New Evaluation Criteria for Vacant Homes: An Approach Emphasizing Simplicity and Practicality

Article published in Akiya Lab | Roopt (Makigumi)

Makigumi, which operates Roopt, constantly researches case studies and other information on vacant home revitalization and publishes them as columns.

For investors and real estate owners of vacant homes, accurately assessing the value of their assets is extremely important. However, traditional evaluation methods currently do not adequately reflect changes in social conditions and diversifying usage scenarios. Against this backdrop, there is a need to introduce new evaluation criteria that are simple and easy to use.

The Need for Simple and Practical Evaluation Criteria

Modern investors want to evaluate assets in a simple and practical way. They seek evaluations that are easy to understand intuitively and useful for actual operation, avoiding overly complex methods. This necessitates evaluations that consider new social conditions, but at the same time, they must be user-friendly. Financial institutions are also expected to refer to such evaluation criteria.

Proposal for New Evaluation Criteria

The new evaluation criteria emphasize the following three points:

• Evaluation based on sale: This is a traditional method, where evaluation is based on market value.
• Evaluation based on rental: This considers future profitability based on demand in the rental market.
• Evaluation based on business: This assumes a business utilizing the vacant home (e.g., a share house or vacation rental) and evaluates it based on the feasibility and profitability of that business plan.

By using the highest amount among these three criteria as the evaluation amount, the asset's potential can be maximized.

The Importance of Local Communities

In addition, a new proposal is to incorporate the element of "local community," which has not been part of evaluation criteria until now. By adding not only demographic trends but also the power of the community in that area—that is, the bonds among local residents and the vibrancy of their activities—to the evaluation, the potential for success of businesses such as rentals, share houses, and vacation rentals can be estimated more accurately.

Thus, new evaluation criteria that are simple, practical, and reflect societal changes are an important step in accurately grasping the potential value of vacant homes and maximizing it. It is expected that by investors, real estate owners, and financial institutions referring to these new evaluation criteria, the effective utilization of vacant homes will further advance.

First published: Akiya Lab (2024 - now integrated into this site)