Contents
- Contents; Introduction
- Due Dilligence; Valuing Property
- Ascertaining the "Real Value" of a Property
- Application of Rental Reality
- Comments; Summary
Introduction
One of the most important criteria in purchasing a property is the Purchase Price. All of the value (profit) to be made on purchasing an asset is based on the price paid on acquisition and not at point of sale! Now you might well ask: “But surely it is the absolute difference between the two prices (both purchase and sale price) that measures profit?”
Example:
Purchase Price = $400,000
And 5 years later,
Sale Price = $561.014
Therefore the gain or profit = $161,014
Why do I rate the purchase price as being so much more important than the sale price, even though the absolute difference is identical?
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