Have you been thinking about investing in real estate? If you really want to become a real estate investor, one thing you really need to develop is the ability to assess the value of a home. If all you’ve ever bought before is a car, and you’re used to seeing NOTHING value listed in a book like you get with car dealers, forget it. There are no values ​​placed on a house for sale other than what you calculate yourself. That’s why it’s often best to stick to one or two areas for your real estate investment, at least initially. Doing this makes it easy for you to get an idea of ​​a home’s value, based on other comparable homes that have recently sold in the area.

So if you want to build your assessment skills, here are some ideas to get you started. First, decide which evaluation method you plan to use and stick with it. Many people appraise a home based on the value of similar homes in the area. In that case, you better make sure you know the area inside out and know exactly what kind of numbers you’re dealing with.

Another method of evaluation is to look at the potential income of the property. In that case, you need to consider all the factors involved, including the potential for vacancy, the maintenance required, and how attractive the home appears to a potential tenant. If you want to appraise the house based on its potential value after you’ve made improvements, make sure you have a very good idea of ​​how much those improvements will cost you in both time and money. Don’t just guess; have real, solid numbers to work with. Otherwise, you could find yourself investing a lot of money in the house with no chance of recouping it through a profitable sale.

You also need to know the type of value you are going to use to get an appraisal. You must learn the difference between tax assessed value and appraised value. Different rules and laws in your state will determine the assessed value of a property, and it is based on information such as the value of the land and the level of improvements made to that land. An appraised value is basically an estimate of the property’s likely sale price if it were sold on the open market today. This is basically similar to the NADA value you see when you go to a local car dealer. It is determined by sales comparison, which means it is based on the sales price of similar homes that have recently sold in the neighborhood.