Measuring Your Real Estate Investment Returns


Congratulations, you finally found one very important and easy-to-use source of information on your future investment decisions.

We have read many books, reports and various articles on investments, real estate investments in particular. Many of them contain vast amounts of information, some of which may even give you instructions on how to use the information. However, none of them seem to provide the missing ingredient to turn the purpose of the article into a real result. Their "way" knowledge is endless, very complex or very simple.

Finally, throughout our research, we found significant shortages in the information provided . They do not really explain why you are investing in the first place! They do not explain how you can measure your investment!

What is the point of investing if you do not have a specific goal in mind? And with that in mind, how do you know if a particular investment will achieve the desired goal?

We hear many times that people who want to buy an investment site, without knowing why they are buying an investment site in the first place. We did research to find the answer only to find the empty appearance, vague statements, and complete ambiguity of questions.

Ask yourself, 'Why would you buy an investment site?

Are you creating more wealth in the future?

Is it helping you financially every day?

Is it producing some return on your investment?

Is it because investing space is a better investment than stocks?

Do you have answers to the above questions? If so, how much do you understand those answers?

We have found that people will usually answer yes to all of the above without having any particular effect on the mind. In this report we will give you the first tool you will need to start answering the above questions.

That tool is the ability to measure the return on investment:

If you are not able to measure your return, you will never be able to achieve any of your goals, or you will achieve them by chance and not a goal, a limited approach. Luck will not allow you to repeat your investment strategies. Good luck only at casinos!

So how do you rate returns?

Let's go back in time and discuss what the benefits of your investment are. When people talk about the percentage of return or return on investment in investments, they usually define the return on time and the basic investment.

So for example if you buy a property for $ 200,000, after 1 year that property may cost $ 210,000. So your return on investment is $ 10,000 in one year or 5% in one year. This example has a specific time period in which recovery is measured.

However, if you are measuring return on investment, do you need to measure return on investment? When you buy an investment site, do you buy that property with CASH? Granted, some people are in a unique and sometimes suspicious way buying property with cash! You may agree with us when we say that this is very rare. In most cases the investment site is purchased with a combination of your own money and a bank loan.

In fact, in most cases, the bank borrows most of the purchase price - 70% to 90% of the purchase price. This means that you usually only put your money as part of the property price. Since you have only invested 10% to 20% of the total purchase price, when you make a return on your investment, why not calculate the return on your investment based on the total local price? You have not purchased the whole property in cash, so you do not need to calculate the return on investment for the entire property price.

We can give an example of this in another field. It says you wanted to buy an old drawer chest. You know that artifacts increase in price over time, especially if they are well cared for.

This drawer bag costs $ 1,000. You didn't have $ 1,000 so you borrowed $ 800 from a friend and set a $ 200 balance. He made an agreement with a friend that at the end of the year once you have sold the episode, you will pay him $ 40 for a loan. At the end of the year he was able to sell the piece for $ 1,100, or for an additional $ 100. So you might think you made 10% of the return.

Or a $ 100 profit divided by a purchase price of $ 1,000. You will be wrong. What you really did was a $ 100 profit of less than $ 40 that you should give to your friend to get a loan. That makes a $ 60 profit for you. To calculate your return you need to divide your $ 60 profit by your $ 200 investment. This means you have made 30%. You are only calculating the return on YOUR money and not on your friend and not on the total cost of buying an old piece.

Here is an example of what your real estate investment will look like. Numbers are deliberately simplified and ignore various costs:

Example 1 - 

Return to an investment based on $ 200,000 on a property purchased with an injection of 20% of your income.

Purchase price $ 200,000

Annual price increase of 1 $ 10,000

Return to Invest in 1 5% year (this is calculated by dividing the Increase in Purchase)

Example 2 - 

Return on investments based on $ 200,000 in a property purchased with an injection of 20% of your income:

Purchase price $ 200,000

Your investment is 20% $ 40,000

Annual price increase of 1 $ 10,000

Return to YOUR Investment within 1 year of 25% (this is calculated by dividing your Increase in Investment)

In both cases the area costs the same and goes up in the same price and at the same time. However, in Example  to the return on investment is calculated on YOUR initial investment in the property. The difference is huge - 500%.

In both cases the area costs the same and goes up at the same price and at the same time. However, in Example  to the return on investment is calculated on YOUR initial investment in the property. The difference is huge - 500%.

You see, in this example, the bank that lent you 80% of the value of the property is getting a return on its investment. It is called the seed. They do not need you to give them part of the property information as well. Given this, you cannot calculate the total value of the property in your investment return calculations.

Of course, it is not as easy as that. There are other considerations that need to be included in the statistics to make it clear but the basic idea is correct. If you start using this method to calculate your return on investment, you will find that the investment site is an investment with a high yield that returns anything from 20% to 100% in the investment year. Investment assets are rivals to get a return and exceeds the shares by eliminating the volatility and risk of your investment.

You have heard from so-called experts that the investment space will always be poorly stocked with stocks and other investments. You have heard that it is the only way to get the highest return on investment (value growth). You have heard that rent does not give you much profit. You have heard that you should use Negative Gearing when investing in a property to compensate for any returns. Unfortunately, none of these statements are true.

Let us take the example of a building with the following variables:

Purchase and investment details:

Purchase price (new 2 bedroom unit) $ 185,000

Bank Loan - 80% $ 148,000

Interest on Loans (Interest 5% interest) $ 7,400

Your contribution - 20% (your cash) $ 37,000

Cashflow Details:

Rent per year (Amount) $ 10,140

Total Cost (asset management, insurance etc ..) $ 3,100

Rent per year (Nett - rent after all costs) $ 7,040

Total income from tax deductions $ 1,960

Total NETT rental income and tax deduction of $ 9,000

From this example we see that your final position as the owner of this property is that you will have an interest rate of $ 7,400 plus an estimated income of $ 9,000. What does that mean when you get a return on your investment?

However, you have earned $ 1,400 on your initial investment of $ 37,000 (your property purchase). This represents a return on 3.8% of your initial investment. That's the low point you can make and we can agree with you. You forgot one thing ... this place pays you money to own it. You have just purchased goods that you pay from day one.

What happens to the property over time? Buildings usually increase in price. In fact, the average price increase recorded in the last 100 years or so includes 7% per annum. If we apply this assumption to the example above, a 7% increase in the actual price of $ 185,000 is $ 12,950.

So to calculate the TOTAL return on your initial CASH investment, you need to do the following:

1. Add income from rent and tax calculations.

* $ 1,400 + $ 12,950 = $ 14,350

2. Calculate the amount of return on your initial investment by dividing the above by your investment

$ 14,350 / $ 37,000 = 39%

Surprisingly, your first $ 37,000 investment in buying this property earned a 39% return on your MONEY in the first year. Of course, unlike stocks you can't withdraw and take this profit immediately. For goods, you have to wait a while before you fully withdraw the money.

To put 39% of the annual return on your money correctly, it is 10 times bigger and the bank will pay you back. 4 times larger than the professional fund managers striving to get - the same paid millions of bonuses. It's almost 2 times more than the richest man in the world, Warren Buffet, always does.

How does that compare to all the investment in your budget or other investment in that issue? Where else can you buy goods and pay for them from day one and go up in price? Remember that property enjoys cycles, but it is ALWAYS grateful.

This is what architects know and do not seem to want to explain to everyone. Now you can calculate the actual return on your money, not your bank account. You do not have to work for a bank loan, which banks can do for themselves. You only need to care about your finances. So if you do the calculations correctly, you will find that by buying the right investment space, you will make a 100% return on your investment. In the worst case scenario you will only make 30%. In any case, the benefits are surprisingly high at normal levels.

All of this can be done without any risk and in some cases, with a fully guaranteed rent!

Now what do I do?

I hope we have shown you that space is an amazing investment that is hard to change. Not all properties are the same and you need to be aware of those that can remain empty for a long time or give you a small tax deduction.


Viva Properties has an education department that teaches people about FREE real estate investments - various pitfalls, risk reduction strategies, early mortgage payments, discounted acquisition methods etc ... We teach by running small forums for 10 to 20 people. During the workshops you are given amazing information on how real estate investments work and this new information is applied to specific real estate models including those you want to explore.


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