The income approach is often given primary emphasis when appraising a commercial real estate used to generate income. Estimates of value via the income approach are highly sensitive to changes in revenue, expense and capitalization rates.
The sales comparison approach is the most intuitive and best understood of the three approaches to value. Home buyers, companies renting office space and real estate investors all utilize this approach. Comparable sales are often referred to as comps and rental comparables are often referred to as rent comps.
Due diligence is an essential step in real estate investment. After selecting the property type and geographic location, the investor needs to ascertain he has accurate information regarding the physical asset, financial performance, tenant base and future prospects for the subject property.
Print This Article
Add To Favorites