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Why you should assess your properties’ market value

Financial PlanningHave you had an appraisal done on your properties lately to determine their current market value? Have you done your own research? If not, right now is a great opportunity for you to do so!

Many investors keep a close eye on the value of their stock and bond portfolios on a frequent basis, partially because it’s so easy. It can be done as often as daily, sometimes from a simple mobile app. However, far fewer take the time to establish the market value of their real estate holdings on a frequent basis. This is largely because it’s more cumbersome, but don’t let that hold you back.

How to assess your property’s market value

The best way is to have an appraisal done by a professional, which will give you an up-to-date value. At a minimum, you can spend some time investigating for yourself other similar properties that are on the market right now, as well as the prices of similar properties that have sold.

Property SaleWhy you should properly assess your real estate holdings

Determining the value of your property can affect many financial decisions. Some examples:

  • If you should continue to operate a business on your property
  • If you should acquire adjacent parcels
  • If you should sell while the market is higher
  • If you have an agriculture business on your land: To determine if it is producing an attractive return
  • If you have a loan on your land: Whether you should refinance

Farming the FieldsThe value of knowing your real estate holdings

Let’s say you operate an ag business that generates $1,000,000/year, on land that is worth $10,000,000 – a 10% return. However, if the value of your land has increased over the years, let’s say to $20,000,000 — and your business is still generating $1,000,000 annually – all of a sudden the return doesn’t look as promising. It’s been reduced to 5%, and you’re working to generate that return.

In this case, it may be worth finding other investment opportunities that would either generate a higher return or generate the same return with no (or less) work.

February 2019

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