In the world of real estate investing, there are dozens of ways to determine what is the fair value of a property. But to keep it short, here’s a list and a brief description of the methods I use for my clients
- Comparable Sales Approach – The approach most Singaporeans like to use because not much calculation is involved and it’s comparison properties is tangible for everyone to see
- GRM (Gross Rent Multiplier) approach is commonly used for commercial properties but with a little tweak is also easily useable for residential properties
- Income Capitalisation Approach is used for rental properties but can also be used to determine the market value of the property you are thinking of buying
As you can see, giving the same formulas to 10 different owners looking for a house in the same location can give 10 different valuations. The variables vary so much because different owners will give different weight to the multiple variables that are included in these formulas. For example, how near the public transport is will not matter to the owner who has his or her own private transport, the rent amount one can expect to receive for the GRM (Gross Rent Multiplier) Approach, or the rate of return used for the Income Capitalisation Approach, all of this are determined by you the owner and can affect the valuation answer.
The important thing is that for you, these 3 formulas, based on the amount of weight you give to the various variables, should give you 3 different answers that are very close to each other to determine for you the valuation you think you should be paying for the property.
Are you interested in finding more about how I approach buying properties for you to see if they are a great purchase decision or not? Or are you curious about this particular property but you are unsure if it’s a wise property purchase decision? How many people have been burned by bad property decisions in the past because they were misled by other real estate agents that don’t know any better?
This is where I come in. For all my clients and you, the reader of this post, I will draft out a comprehensive plans using these formulas to make sure you are buying a property that not only you are in love with but also one which will turn out to be a property that will be an appreciating asset in this tough Singapore Property Market.
Let’s have a quick non-obligatory chat or meet up about your real estate investment needs and let’s make sure you are paying a fair price for your next property purchase!
If you still haven’t found out what property you are looking to buy, let’s discuss further and I will aim to find a property which will be something you like and also serve as a capital appreciating asset for your real estate portfolio.
In the form below, let me know the unit you are thinking of buying or renting and let me work together with you to determine if the next property you are looking to buy is at a correct price.
If you are still deciding, just drop me a message and let me do the necessary scouting and calculation for your perfect next home!
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