GO PRO! with Automated Valuation and Development Models for Property Practitioners, Architects, Quantity Surveyors, Accountants and Business Brokers!
Ever wondered what International Best Practice Models and Templates for the Real Estate Industry look like? Simply download your Free PDF Explainers on each Model and see how these Templates are able to enhance your skill, efficiency, speed and accuracy. https://proppro247.com/calculators https://proppro247.com/calculators
Like any other Industry, the real estate industry must adopt and embrace automation and the growing need for professionalism. International Accredited Valuation mechanisms and meaningful Financial Models and Forecasts are a must if you want to be at the top of your game.
Gone are the days when CRE Brokers simply provide a Cap Rate to the NOI and Gone are the Days that Residential Property Valuations are performed off the back of Historical Sales Statistics
We cringe at the idea that historical sales statistics are used as the backbone of current market valuations, because:
- The economics of today is vastly different to that of yesterday
- Interest rate cycles are never the same as they were historically and the trends are always different
- The supply and demand of property historically would be different from today, therefore you are unable to correctly account for that
- Possibly the largest factor rendering old stats dangerous, is that it is estimated that more than 20% of property transactions relate to internal sales between the owners and their own entities. These transactions are made for varied reasons, such as shifting portfolios or individual properties into trusts and family-type structures, some for re-gearing and re-balancing reasons etc. These transactions are not at an arm's length property deal and on many occasions are performed at either well below or well above market-related prices dependent on the CGT liabilities and where they are vested.
We believe that the Current Market Value of your Property equates to the weighted average price of all current competing properties on the market today!
In that sense, a buyer is not interested in what sold yesterday and for how much, the buyer can only choose from the stock availability today! Your CMV is dictated by all competitors with similar properties in similar areas Today! If you are not competitive with current competing listings then you have not performed a true market evaluation and therefore your historical sales stats are rendered useless. We are able to perform LIVE PROPERTY PRICING per square foot or meter for most suburbs globally. Mail us if you are interested in this customized service (propscience@proppro247.com)
Commercial Real Estate Brokers and Practitioners should always provide buyers and sellers with IRR and MIRR as a standard, under all gearing circumstances!
Why are these formulae really important?
- All prudent Investors will target a certain IRR and more importantly a certain MIRR against certain conditions
- All funders will be dictated to by the amount of gearing that they are able to offer buyers largely dependent on how far IRR and MIRR can beat the hurdle rate.
- Relying on a simple Cap Rate will only provide you with year 1 of ROI, it simply cannot account for gearing and different annual lease escalations that exist from property to property.
