Realtor Records — Issue #18 — Explaining ROI — the only thing an investor cares
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To begin with we need to ask a simple question
What is So-called ROI?
Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.
When it comes to real estate, ROI is the income generated every year after deducting all the costs associated with the property.
Why do the Investors love it?
When it comes to investors the only thing they care about is how much money they get in return for the amount they have invested especially when it comes to real estate. This also applies to other Investments.
In Addition to this, This is an additional income, who doesn’t want to make more profit? when it comes to an investment as much as ROI the amount you spent to buy a property is necessary.
Here the objective is to create more money by spending less.
When it comes to property investing in real-estate Dubai
When it comes to investing in properties in Dubai, you are told that for every purchase based upon the property value, you will gain up to 7% -8% in return, which is the rental income. but in reality, this isn’t the case.
You see 7–8 % you get is the gross profit, which is very different from the net profit, I will explain it to you.
let’s just say that you have bought a property, during the purchase you were told you would get up to 8% on rental which is the ROI of this particular unit.
If this is not accurate what is the actual ROI that I can expect to gain from my investment? How do I do the calculation?
When buying a property in Dubai apart from the purchase cost there are some additional fees you need to look out for such as 4% DLD, title deed fees, trustee office fees, and service charges.
After adding these associated costs with the purchase cost and deducting them from gross ROI you will get the net ROI, which is very different from the gross Roi.
How do we understand if this is a good deal or not?
well, I would say that Based on the current market scenario 5–6% is a very good deal. 5–6% ROI is still greater than the bank interest rates. not only that there is always market price appreciation in the long term. Also here in UAE there is no tax on the income you have earned unlike in various other countries there is income tax .anything you earn from the rental income is full on your own. How great is that!
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