How to Calculate the Real Value of Real Estate

What About You?

When considering the value of your home, it’s wise to think outside the box. The most beautiful split level bungalow with a two car garage and swimming pool is still subject to market forces “in the neighbourhood” all around the property. Smart investors buy properties in good neighborhoods, and their investments are more secure in troubled times. But what exactly constitutes a good neighbourhood?

Learn To Spot Premium Neighborhoods

One of the secrets to building wealth in real estate is to spot the “premium neighborhoods of the future” while they are still low-end residential areas. Real estate speculators look for the sudden emergence of upscale housing, usually on a hill, or beside a body of water that might spark a five year trend wherein the entire street is renovated and improved. Upscale housing requires nearby schools, playgrounds, churches and shopping. The secret of secrets is to buy property just before Starbucks appears on the corner.

Use Free Online Services to Your Advantage

You don’t need to buy fancy software to calculate the “community value” of your neighborhood – you can do it yourself for free. According to most real estate gurus, this variable is the biggest catalyst in the well televised “flip this house” profit equation. The style and square footage of your investment remains the same, but the area around your house can dramatically rise (or fall) in value over time depending on a number of different factors.

For the first time in our history, insight into the quality of a particular residential or commercial area, and sometimes a privileged look at its future (for those clever enough to spot the indicators) can now be found online. New fangled online information dispensaries like,

1. Online “local search” services,
2. Your official City Hall website
3. Real estate development discussion forums
4. Aerial photos and map services

First, Do a “Local Search”

Thanks to recent technological improvements online, curious folks can now sit at their computers and use new technology to scrutinize their neighbourhood. I use Poynt on Microsoft® Windows Live™ Messenger because it’s good, fast and free, and Poynt is powered by Yellowpages.ca™ for Canadian listings and by Superpages.com® for American listings, with movie listings powered by CinemaSource. I like the way this software ranks the results in terms of proximity (with a handy mileage counter). I like the scalable details, and there’s no download or lengthy registration – visit Poynt or simply add “poynt@live.com” to your contact list on Microsoft® Windows Live™ Messenger.

Use Poynt to complete a special checklist of important resources that comprise the top criteria for premium neighborhoods; this is what home buyers should consider before shopping for real estate in unfamiliar areas of the city. Check your own home’s proximity to these key resources. Register the target address with Poynt, and then search for the closest…

1. Transportation network like the subway? (should be less than .02 km)
2. Schools; check both high schools and junior schools, and Catholic schools?
3. Banks; where are the financial institutions in relation to your home?
4. Doctor and dentist or a medical office, even walk-in clinics?
5. Churches and other places of worship?
6. Shopping? Assign bonus points but neighbourhood shops, esp Starbucks!
7. Recreation centers, this is indicative of community ie local sports
8. Hospital is required in a wider radius than other criteria like a medical office
9. Police department should be present but not visible – a quiet neighbour
10. Fire department – nobody wants to hear the sirens

These are positive indicators, but you can also check your house’s proximity to negative indicators like,

1. Areas of low rent government subsidized housing
2. Light Industrial manufacturing that creates noise and strange smells
3. Low-end commercial areas – but these can be gold mines (when Starbucks appears).
4. Planes, trains and automobiles and the SOUND of any nearby commuter traffic.
5. Prisons, especially if you can hear the prison P.A. system from the property.
6. Graveyards, because they are just depressing.

But there are other factors you should consider when choosing the location of your home. One of the secrets to the information age is that information is free – almost anything you could ever want to know about your city can be discovered online, and the rarest data can be gleaned by frequenting online discussion forums.

Use Online Discussion Forums to Learn Valuable Secrets

Here in Toronto, I use Urban Toronto to query a panel of experts who seem happy to share their knowledge on this platform. This is like having a staff of hundreds of specialists at my disposal. For example, I ask the gurus “Have property values increased in this neighbourhood? Why?” And the secret of secrets is to ask for hard facts like “Are there any new developments occurring in the area?” and, “What is the fate of this address? Who owns the land? What is happening?”, and the chances are that somebody in the design firm that’s actually working on the project will respond to your query. People love to gossip and these forum members enjoy building online reputations by vending unique information. Knowledge that’s of little value to one member could be the lynchpin in a bold stroke of business enterprise for you.

Log On To Your Friendly Neighborhood City Hall Website

This information portal is full of facts relating to zoning bylaws, trash collection, recycling programs, and recreational programs in special needs facilities. There is often software to filter maps for information on off the leash dog parks, organic farmer’s markets, street festivals including holiday parades etc

Be sure and check anything marked “Future Developments” for insights, both positive and negative into the future of your investment. Future development can affect property values as well as property taxes.

Live Earth online map software including Google Earth and Microsoft Live Earth is changing the way humanity views the world.

Market trends experts everywhere are now cautioning to buy only “blue chip” properties in premium neighborhoods that will always hold their value in any market.

Veteran real estate speculators know the location of the venture property is the core of the investment – buying into a premium neighborhood doesn’t have to mean spending more money if you do your research and buy property in the first stages of gentrification.