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Property Investment

How to value a property investment at a glance

This is by no means all the research you have to do if you want to follow Richard Branson's mantra of "Protect the downside", however, this is an easy way of coming up with a shortlist to review later and ensure you don't miss out on any diamonds in the rough.

Every property investment is unique, but what makes them similar is your personal model and what you want out of them.

Whether you want a 20% capital gain over 5 years or £200pcm positive cash flow, this is what makes both a commercial investment and a ‘two-up, two-down’ property the same – your end goal.

The formula

  • Take the highest asking price on the street and take 10% off. (£100,000 > £90,000)
  • Take off 20% for the refurbishment (£90,000 > £72,000)
  • Take off 20% of this for your profit* (£72,000 > £58,000)

What’s the asking price? Doesn’t matter! This is its value to you as a property investor, so if the asking price is 10/15% either side of this, go home and do some deeper research.

* This is not how to work out profit/return on investment but is a good buffer for the 1st stage.

If you think these don’t come along very often, you’re right. But you’ll only find them if you look and make sure you’re the first person the agent rings when they come up.

Nicholas Stott

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