Determination of the Real Estate Open Market Value and Rent
The best strategy for an investment property is investing in rental houses. In this type of investment, Bade and Hirth state that the owner has two main options. The first option is a lease option for long-term (according to the number of years) or short-term lease services (according to days or weeks). The long-term lease is mainly characterized by a long-term agreement between the investor and the tenant
The open market value is the local rice that is agreed upon between voluntary independent sellers and buyers. However, there is no consideration for extraordinary effects such as price inflations. For comparison, the number of objects being compared is very crucial. However, this is always limited by the amount available in the local market segment. Hence, the number of objects being compared is limited from the top since the objects beings used for comparison must fulfill certain criteria. The comparative method can only be used in cases where a market with the same assets is fully developed. To measure the comparative value of a real estate investment, an example of six comparable real estates in the US was used. The six estates were offered for sale in Texas in the United States in a period between 1/9/2018 to 30/9/2018. All these real estate properties had close qualitative terms. As Fields et al. state, the reduction coefficient of the price was determined for individual real estate properties after consideration by the experts. This was regarding the bargaining power of the seller and the buyer with the final price.
