At Gulf Coast Property Management, we work primarily with investors, and we introduce them to real estate that will give them a good return on their investment. Today, we’re talking about the three different ways to value a property. Those methods are the cost approach, the value approach, and the sales approach.
Cost Approach Valuation
The cost approach is often used by builders and insurance companies that are looking for the cost of producing a building. This is not something we will typically deal with; we are more likely to use the value or the sales approach. However, it is one method that might be used to attach a value to a property.
The value approach strictly looks at the balance sheet and income statement. We want to know what the property will produce in revenue. Those numbers are more important than what the kitchen or the roof or the garden will look like. This approach keeps us focused on the numbers.
Sales Approach to Valuation
This approach is what you would typically see when you go to purchase a property. We would look at the comps in the neighborhood, and evaluate the properties that were sold and listed in the last 90 days. We’d want to know the market value for those properties, and use that data to attach a value to your home.
One method is not necessarily better than the others. It really depends on your circumstances.
If you want help looking at investments or need investor financing tips in Manatee and Sarasota counties in Florida, please contact us at Gulf Coast Property Management, and we’d be happy to tell you more.