How do you calculate the value of a property?

Most residential property values are based on a direct comparison with recent comparable sales, though valuers may also consider the size and types of rooms, fixtures and fittings, building condition, location, block layout, and a variety of other aspects.

If real estate agents and brokers who work with investor clients are to do their jobs properly, they must understand income property valuation methods. To determine the current value of a property under consideration for purchase, a common valuation method combines income and the capitalisation rate.

In addition to determining a property's market value, one of the first things you should do as a real estate investor considering purchasing a property is to determine its operating income and costs. This data will tell you whether the property meets your cash flow and profitability targets.