Rental Return On Real Estate Investment

Return on Real estate investment

When you make a real estate investment, the period till you gain possession is a period of outflow for you. Once the property is completed, it is wise to lease it out and earn rental return from it while you hold so that the property value rises. This gives you twin benefits of rising value that you leverage when the property is sold and also of steady rental returns that helps pay off your home loan. Also remember that in addition to your loan amount, the monthly maintenance, power and water bills also kick in when the property is ready. This too gets paid by the user when you lease out your property after it is ready.
This graph explains the gross rental income earned on investment at current price. It captures the gross annual rental return percentages across various localities.
This tool helps investors to identify localities offering maximum rental return on investment. It is computed as a ratio of average annual rental value to the average capital value of the property. The return is at pre-tax level and excludes repair/ maintenance expenses.

RETURN ON INVESTMENT (ROI)
Rental return on investment depends upon a number of parameters. One must take into account the costs associated with purchase, opportunity cost of investment, interest expenses (if any), property management costs, repair costs, vacancy cost etc.
Location, proximity to commercial centres, local shopping complexes and connectivity are the important yardsticks to measure the potential of the property rentals. Therefore, you have to take into account both outflows and inflows to arrive at net return on property investment.
Info. Source- Web World

By-
Alok Kumar Upadhayay
Real Estate Professional

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