Are you new to the realm of investment and want to start your successful investment journey today? Do you want to understand more about real estate investments? Are you wondering how to calculate the rate of return on real estate investment? Do you know what is the best return on investment for the real estate market and how to calculate the ROI for the real estate?
This article will guide you through all the details of roi, roi of the real estate investment, and much more, keep reading it and you will understand all the details.
What is Return on Investment (ROI)?
Since our article’s focus is the best return on investment for the real estate market, we will dedicate to this topic and the return on investment(ROI) of real estate but, we need first to get an overview of the topic of investment itself to be able to understand our main topic.
Many people regard the investment game as a complicated one and so they rather stay away. However, this investment game is a truly highly profitable and rewarding one if you choose to play it with well-studied rules and well-informed decisions.
One of the important terms that you need to familiarize yourself with in the world of investments is the return on investment or ROI.
Simply put, the ROI or return on investment is the ratio of profitability of any investment, it is a calculation that tells you whether you are gaining profit from your investment or not, and if yes, it helps tell you how much profit or “return” you are getting.
In other words, the return on investment or ROI measures how much you earn on the money you invest in a certain project.
There is one last question that we need to answer before tackling the topic of the best return on investment for real estate and the return on investment of the real estate which is how is the return on investment (ROI) calculated?
How to Calculate the ROI for any Investment?
The return on investment for any project/business or investment is not only the best return on investment for real estate but is simply calculated by dividing the net profit earned from the investment by the cost of this investment multiplied by 100 to get a percentage as shown in the below formula:
ROI = (Net Profit / Cost of Investment) x 100
Since the net profit can be broken down into the initial and final values of investment, thus another formula for calculating the Roi is:
ROI = (Present Value – Cost of Investment / Cost of Investment) x 100
By now, you do understand the basic and most important investment terms and formulas and you are ready to dive into the world of ROI for the real estate market.
Real Estate Investment and Its ROI
As we all know, real estate investing is one of the successful fields offering high ROI and best ROI for investments. Generally speaking, the ROI in the real estate market, is used to measure your profit of investing in buying and selling units.
The ROI for real estate is calculated after deducting the costs associated with the investment including the purchase price and any additional expenses associated with repairs or remodeling. When the property generates income upon sale or rental, you get your ROI.
The ROI formula for the real estate market is the same as that of any investment [ROI for real estate = (Net Profit / Cost of Investment) x 100 ] with changing the net profit and the cost according to the type of activity; selling or renting the unit.
In order to help you further understand how to calculate the rate of return on real estate investment, let us see an example.
Calculating ROI for Real Estate Investments
Let us give you an example to understand the ROI on investment of any property. Let us say that you bought a home for 300000 EGP and paid an additional 400000 EGP on improvements and maintenance.
Also, thanks to market fluctuations, the market value of your property increased to 400000 EGP. Don’t forget that you rented this property and this rest gave you 20000 EGP income.
You now want to sell this property for 400000 EGP, using the formula above, the ROI for this property = 20K EGP (rental income) plus 400K EGP (sale price) minus 340K EGP (cost), which comes to 80K EGP; 80K EGP divided by 340K EGP is 0.235, so your return on investment in the real estate or ROI is 23.5%.
Now, let us take a closer look at the Egyptian real estate market and invest in it so we can get practical insights on the best return on investment for real estate in our market.
Real Estate Investment in Egypt
To talk about the real estate market in Egypt and the ROI from its investment, we need to understand the status quo of this market in Egypt. The good news is that in recent years, the Egyptian market exhibited the best return on investment in real estate thanks to several factors.
The Egyptian real estate market has been experiencing rapid growth lately thanks to these factors:
- The Government’s efforts to attract investments to the country make it work thoroughly on modifying the country’s infrastructure.
- The rapid demographic growth goes in parallel with the increasing needs and thus creating more chances for the real estate selling and renting invesmtents.
- The Egyptian Government is focusing on creating giant projects, in new areas such as the New Cairo and the New Administrative Capital the thing which increases the demand for these areas.
These are just a few reasons why you should be encouraged to take a step towards investing in the Egyptian real estate market and get the best ROI for real estate.
You can get more insights on real estate investment and its return on investment from this article: Why Real Estate is a Bad Investment Unless Done Right.
Start Investing Now!
Did you find yourself in this article and want to start investing in the Egyptian real estate market to generate the best return on investment from real estate? There is no limit to the solutions Nawy Premium Real Estate introduces to you.
Thanks to Nawy Shares you can enjoy now an easy and seamless investment process with the highest guaranteed return on investment (ROI). You can choose from different areas and among various developers to decide where to invest and make the best use of your money.
Also, you can access our website and go through the various units available to buy or sell.
All the solutions are just one click away, click on the call button and Nawy’s property consultants team will get your back covered.
We wish you to find the best return on investment for real estate opportunities and generate the highest ROI.
