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How to Evaluate the Value of Your Present and Future Housing Business

How to Evaluate the Value of Your Present and Future Housing Business
LIVE WELL - BUY RODWELL
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Beyond Proforma Income Statements; Flush-out Some More Hidden Values of Your Housing Business!

 


 

Looking to start a housing business? Nearly all influential and affluential people, no matter how they derive their wealth, have invested into the housing business for both securing and furthering their prosperity. However, it is more involved than just buying properties that you can let occupants pay more than the monthly mortgage note payments.

 

However, there is more to the housing business than amassing houses and rented properties. The most recent depression that former President Obama had to resolve by making lenders forgive some their loans was the consequence of multi-property holders who failed to make a go of their housing business. Either it was due to inadequate business evaluations or improper planning, but many people abandoned their holdings to foreclosure because they could no longer keep the doors of the business open. After all, it is a business and just buying more units because the leasing receivables are greater than the mortgage note payments is not the only valuation for the real estate base enterprise.

 

Since the recession started to recover, not completely healed yet, there has been many measures in place for ensuring that those conditions do not recur. One false-profitability practice that seems to survive the recession is: “the concept that you will be a profitable investor/holding company when you acquire real estate and simply let it for a lease with term that will pay you more than the monthly mortgage note you pay so you can run out and live above your means.”

Nearly 17 out of 20 of our multi-family property shoppers and all of our 3rd and 4th single-family house buyers still think that all they have to do is to let the property for lease at a rate higher than the mortgage payment.

 

Appraising the value of a home may seem to average person as one-dimensional because most people never bother to read them. Very few agents want to know more than whether the independent appraiser’s figure is more than the offering price. However, when evaluating your Housing Business, the values can be appraised from multiples of dimensions.  In fact, a good business appraisal is one that factors in a wide range of variables in order to achieve an accurate result.  Indisputable records ranging from comparable housing businesses and favorable market capital improvement projections to management improvements and a good deal more are all factored in.

 

It is important to remember that while an appraiser may feel that he or she has all the information necessary, it is still possible they have overlooked key information that could add much value to you when negotiating the sale or refinancing. Refinancing commercial real estate is a business role and just because your holdings are less than 5 units and not considered “commercial” yet, one should practice the proper business principles just the same.  

 

Property buyers of multiple units must evaluate their purchases as business appraisers do. Surely. Housing Business appraisers must understand the purpose of their appraisal before beginning the process.  All too often appraisers are unaware of important additional factors and considerations that could enhance or even devalue a business’s worth. Yet it is more so for multi-family housing businesses.

 

There Can Be Unwritten Value

Value isn’t always “black and white.”  Instead, many factors can determine value. Many prospective buyers are more attracted to well-maintained properties with modernized residency appeal. That’s natural and understandable until they realize the pricing are way out of their range. But only serious housing business owners know what to do before giving p on their dreams of owning a housing business after the shock. RodwellBuildingServices™ can tell how serious a multifamily housing buyer prospect is when they start looking at variables, such as profitability, depth of management and market share and even capital improvements. However, when you come to RodwelBuildingServices™, there can be a myriad of more factors that adds value.

 

For example: Takoma Park, MD and Silver Spring, MD also Alexandria, VA and Arlington, VA are great locations for your multifamily housing business. If you are considering the venture you will notice that comparable properties within those locations are averaging 63% higher rental rates and with less turnover than other areas in and around the national capital area. SO before accepting the brokers motto: Location – Location – Location, those areas will get better than those market rates for the rents if the landlords create better than market features into their properties. It is not all into the Location and I am giving you the secrets if you stay F.O.C.U.S.

 

Here are some of the factors to consider when determining value: How much immediate and future marketed competition is there?  What are the key features of those comps? Does the business property have potential beyond its current occupancy?  Does your business property offer a mixture of unit sizes and features? It is very simple when your business property is 4 or less units, however, you should be able to develop the marketing mindset once you reach those thresholds. You may want to see how you can have easier access to big employers who will employ your targeted occupants and place a value on that since it is also a business stratagem. Value Added Realtors will show you how to capitalize on your business property’s competitive advantages. It is always more than pricing in line with the other properties in the area. Those are just some of the F.O.C.U.S. consultations and evaluations RodwellBuildingServices employ when helping housing business property buyers and sellers.

 

There are Ways to Increase Both Valuation and Success

 

No doubt, successful housing businesses didn’t get that way by accident.  A successful housing business is one that is residency focused and perform periodic capital improvements in order to increase value provided to the tenants.  One thing can be said about billionaire, Donald Trump, is that he delivers value by way of exclusiveness, aristocracy and cleverness in the real estate he develops for his customers.

 

No Replacement for Understanding Trends

 

If a company doesn’t understand trends, then it can’t understand both the market as it stands and as it may be tomorrow.  Savvy business owners understand today’s trends and strive to capitalize on the mistakes of their competitors while simultaneously learning from their competitors’ successes.

 

It was a trend that broke the economy and cause the recession. During the 2000-2010 housing businesses as well as individual owners bought more properties than they could carry simply because they could borrow the funds. Take heed, the new trend is to evaluate your housing business’ present value and chart a course for capital improvements so you can exit with profits exceeding your tax liabilities.

 

Contact your #ValueAddedRealtor at #RodwellBuildingServices and follow us next time for “Transforming Hidden Value Into Operating Strengths and Positive Cash Flows”

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Rodwell Smith

Rodwell Smith and RodwellBuildingServices, Inc., has over 35 years of progressively responsible experience developing and modernizing real estates for individuals, corporate and government entities. Rodwell has sold and procured over $270M real property improvements; managing the projects from selection, inception, through design, through construction; quality assurance, surveying quantity, turnaround delays and augmenting progression to completion. RodwellBuildingServices™ benefits keen real property sellers, buyers and users in Washington, DC and up to 50 miles around Maryland and Northern Virginia with the real services and the right property for their order!

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