Property values in many areas have risen over the last year – and many investors may not realise just how much their asset is worth these days.
Even if the landlord is not planning to sell, it is important for them to have a clear handle on the current value of their asset. If the property has increased in value, they may be able to borrow more money to build their portfolio or raise funds to use for other things.
Landlords who want to accurately track the value of their property are well advised to consult a professional, to prevent the risk of letting bias cloud their judgement – in either direction.
Local real estate agents are usually only too happy to provide a free “appraisal”. These, backed by information from internet sources such as CoreLogic RP Data and Residex, can be useful in providing an indication of value.
However, the gold standard in knowing what any property is worth is a formal valuation by a qualified valuer, who will produce a full written report noting all relevant considerations including location, comparable sales, access, planning restrictions and council zoning.
Comparable sales can be particularly useful in giving investors insight into what changes they could make to improve the value of their investments – such as a new kitchen or bathroom.
It’s worth noting that the property valuation is not the sum the property should be insured for – the insurance should cover the cost of demolition, planning and rebuilding.
If an investor is getting a valuation report performed, it’s worth asking the valuer to nominate a replacement cost as well as a market value.
The following tips can help ensure a property receives the best possible valuation:
• presentation – neat and tidy, outdoors and in
• sales evidence – if houses nearby have sold recently, have the relevant sales figures and agent contact details at hand
• a rates notice – even though these are often inaccurate, they can provide a valuable point of reference to other properties in the same local government area
• preparation – if a landlord is planning improvements, get them done before the valuer comes; good intentions don’t have a dollar value
• if the landlord is planning a renovation, and has plans already drawn up, make it clear you want a valuation “as if complete”
• improvements – if there are recent improvements, provide the valuer with a written list of what they were and how much they cost
• areas which have the largest impact on values include kitchens, bathrooms and outdoor living areas