After over 20 years actively and professionally buying and selling real estate commercial or revenue and investment real estate has always been a keen interest of mine.
However, I have discovered through experience that what is sometimes common sense or rational thinking becomes irrational or emotional when purchasing investment real estate, we sometimes lose sight of our objective.
Typically, our objectives are to invest our resources so they work for us and accumulate and appreciate in value over time. Another healthy component of this exercise is to generate cash flow or ROI that will help improve the asset and add value for a longer and better return in the long run.
Today I want to highlight a very simple calculation that can get you very close to evaluation and therefore an answer to whether or not what you're looking at is a good investment or a bad investment.
That calculation is simply determining the value per square foot on a relative basis. In this case if you're looking to buy a property say it's a house and it has a thousand square feet and the price is $400,000. What you would do is take the price and divided by the square footage and that would give you the price per square foot. Next you would then go out in the market and look at what has sold that is very similar and do the same calculation and compare that.
No not all homes or properties are the same so you have to make some alterations as an appraiser would in determining the value for a bank or other financial institution.
This is just one simple relative test to find out if there is even value in pursuing this investment or not.
Okanagan Real Estate Kelowna Vernon Penticton Summerland Oliver Naramata Update Raymond MAASKE 250.878.2218
Real Estate, Kelowna, Vernon, Penticton, Summerland, Oliver, Naramata, Update,
Raymond MAASKE, is an accountant and licensed real estate broker with considerable experience in commercial and residential Real Estate. He has owned and managed a wide range of businesses and continues to build solid relationships with businesses and BUYERS & SELLERS.
Investment Real Estate Expert, TerraCorp Real Estate Services
250.878.2218 | RaymondMAASKE@gmail.com | TerraCorpRealEstateServices.com | Skype: raymond.maaske | Okanagan, British Columbia, Canada