If you want a real estate destination with plenty of promise, look no further than Houston. The latest statistics show high levels of growth and employment. It has created perfect conditions for any commercial real estate investor.
One of the first challenges you'll face in real estate is your commercial property valuation. Get it wrong, and you could lose out on potential profit. Here are five property appraisal techniques to help you get it right.
1. The Current Market Conditions
The economy will always shape commercial property prices.
During a recession, demand for premises will drop. When interest rates and inflation are high, companies get nervous about investing in new buildings, and likewise, when unemployment numbers are growing.
Thus, consider what's happening with the broader economy when finalizing your commercial property valuation.
Look at trends and market predictions for the next 12 months. If the market looks like it's thriving and in high demand, it is a good signal for you to raise your valuation.
2. New Developments
Emerging commercial districts and industrial developments will help boost demand for neighboring commercial properties. If you already own a property that requires a valuation, look at factors such as:
- New transportation links like airports or highways
- Amenities like gyms, restaurants, and parks
- Aesthetic upgrades to existing commercial properties
In short, if a neighborhood looks up and coming, it's a strong sign of positive demand. It's also worth considering public funding for developments in the next 1-2 years.
3. Changing Demographics
Houston is a hub for economic activity in industries like oil, technology, and manufacturing. This has created a pull factor for many Americans who want to move somewhere with many job opportunities.
This growing population means there is more demand for commercial properties, sparking development across the city. When calculating your real estate valuation, look at demographic statistics for your area, such as age distribution and population density.
4. Regulatory Factors
Texas ordinance laws can significantly impact the value of your commercial property, determining whether a development can be used for different types of businesses.
Grasping regulatory challenges will help you reach an accurate valuation. Commercial real estate that can be used by lots of different industries will always be in higher demand than one that has a particular purpose.
5. The Property Condition
When buyers or tenants view commercial properties, they'll note the condition. Businesses want a hassle-free environment that looks impressive to customers and doesn't require many ongoing repairs. Factor this in when looking at how much a commercial property is worth.
If your commercial property needs extensive work, it could negatively impact your asking price. You may want to consider investing in repairs to make your property more attractive to buyers and tenants.
Seeking High Returns With Your Commercial Property Valuation
Getting high returns on your real estate investment isn't down to luck; it's down to research. Use these five factors for an accurate commercial property valuation to ensure you reach the highest possible asking price.
PMI Northwest Houston offers the best of both worlds: a local Houston team offering a personalized service supported by a professional global franchise. Find out what that could mean for your commercial real estate by viewing our property management services.
