Whether you are an experienced or an aspiring real estate investor, determining a property’s value is your first major step on the road to a good investment. There are a number of ways that you can do this. The easiest is working with a real estate agent familiar with the area that you want to invest in. He or she can provide you with sale comparables unique to each subdivision, condo complex, land, or commercial property in a certain locale.

You are going to have much more to choose from if you don’t limit yourself to inventory in your own city or state. What you should aspire to find are distressed properties or those owned by individuals or entities who either don’t want them or can’t afford them.

While the old adage “location, location, location” is still very crucial in determining property values for real estate investing, what also needs to be considered is the price at which properties can be purchased for in today’s market in comparison to what the same properties actually sold for 2-5 years ago. This is where there is money to be made. Local real estate professionals are always a good bet for whatever city or state you are interested in. If you are limiting yourself to your own city and state, you can easily drive the areas, view the properties, and research tax valuations and property history. If you’re willing to expand your search criteria, find someone intimately familiar with that market.

Always determine the answers to these questions. How much lower than fair market rate can the property you are interested in be purchased for? How much work, remodeling or updating does it need to bring it up to par with neighborhood standards? Most importantly, is it something you can rent out and at least cover most of your carrying costs while waiting for the market to turn around? Can you manage the property yourself or will you need to hire someone local to manage the property for you?

No matter what a property formerly sold for, or what it was formerly appraised for, it is only worth what someone will pay for it today. No matter what the investment, the ultimate goal is to buy low and sell high. You need to determine if a certain property fits this criteria. Terms of sale can also be extremely important in assigning a value to a certain potential real estate investment. These ancillary costs have to be factored in right along with the purchase price.

Make no mistake about it though, real estate investing, with properly determined valuations and projected figures for certain hold times can be the best money you ever spend.