How Do I Choose the Best Investment Property?

Return on investment (ROI) refers to the value that should be returned through investment, that is, the economic return that an enterprise receives from an investment activity. It covers the profit goals of the business. Profits are related to the assets necessary to put into operation, because managers must earn profits from investments and existing assets. Investment can be divided into two categories: industrial investment and financial investment. People usually refer to financial investment as securities investment.

The English name of return on investment is Return on Investment, which is abbreviated as ROI. Return on investment (ROI) = (profit before tax / total investment) * 100%. It refers to the economic return that an enterprise receives from the investment in an investment business activity. It is a ratio used to measure the profitability of an enterprise. It is also a comprehensive indicator of the effectiveness and efficiency of an enterprise. ^[1]

Return on investment (ROI) = annual profit or average annual profit / total investment × 100%, as can be seen from the formula, companies can reduce

advantage

How to calculate the return on investment: Some insiders tell such a formula for calculating the return on investment:

Calculate the return on investment for purchase and re-rental = monthly rent x 12 (months) /

Generally speaking, shops can recover their investment in about 8 years, and the annual rental yield after that can generally reach 8%, and good commercial shops can reach more than 16%. Of course, different shops are different. Two formulas can be used for calculation.

The first method is mainly applicable to one-time investments without loans. The calculation formula is: (monthly rent after tax-monthly property management fee) × 12 = annual rental income. Annual rental income ÷ total purchase price of shops = annual investment yield. On the contrary, the total purchase price of the shop ÷ annual rental income = investment recovery period.

The second method is mainly applicable to the calculation of the return on loan investment. The calculation formula is: (monthly rent after tax-mortgage interest-monthly property fee) × 12 = annual rental income. (First installment + mortgage loan) ÷ annual rental income = years of return on investment. Conversely, using annual rental income ÷ (first installment + mortgage loan) = annual investment yield to invest, of course, to make money. Is it possible to make money? How much money can I make? You can't just count your income here, but you also need to take full account of various expenses.

Yield algorithm

The upsurge of investment shops has heated up sharply, so how to calculate the return on investment of shops? According to the staff, there are four algorithms for the shop's return on investment:

Rental return method

Formula: (monthly rent after tax-monthly mortgage payment) × 12 / (first-period housing payment + mortgage payment during off-plan period). Advantages: Considering the rent, price, and main investment in the previous period,

The return on investment is calculated, so how do you judge the significance of these values? That is, which value represents a reasonable profit? Which value means never touch your hands? Which value indicates that it is very good? Or which value belongs to the other party's condition is too good, you have to consider carefully?

People in the industry believe that interpreting these values is not a standard answer in the industry, and 10 people may have 10 answers. However, according to the data collected by this newspaper from some real estate practitioners and investors, these answers are not much different, and the difference is only the value after the decimal point.

According to Situ Peiqi, the person in charge of the second-hand department of Jingwei Property: In fact, the ideal return on investment varies from property to property. For subway properties and prestigious school properties, their reasonable profits, investment thresholds and ultra-high profit margins will be roughly listed in the following table:

Reasonable rate of return for property category Ultra-high return on investment critical point (require prudence)

Commercial and residential dual-use property 10-12%> 7%, more than 15%

Rotten tails biological industry 9-10%> 6%, more than 20%

Metro property 3-6%> 3%, more than 10%

China

The return required by an investor depends on how much investment risk he or she has in mind. If an investment is extremely risky, investors will expect a high rate of return. Risk factors include time and

Interest rate is also called interest rate. Represents the ratio of the amount of interest to the principal over a period of time, usually expressed as a percentage, and is calculated annually as the annual interest rate. its

The calculation formula is:

The interest rate = the amount of interest / principal interest rate determines how much interest a certain amount of borrowing capital receives in a certain period of time. The factors that affect the interest rate are mainly the marginal productivity of capital or the supply and demand of capital. There is also the length of time that the currency is promised to be delivered and the degree of risk assumed. The interest rate policy is the main measure of western macro monetary policy. In order to interfere with the economy, the government can indirectly adjust the currency by changing the interest rate. During the depression, lower interest rates, expand the money supply, and stimulate economic development. In the period of inflation, increase the interest rate, reduce the money supply, and curb the vicious development of the economy.

Return on investment

1. Return on investment (ROI. Returnoninvestment) refers to the normal annual profit or the annual average profit of the total investment in the full production period. The calculation formula is: return on investment (ROI) = annual profit or average annual profit / total investment × 100%

2. The investment return rate has the advantage of simple calculation; the disadvantage is that it does not take into account the time value of funds, and cannot accurately reflect the impact of conditions such as the length of the construction period, the different investment methods, and the existence of the recovery amount on the project. The numerator and denominator calculations are comparable It is poor in nature and cannot directly use the net cash flow information. Only investment projects with investment profitability indicators greater than or equal to the risk-free investment profitability are financially viable.

ROI is often time-sensitive-returns are usually based on certain years.