Today the demand for apartment buildings is increasing in Chicago and all over the world. More and more investors are moving towards investing in rental housing. It is essential for inexperienced investors to do valuation of apartment buildings, because they generally do overinvestment due to they think more about the rental income but not about the expenses.
There are many methods to do valuation of the apartment buildings -
- Sales comparison approach
- Capital asset pricing model
- Gross rent multiplier approach
- The cost approach
Sales comparison approach is the most popular method of valuing apartment buildings. Generally brokers and real estate agents use this method to do property valuation. The valuation is dependent on many factors - no. of bedrooms, pools, decks and garages. Thus there are multiple factors responsible for rental apartments valuation.
In the capital asset pricing model, opportunity cost and risk concepts are used for doing the valuation of apartments. In this model of valuation, the potential return on investment is evaluated and it is also compared to the other investments, which have no risk associated with them.
The gross rent multiplier approach emphasizes on the fact that how much an investor can collect the rental income in a year. It is considered a very good method to evaluate the overall worth of a property for doing the investment.
In the last, the cost approach is the most pragmatic approach for property valuation. It is based on the concept that for how much purposes a property can be used for. In this approach, it is very necessary for a property to be in a zoned region otherwise its value can be reduced.
Your Best Bet: Apartments Value
Apartments Value is an expert and professional roofing contractor in Chicago, which also deals investment property value for the last 30 years.
