Investment analysis applies equity strategies to real estate consulting to determine the likelihood that any property is a wise place to put your available capital. Partnering with local real estate consultants is a crucial first step to developing a solid investment strategy.
From a quantitative perspective, real estate valuation is like stock investments. Through their real estate consultant, investors buy properties and make educated guesses about how much money they can make through rental income, property appreciation, or both. Real estate consultants must combine quantitative analysis with an in-depth knowledge of the markets they serve to know when good deals become available.
Both equity and property valuation involve two basic methodologies: absolute value and relative value. Real estate consultants develop a knack for calculating future net operating income (NOI), which in commercial real estate integrates the gross income multiplier model and in residential real estate involves a comparative market analysis conducted by local market experts.
Real Estate Valuation
Real estate valuation involves more than tracking trends and running various analyses of future expenses versus revenues. Arkansas real estate investment analysis, for example, is unique in that much of the profitable commercial real estate involves large tracts of undeveloped land for which a highest and best use analysis is required. You need local brokers with working knowledge of southern city migration and development patterns to determine which local areas will most likely experience the fastest rate of appreciation, and consequently yield the highest rates of return.
The Importance of Finding a Local Real Estate Consultant
Real estate markets vary markedly between states and within cities. Without understanding which calculations are relevant to the current market, you can easily make a blunder and lose money instead of making it. That is why local insight is so critical to determine which data provides critical information necessary to make a good investment.
Arkansas Real Estate Investment Analysis
Right now the real estate market is healthy in Arkansas, with the median home listing at $165,000 and median sales price at $140,200. For residential and commercial sales in Arkansas, prices are expected to rise by three percent in the next year, according to Zillow and other predictors. However, there are many calculations that must be weighed to determine the health of a local market and the ability of a specific property to generate income. For that, it is best to take advice from the experts.
Ferstl Valuation is a full-service Arkansas real estate investment analysis firm with a qualified staff of real estate consultants to advise your next venture. Contact us by calling (501) 313-0641 today to make an appointment to discuss marketability studies, discounted cash flow analysis, and other investment analysis needs.