Thursday, August 12, 2010
Keeping track of market values and rental rates
But, there is another important reason to be looking at properties all the time; and that is so that you are up-to-date on what the market values are in your area. And also the prevailing rental rates. That would help if you 1) want to sell (which I don’t recommend – see 10 rules on investing in properties), and 2) wish to refinance it, and take out some cash.
Last weekend, I spent sometime looking at properties, and it was an enriching experience, (especially when you are not in the market to buy). With the advent of the internet, and property websites, it is so much easier to know what’s on offer out there. And what prices people are asking for similar properties to mine. Going through the listing, making calls and finding out more about the property was a good way of staying in touch with the pulse of the area. Here are some tips on how to do this.
• Check the Star classifieds or website listings like www.iproperty.com,
• Filter the listings by newness and list those that meet your criteria on a notebook, and start calling the agents,
• Remember you want to get an idea of how much your property is worth, so call those that match your criteria,
• Ask the agents if they have transacted any at the prices that’s advertised. Sometimes, owners just put them up at high prices, hoping that they may get lucky.
• Also, find out if the property is tenanted, and how much is the rental (that would help you to determine whether to raise your own rental rates)
• At the end, scan through the list and you’ll get a good feel of whether your property has appreciated or not. Compare this with the prices you had bought earlier (much easier to do if you have kept a log of the listings!)
I came away from the exercise pleasantly surprised: the price of a 2R 1B flat similar to mine is now 20% higher, and it appears that my rental rate is about 9% lower than what the market is asking. So, that’s some food for thought.