The Top 10 Factors Affecting the Value of Investment Properties

Buying or selling a property is often described as difficult because several factors determine its value in the market. However, this does not need to be the case, as knowing the value of a property allows investors to make informed decisions during the buying or selling process. Moreover, it provides methods to avoid a wrong deal and reduce losses. Anyone who wants to buy or sell a property, be that through Property Auctions, an estate agent or private sale should evaluate the things that can impact its value. This will help you get ideas about investment properties before putting money down. Apart from this, they show ways to proceed further to close a deal without any difficulties.

The top 10 factors that impact the value of investment properties

1. Location

Location is a major factor that can significantly influence the value of a property. The prices of properties will rise in areas with good amenities. Some suburban areas have a better reputation due to low crime rates and a peaceful living environment. Borrowers have to pay more when they want to buy a property in an important location.

2. Age and condition

Age is another important factor that will impact a property’s value. Buyers like to pay more for a new property because it doesn’t need any repairs. Moreover, the condition of a property plays an important role in influencing its value. Property management will determine the value, and properties that have good maintenance may cost more. For instance, investors prefer buying a 15-year-old, well-maintained property rather than a new one that requires major renovations.

3. Supply and demand

Supply and demand will influence investment properties because prices will increase if there is high demand. Therefore, it is wise to evaluate them before buying or selling a property on the market.

4. Property size and usable space

The price of a property is usually determined based on its square footage, which becomes its market value later. Besides that, the usable space also determines the costs, and investors should understand them properly.

5. Environmental factors

Some environmental factors, such as climate and weather conditions, can influence a property’s value. Properties located in a flood, hurricane, earthquake, or tornado zone may experience decreased values due to high risks.

6. Investment potential

The value of a property may increase due to future growth prospects such as high rental income and appreciation. Upcoming features in an area will influence the market value, and borrowers will have to pay more when buying a property.

7. Interest rates

Interest rates can affect the value of a property when banks increase the interest rates on loans. That means borrowers have to pay a high monthly mortgage repayment. Also, high- interest rates can lead to high selling prices in the market.

8. Upgrades and updates

Older properties need renovations and upgrades to improve their conditions. The renovation costs are expensive, which leads to high property management costs. Properties that have the potential to add extra features will cost more. Curb appeal affects a property’s value, which will result in higher prices in the real estate market.

9. Economic Outlook

The economic outlook is another important factor that can influence a property’s value in the market. If the economy is booming, then it will lead to future growth prospects, and people like to buy property. The buying power of investors will increase in the market when the economy experiences steady growth.

10. Energy efficiency

Heat and cooling costs will influence a property’s value in the market. This is because environmental factors may affect a property, and many buildings use high-quality materials to overcome them. Properties that have double-glazed windows and solar panels will cost more because they offer more advantages to buyers.