Realistic Return on Investment Rates

In addition to everything else, real estate purchases require a real money outlay, namely the down payment. To determine what return one may expect on their investment, it’s best to start by making a realistic investment assumption.

Determine the Annual Rate of Return You’ll Be Seeking

Based on the variables discussed, here is a realistic investment return (all figures are approximate):

$500 down payment (R4,000) – 1.6% real rate of return (See Why Real Estate Investing Is So Realistic Now)

After one year (R4,000) – 4% real rate of return (See Realistic Return On Investment Properties Now)

After five years (R12,000) – 9% real rate of return (See Realistic Real Estate Returns Now)

This gives a real rate of return of 9%, very reasonable for an investment in real estate at the time. With inflation being high and the interest rate remaining low for nearly ten years now, real estate now offers a great deal of safety and a great return on investment. This is only possible because real estate has historically provided the best return on investment, especially at the time that real estate is at its best value relative to other investments.

Who Should Buy Real Estate?

Real estate investors should look at real estate investment as a way to achieve a cost-effective, risk-free real return on their investment. Real estate’s value to an investor lies in the stability of its real return, not its fluctuation in value.

Real estate buyers should buy real estate for their immediate needs and to maintain a healthy real return on investment. Buyers should buy property in markets that have demonstrated an acceptable level of stability and attractive real returns on investment, regardless of the market’s fluctuation or fluctuation of interest rates. Real estate investors should avoid buying in markets that have demonstrated a minimal real return on investment. Real estate investment is not a great investment for all individuals.

Real estate is more attractive than most other investments when the return is more stable, more reliable and more predictable. Real estate’s risk-free real return is based on the certainty that it will provide a consistent, relatively fixed return. Real estate’s risk-free real return represents an acceptable return regardless of market fluctuations, interest rate fluctuations or even changes in real estate valuations. Real estate investors should never expect more than a low-risk, low-risk return on their investment.

Real estate investment is for investors who want to have a real return on investment, but avoid any real risk.

Real Estate Investment For Example

For a real return on investment of 8%, one should look for a property in which the market value would be at least 40% of the property’s cost to purchase. The cost to purchase the property would be the amount that an investor must put into a real money deposit. This includes the down payment (R3,000), the closing costs and the earnest money deposit (R4,000).

Some of the best people at developing a natural ability to determine real value return are those who search local markets using localised terms, like how they’d type beste online casinos for the suggested South African property market (suggested by the currency used in the examples).

It's only fair to share...Share on Facebook
Tweet about this on Twitter
Share on LinkedIn