Thursday, February 18, 2010

Calculate Return on Investment for Property

Ive noticed people commonly throw around percentages regarding 'return on investment' for investment properties...
I currently have an investment property thats been tennanted for a few years now... how do i work out my 'return on investment %' for it?

From: Dan

Location: Mitcham

1 comment:

Toop&Toop Real Estate said...

Hi Dan



The gross return is the annual rent achieved divided into the capital value of the property expressed as a percentage. Commonly this is calculated against purchase price BUT it should include all costs associated with the purchase including stamp duty and transfer costs.



So a $500,000 property rented for $300 per week gives a gross return of $15600 or 3.12% gross return. The net return is dependant on financing, tax and outgoings such as management costs, maintenance and rates and taxes.



I hope that helps.



Regards



Anthony



PS we will cover this on Toop.TV for you Wednesday, 1pm.