In Steve's thrid book in the chapter called 'working the five money making forumlas", he descirbes at the end how often you should monitor actual results of the gross rental return, return on investment, cash-on-cash return, growth-on-equity return and the net-profit percentage.
With the frequencies mentioned in the book about these formulas with the monitoring of results, how often should a property be valued? and what are some good ways to predict some of these values? (e.g. indicators of market going up or flat or down, e.g. affects growth-on-equity).
This chapter that I read and also the one straight after about the 3-2-1 are my favourite pieces of reading in property investing that I have ever done, and ive read about 30 investment books over the past 13 months. I love them, the detail and due diligence is very thorough. My favourite is net-profit percentage.
Chris.
I keep an eye on the markets that are relevent to my properties – every month or so.
I do this so I can keep a ball-park idea of how we are travelling as far as LVR.
I look at recent sales of similar properties, say; the last 1-3 months, which is pretty much how the valuers do it anyway.
I only get an actual valuation when it's time to buy, and that's on the new purchase, which is because the Bank requests it.Here's my re-evaluation story…
1 property, 2 evaluations, 3.5 months apart, 50k difference between both and all I did in capital improvements was dug up a few weeds from my lawn and re-stained the decking…
What pushed the price up? To my knowledge the lenders comparitive sales. It took the sale of 1 house and 2 units in close proximity to my house to push the value up.
(Please note that the 2 evaluations were completed by 2 different company's and the first was through a bank and the 2nd (the later) was done on my own back. Although I didn't get a chance to compare the two in detail I did get a chance to see the comparative sales on both re-evals.)I don't think a time frame is relevant in a re-eval, only recent comparitive sales. (although I could be wrong)
I would keep a close eye on houses/units/real estate in general in close proximity to your property and what they go for.If your looking at re-financing and having your own evaluation done make sure you have it completed in a format for Mortgage purposes. Also ask the company doing the eval which banks they do evals for as this could hint as to where you could go re-finance hunting!
I'm no property expert but just wish to share my recent re-eval/re-financing experience,
Hope this helps!
Joel.
Thanks Marc and Joel. I can't believe I didn't look at comparative sales, that should enable me to keep an eye on the value and keep those formulas in check.
Thanks again,
Chris.
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