Valuation

Understand Valuation

• It is important to understand the type of assets in which you invest.

• Investing in real estate is different from investing in commodities, stocks or collectibles.

•It is necessary to understand how to put a value on any particular thing.

•The price of assets will vary over time but all assets are, in some way, valued based on how the price of some thing compares to the price of similar things.

• In residential real estate investing, home values are determined by comparing a home to other similar homes in the same area.

• Stocks are valued by comparing the price per share of stock to other stocks in the same or similar industry, by the assets the company owns, how much debt or other liabilities it has on its balance sheet, and by considering the future potential of the business.