Property valuation can be calculated using different methods, such as the capitalization approach, the gross rent multiplier, and the comparative method
Capitalization approach
That's done by taking the property's net operating income (NOI) and then dividing it by its cap rate to determine its value. NOI = Income - Operating Expenses The cap rate is calculated as a percentage, considering the property's risk-return profile versus others of like kind and current market conditions.
Gross rent multiplier
This approach simply involves determining the value of the property's annual gross rental income multiplied by its gross rent multiplier (GRM).
Comparative method
This approach is based on the comparison of prices for equivalent homes in a designated area to arrive at an estimated value figure. To do this, you can: know the location, type, and size of your property; and look for recent sales of comparable properties.
After that, multiply the average price per square foot of your property with all comparable properties to get a benchmark value.