Real estate is typically the largest asset or group of assets that a couple shares in their marriage. They may have a single home that needs to be appraised or a portfolio of properties used to bring in rental income.
Real estate can be complicated to handle during a divorce because you do have to make sure it is appraised correctly for its individual value as well as its investment potential. For example, if your property is valued at $400,000 and you’re making $16,000 a month in income from renters, is the value really just $400,000? No, it is higher, because you have to consider the income that is coming in, too.
How you determine the value of investment property depends on a number of factors such as:
- When the property was purchased
- Who managed the property
- How the property was used
Achieving an accurate valuation is essential to be sure that you and your spouse divide the assets fairly and get the most money out of those investments possible if they’re sold.
Valuating or appraising a property is the first step
To get started on determining the value of your real estate investments, you should begin by determining the actual value of the property. For example, you may have seven investment properties. Each of those properties may be worth a different amount of money if sold, such as a single-family home valued at $150,000 or an apartment complex valued at $500,000.
After finding out the value of the actual property, you can look at income and special features that may increase the property’s worth. For instance, if that $500,000 property is filled with tenants, you need to consider how much money the property could bring in as income, too.
Sometimes, people sell all their properties and divide the profits fairly during a divorce. Other times, they share the property and split profits from tenants, for example, or keep the property until it is valued much higher in the future and sell it then.
What you do will depend on your personal circumstances, need for liquid assets and other factors during your divorce.
