New evaluation criteria for vacant houses: An approach that emphasizes simplicity and practicality.

Article published on Vacant House Lab | Roopt (Makigumi)

Makigumi, the company that operates Roopt, is constantly researching case studies and other information on revitalizing vacant houses and publishing them as columns.

For investors and property owners who own vacant properties, accurately assessing the value of their assets is extremely important. However, current valuation methods do not adequately reflect changes in social conditions or the diversification of usage scenarios. Against this backdrop, there is a need for the introduction of new, simple, and user-friendly valuation standards.

The need for simple and practical evaluation criteria

Modern investors want to value their assets in a simple and practical way. They want to avoid overly complex valuation methods and instead seek valuations that are intuitively understandable and useful for actual investment management. This requires valuations that take into account new social and economic conditions, but at the same time, they must be user-friendly. Financial institutions are also expected to consider such valuation standards.

Proposal for new evaluation criteria

The new evaluation criteria emphasize the following three points:

• Valuation based on sale priceThis is a traditional method, where the valuation is based on a price that reflects the market value.
• Evaluation based on rental incomeThe valuation takes into account the demand in the rental market and considers future profitability.
• Business-based evaluationWe will evaluate businesses that utilize vacant houses (for example, shared housing or short-term rentals) based on the feasibility and profitability of the business plan.

By using the highest amount among these three criteria as the valuation amount, you can maximize the reflection of the asset's potential.

The importance of local communities

In addition, a new proposal is to consider the element of "local community," which has not been included in the evaluation criteria until now. By adding the strength of the community in the area—that is, the ties and activity levels of local residents—to the evaluation, not just demographics, it becomes possible to more accurately estimate the likelihood of success for businesses such as rentals, shared housing, and short-term rentals.

Thus, these new evaluation criteria, which are simple, practical, and reflect societal changes, represent an important step in properly understanding and maximizing the potential value of vacant properties. It is expected that investors, property owners, and financial institutions will refer to these new evaluation criteria, leading to further effective utilization of vacant properties.

source: Vacant House Lab