Valuing Rental Property

by Kenneth Hoffman in ,

When you're buying a house the appraiser may use several methods, but the selling price of comparables in the area is usually the one that determines the value. That's not true for investment properties such as apartment buildings, office buildings, etc. For these properties the cash flow from the property is what generally determines the value. While location and certain other factors go far in determining the cash flow, management can be a critical factor. A good manager can buy a property cheaply and turn it into a cash cow by getting the building fully leased, increasing rents, cutting costs, etc.