Residual value or yield analysis is an advanced method of real estate valuation, applicable in a limited number of cases only. Its biggest problem is the quality of the input data. Less than critical use of the input data may lead to a completely wrong assessment. Therefore, the purpose of the thesis is to analyse in detail the residual method as a residual values as well as residual yield method. The aim of the survey is to determine the adequacy of the method in evaluating the performance real estate investments in the Republic of Slovenia. The underlying hypothesis posited is: the residual method is more useful in assessing real estate investments in real estate compared to real estate valuation. Research issues related to this hypothesis are: (a) how to increase the usefulness of the residual method? (b) how to improve the volume (the perfection of covers) and the quality of the data in order to increase the reliability of the estimates, based on the residual method? (c) Which information bases would need to improve the quality of the results obtained on the basis of the residual method? Hypothesis and the question of the proper method are the basis of the work presented here. First, the existing research areas under consideration were analysed and a critical analysis of the residual method and the necessary data for it performed. The next step was an analysis of the relationship between the prices of housing and the land and the construction costs, on the basis of which we could prove that the method is less adequate in periods of unstable real estate market. The survey of the factors affecting the use of the methods of the balance was made by means of a questionnaire. The survey involved 89 respondents. The conclusion is that the residual method has in practice been rarely used for real estate valuation and proved more suitable when assessing the investor’s value. Two detailed examples of the application of the residual method are included. Based on the past and current research we can conclude that the residual method is a better choice when assessing the yield of the real estate investment than when determining its value.