02/06/2023
Q) Do you feel the apartment price is overpriced when you decide to purchase? Do you postpone the decision to purchase the apartment when the cost comes down? Have you ever waited for the property prices to come down which never happened?
Well if you feel so …Let me give the explanation and try to answer this question …
Probably you need to understand How to do real estate Valuations, which is a simple calculation (Assuming this is our 1 st or 2 nd apartment or home purchase).
In step 1) You need to do is to check the rentals for a similar property in the same complex(s).
In Step 2) Rental earnings in one year = monthly rentals* 12
(Assuming the rest of the costs like the electricity, maintenance, wear, and tear are paid by the tenants).
In Step 3) You need to evaluate the property values …which requires BIT effort BUT trust me its worth putting the efforts ….
Identify similar properties in the same complex or same society and check for the rates at the online real estate portals ….
Make calls to real estate agents as a seller at times and a buyer at times to access the price differential..there should NOT be a HUGE difference in the BUYING and the SELLING Price ( 5 % to 10 % is OK ) …This will ensure the Property is having a stable pricing
Now identify the competitive property in the area ( Like if you are looking for 3 BHK look for similar or equivalent property in terms of area, density, and facilities in the same suburb) …and follow the same online and offline process to access the property prices….
Now you have a fair idea of the price of the property
In Step 4) You calculate the Return on the
Rentals in percentages (Yearly Basis) = (Yearly Rent in INR/Total Value of Property )*100
If this is in the range of 3 to 4 % on a yearly basis we can safely say the property is fairly priced and the Rentals also justified ….
If you are interested to have advance level analysis for the rental yields and the property pricing and wanna know the future trends ? Do let me know shall write on the same?
