If you are looking for a property or new home, it is important that you understand the factors influencing the property valuation. There are many things that you must carefully take into consideration when deciding to buy a new property, so as not to affect the value of your income property negatively in the future. To help your decision-making process, listed below are a few factors that can affect the appreciation or depreciation of a real estate investment or the value of your income property.
1. Location
Ok fine, “location, location, location,” is all you hear about. But it’s the core of the apple. Buying a home in a good location can be a solid long-term investment. Is it close to medical facilities? Is there a good quality school nearby? Will you have easy access to employment centers? Choosing a location that is close to a wide array of local amenities and good transport links increases the value of your potential income property. Those who plan on selling their home in the future must remember that location is what leads tenants to the property.
2. Geographically stable
An area that is likely to be affected by natural disasters such as tornadoes, floods, or hurricanes is a poor choice when buying an income property. Anyone searching for a home searches for safety as well. So for an area to be geographically stable is a key factor that will help in determining the value of your property.
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3. Age and condition
These two factors certainly affect the value of your income property. The older your home, the less valuable it becomes. New house are naturally worth more. On the other hand, despite their old age, historical homes can be very valuable if they have historical significance. Of course they would have to be well maintained and livable.
The condition of your home also plays an important element when it comes to determining its valuation. An old, but well-maintained property, can achieve a valuation that is the same as that of a new build of equivalent specifications. Keeping your property well-maintained will keep its value high. So always upgrade and improve your home so as to keep its worth high.
4. Size and renovation
People always assume that the bigger the house, the higher the value. While it may sound reasonable, this is not always the case. There is a lot more involved with taking care of a large house – a lot more rooms to look after, a lot more yards to manage, and a lot more adjusting and repairing. Also the number of bedrooms affects a home’s value. Adding more rooms will take away from its value. Less is more! When it comes to renovation always keep in mind to renovate in accordance with your neighborhood and the houses around you. You want your home to be similar with your neighborhood’s style. All this pays off when you’re able to reap the benefits of appreciation.
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5. Taxation and urban zoning
Taxation and urban zoning play a role when it comes to determining the value of your income property. An increased taxation in the center of the city will decrease the value of residential property in that area, making it cheaper for residents to live outside the center. Likewise, rezoning part of an area previously classified as residential to an industrial development may cause a decrease in value of adjacent properties.
6. Foreclosure homes
Foreclosure greatly affects the value of your income property. Though the majority of the loss is acquired by the owners of the foreclosed homes, they are not the only ones affected. According to RealtyTrac data, neighboring home values are proven to drop an average of 1% for every 7% the foreclosed home value drops. Areas with foreclosed homes have an increase in property tax rates and a significant decline in the value of surrounding properties. Foreclosures also tend to have an effect on a potential buyer’s perception of the area. This is a very bad influence on homeowners thinking about selling their property in the future.
7. The effect of crime
Of course nobody wants to buy or live in a neighborhood that has any case of crimes. Any sort of reputation of crime in an area can affect the value of your income property. People avoid dangerous neighborhoods. Studies show that the impact of crime can dramatically affect the value of your property.
Take it all in . . .
When it comes to understanding the value of you income property, many tangible and intangible traits to think about. The smallest things can affect the value of your property, including things out of your control, such as foreclosures.
Know you know what look after, this will help you when buying an investment property in order to sell it in the future. More importantly, these tips prepare real estate investors about their potential profits and how to assess the concerns of buyers.
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