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How to Estimate the value of a Rental Property? 

House and building construction is a civil engineers jobs. And its starts with the design and preparation of materials specification used for the construction; then the estimation of labor cost, materials cost and expenses for maintenance and equipment rentals, then processing for the permit and licenses for the commence of construction. The total value is then sum up to acquire the true cost adding a monetary margins equates to market value, for exoneration in real estate market. For the Market value of the land; Acquisition cost plus permit and licenses plus development cost adding monetary margins equals your market value. Construction engineers, cost engineers and quantity surveyors arrange these datas into spreadsheets to summarize the overall project cost and draw bar- chart out of these datas to become part of their management plan. This is a cost approach method and its sounds too technical... Here’s the easiest way to estimate the value of the property and there’s no need to be an engineer or appraiser in order to attain the estimate value.  First, you need to determine the reference market prices, like the rental incomes in the local market area and the latest real estate transacted. (but mostly kept confidential); latest buying and selling prices. Look for the real estate adds and real estate websites….Most seasoned real estate investors do market survey to help them decide whether or not it comes closed to be a good real estate investment. This method is comparative income approached; market data are collected and comparing the measurements of the subject real property. Example: A 3-unit apartment building being rented at P10, 000 per unit per month the building cost is 2.8 million. What is the estimated value a 5-unit apartment building in the same neighborhood with a gross rent of P8, 000 per month? First determine the Gross Rent multiplier; (GRM) = Market Value/Gross Scheduled Income =              = 2,800,000/ (3-units x P 10,000 x 12 months)              =  7.7778 Applying for the subject property based on the neighborhood average Gross Rent multiplier; Value of the Property = GRP x 5 units x P 8,000 x 12 months                                          =7.778 x 480,000                                         = P 3,734,400.00 The same application can be apply for lease land. (Use per square meter instead of per unit) The more the reference properties within the neighborhood, the more reliable the average gross rent multiplier [Summation(GRM)/n] factor that can be used within the local market area. This technique is one of the methods used for real estate value analysis for quick estimation. To obtain the more reliable value of property consult an engineer, real estate investment analyst or real estate appraiser before making your real estate investment decision.

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