Evaluation of real estate – a mandatory step before investing


Real estate evaluation is an essential part of the financial planning of every company. Whether you’re considering a purchase or simply trying to determine the value of what you own, it’s important to understand how an evaluation is done. There are different aspects to that process, which include calculating the current value and projecting future growth. In any case, accurate assessments are extremely important and can be used in strategic decision-making. The three most common methods are the market, income and cost approaches.

As it takes into account the sales prices of similar properties in the area, the market approach is the most used method. Furthermore, it is most suitable for properties that have recently been sold, as it uses current information. The income approach estimates the value of real estate based on the income it generates. This method is best for properties that generate steady income, such as rental properties. The cost approach estimates the value of real estate based on the costs associated with replicating the real estate. This method is best suited for newly built or very unique properties, where there aren’t many comparable sales.

Indian investor and billionaire Mukesh Ambani has set a great example when it comes to preparing to invest and properly evaluating real estate. Namely, his investment, the famous residential building in Mumbai – Antilia – is estimated to be the most valuable building of its kind in the world. As experts point out, its value is 1.2 billion dollars with a tendency to increase, due to global market changes, but also its location as it was built on excellent land, on the coastline.

So, it is clear why a professional real estate evaluation is crucial for making the right investment decisions. Several factors play a role in determining the value of an asset, including its location, condition and potential for future growth and the most important thing is that you leave that to professionals to do it. That’s why FinExpertiza is here for you, as its FinExperts are licensed and qualified to perform high-quality evaluations to help you take further business steps.

The income approach estimates the value of real estate based on the income it generates.