Property Appraisals: Know the Value of Your Investment
An appraisal is the process of determining the market value of a property. The market value is a measure of the property’s worth. An appraiser may use a combination of three basic valuation methods, also known as the “Three Approaches to Value,” to determine the market value of an investment property. As a Tampa property management company, we understand the importance of knowing the market value of a property to ensure that you are making a sound investment.
A property appraisal is not just necessary for buying or selling a property. In fact, there are several possible reasons for needing an appraisal of an investment property. Though it is true that the most common reason is for sale of a property, among other things, an appraisal can be needed for refinancing, applying for cash or business loans when the property is used as collateral, and also for tax reassessments.
THE THREE APPROACHES TO VALUE
1. Sales Comparison Approach to Value
The sales comparison approach to value is a commonly used approach for estimating the value of a property. Sometimes referred to as the market data approach, this method assesses the value of a property based on selling data of similar properties in the area, usually three or four. These are known as comparables. The comparables must be very similar to the subject property and must have been sold within a year in a competitive and normal market in order to provide an accurate estimate of the value of a property.
2. Cost Approach to Value
The cost approach to value, which is sometimes referred to as the summation approach, bases the value of a property on the current estimated cost of replacing or replicating a property of comparable use and marketability. This method combines the value of any existing structures on the property minus depreciation and the value of the lot separately to calculate the value of the improved property. It is assumed that a reasonable buyer will not pay more for a property than it would cost to replace it with a similar lot and comparable structures.
3. Income Approach to Value
The income approach to value is typically used in combination with the sales comparison and cost approaches to assess the value of an income-producing investment property. The income approach is frequently used for valuing commercial and residential real estate investment properties. As an investment property owner, this approach is the more important of the three. This approach bases the value of the investment property on the value of two factors: the “market rent” that a property can be expected to earn and the “reversion” (resale) when the property is sold.
OTHER FACTORS THAT AFFECT THE VALUE OF YOUR PROPERTY
An appraiser may take into consideration other factors that fall outside of the “Three Approaches to Value.” Some of these factors include the size and shape of the property, the condition of the exterior and interior of the property, extra features, and additional improvements.
We are a highly experienced property management company in Tampa who’s worked with investors and rental properties throughout the Tampa Bay area for over 30 years.
If you are looking to buy an investment property, or already own investment properties, please all us at (813)968-5665 to learn more about our property management services, or submit our proposal request form.
Our founder, William C. Spivey, is a man who believes in the power of people...LEARN MORE
We are a family-owned and operated company built in the Tampa Bay Area by a working-class Tampa family.LEARN MORE
In today’s day and age, technological advancements are occurring at a rapid rate. These developments...LEARN MORE
At WPM, we understand the sensitivity and importance of a management transition. We will proactively work in...LEARN MORE
SEE WHAT OUR CLIENTS ARE SAYING
Couldn’t have asked for better service. It’s NEVER this easy dealing with property management companies. Great Job! Thanks so much!
Cody Glass from the accounting department was very helpful and professional with a lot of courtesy to help me to understand and set up a new payment process.
I work with Wise on a regular basis, as the nature of our business requires quick turn around times. They are kind and helpful when you need something.
I have always received great service from Wise. Any time I need help someone always answers the phone and directs me to the right department.
My name is George Florence, I am the Board President of Villas of Northdale, and I have been a Board member for 5 years now. We have had perfect help from Wise Property Management.
Wise Property Management is the quintessential image of a professional, organized, comprehensive, deligent and knowledgeable Property Management company.
Kristy D., South Pointe HOA Vice President.
I have been working with Jeanie Hunter of Wise Property for several years now. She has handled all our Tampa Villas South association issues promptly and with great efficiency.
Ken C., Tampa Villas South HOA Vice President.
Very easy to work with and everyone is friendly. We have worked with them for a very long time and love the experience. They take pride in their work and truly enjoy what they do.