What can you do to help ensure the valuation on your investment property is as good as it can be? I’m glad you asked.
Here is a recent interview we conducted with Domain
Having your investment property valued and revalued is important, particularly if you want to leverage your property’s increased value to fund further investment. Director at Right Property Group, Steve Waters, understands how crucial a strong valuation can be for property investors.
“If your property has increased in value, your borrowing capacity may also have increased. Yet valuations can sometimes come back lower than expected. Future investment plans can really stall if you don’t get the valuation you were anticipating.”
Presentation is key
Waters encourages investors to put their property’s ‘best foot forward’ to a valuer. While there’s no need for flowers and freshly roasted coffee, he says presenting your investment property in the best light is important.
“Have the tenant clean the place from top to bottom. Have the lawns mown. If you can, time the valuation with a routine inspection, so there’s extra incentive for your tenant to present your property clean and tidy.”
“You might even consider investing in fresh paint or carpet, if the property is looking tired,” he says.
Waters encourages investors to be prepared and to provide the valuer with some relevant facts and figures when he or she arrives. “Valuers look at hard data, including recent sales. It’s worth keeping your eye on the local market and supplying the valuer with a list of the latest comparable sales.”
“You could also consider providing letters from local real estate agents advising what they estimate your property would achieve if it were put on the market,” he says.
Waters also suggests providing details of the scope and cost of any renovations you’ve had done to the property, to highlight its increased value.
“You don’t want to tell a valuer how to do his or her job. Providing them with information is about making things easier for them and also recognising that many valuers are from out of the area and may not know the locality of your investment as intimately as you do.”
You need to keep an eye on the value of your investments, so that when it comes time to have them revalued, you’re realistic and have a fair idea of what they’re really worth. “Some people say property is a set and forget investment, but I think that is false. You need to keep your finger on the pulse of what’s happening with your investment properties. This includes always staying up-to-date on their current value,” he says.
Good communication is important
As well as communicating with the valuer, make sure you keep your property manager informed, says Waters. “Get your property manager involved and let them know to expect a call from a valuer. If you can’t be there to meet the valuer on site, ask your property manager to do this on your behalf and give them a thorough briefing.”
Explain sales anomalies
Property valuations are created using available data and sometimes an unusually low sale price for a similar property can drag the valuation of your own investment down. This is where it pays to find out story behind the data, says Waters. “If a similar property has recently sold below what you’d expect, call the selling agent, find out why then share this information with the valuer.”
Bad valuation? Get another one
“Property valuation is an inexact science. Many’s the time I’ve seen a property valued at two wildly different price points within in the same week. I’ve seen a property valued at $220,000 on a Monday and $270,000 on the Tuesday. It’s more common than you might think.”
“If you really believe the valuation is way off, obtain another one,” he says.
If you’re looking to increase your borrowings to fund further investment, a favourable valuation can put you in the box seat. Preparation, research and communication can help you get the best valuation on your property.