional Property Valuation
While online tools and research are useful, a professional property valuation provides a more accurate estimate.
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- Why It Matters: Lenders often require professional valuations for refinancing or loan applications.
- What to Expect: A valuer will consider the property’s location, condition, and comparable sales in the area.
Factor in Unique Features and Upgrades
Don’t overlook how unique features or recent upgrades can add value to your property.
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- Features: Properties with off-street parking, modern kitchens, or extra storage often command higher prices.
- Upgrades: Renovations, like a new bathroom or landscaping, can significantly boost value.
FAQs About Valuing Investment Properties
How often should I reassess my property’s value?
It’s a good idea to reassess your property’s value annually or whenever market conditions change significantly.
Can I rely on online valuation tools?
Online tools provide a general estimate but may lack accuracy. A professional valuation is more reliable, especially for loan or sale purposes.
How does rental yield affect property value?
Higher rental yields often attract investors, increasing demand and property value in the area. Learn more in our Guide to Rental Yields.
What should I do if my property’s value has dropped?
Focus on long-term growth and consider refinancing or upgrading the property to improve its value. Speak to us for tailored advice.
Is growth potential more important than current value?
It depends on your strategy. Long-term investors often prioritise growth potential, while short-term investors focus on current market value.
Let Us Help You Value Your Investment Property
Accurately valuing your investment property ensures you make informed decisions and maximise your returns. Let our team of expert mortgage brokers guide you through the process.