Return on Investment

Rate of Return or Return on Investment (ROI) is the ratio of capital earned or lost in relation to the amount of capital invested on certain project. The amount of capital earned or lost is termed as profit or interest, while the investment is termed as capital, principal or asset. More theoretically, the estimation of ROI involves dividing the Net Profit by Net Worth. In general, expression of Rate of Return is depicted through Percentage symbol. Remember, ROI entails both gains and losses earned on the capital invested in the earlier period, current period and for the future.
Calculation of Return on Investment involves estimation of past or present investments, or determining returns on the future investments. ROI does not depict the period of investment. Return on Investment, Rate of Profit or Rate of Return is the prospective stream of cash flow or income from an invested resource. This prospective stream of cash flow or income comes from dividends, capital gains, or interest. In general, a capital gain happens when the stock market value of any investment falls or rises. However, it does not include the return gained on the specific investment.

Return on Investment Estimation:

Return on Investment is arithmetically is represented as Vf / Vi -1. Where, Vf signifies ultimate investment value and Vi denotes the preliminary investment value. Return on Investment is beneficial when the Vf / Vi -1 > 0 and is deemed to be unbeneficial when the ultimate investment value is below the value of preliminary investment.

In a dynamic sense, Yield is the original Return on Investment. Yield is based on the CI (compound Interest) rates estimated, when the investment value constantly changes over a time. Yield captures the reinvesting interest or dividends. Generally, academics use continuous compound return or natural log return for their research purposes. APY (Annual Percentage Yield) or EAR (Effective Annual Rate) implies yearly yields, if estimated by means of compound interest.

In business lines, ROI is the firm’s capacity to make use of its wealth to make extra returns for its stakeholders. Returns on assets or returns on equity are widely used by fiscal analysts to estimate the company’s profitability than other companies. Estimation of a net present value, profitability index, or internal return on investment, helps to select risk free assignments or projects that would bring maximum return for the stakeholders. These estimations come under the arena of capital budgeting methods, where the investments that are more speculative have the prospective to generate the higher returns.

Overview:

Usually, return on investments or investment returns get discount for factors such as taxes and inflations that give the actual worth of the return on investments. Investments generate incomes for the investors to compensate the time value of the money.

Finally, Rate of Return or Return on Investment is an essential part of cost benefit evaluation for prospective projects and those, which have far reaching consequences on the progress of a country or a region. Rate of Return estimations are generally used for individual’s financial decisions such as Annualized Rate of Return and Annual Rate of Return.

How to Make a Smart Real Estate Purchase?

Several thoughts go behind making a smart real estate investment. Though a safe investment, it’s important to analyze all the permutations prior to investing in real estate as at times there could be some risk involved.

In today’s intensely competitive market, one needs to be smarter and must do a proper research and keep a good knowledge about the market. Issues are many and they need to be addressed while investing in the real estate sector. Given ahead are some points that will help you to make a wiser decision while investing in this sector.

Tips to Invest Wisely in Real Estate

Make a Fixed Budget

It’s very important for everyone wanting to invest in a residential or commercial property to keep a fixed budget and more importantly stick to it. This is because, it’s very easy to get carried away with the properties you like and which are beyond your budget. So, there is a word ‘PLAN’ which is the key here, as you can land yourself only into trouble if you go over the budget. Thus, it’s necessary to think other than mortgage payments as well.

Search for Alternatives

One of the best ways to make a smart purchase is to explore different alternatives. It’s important that you inquire about local investment properties and converse with as many real estate developers as possible so that you know about the ongoing rates. If you are interested in buying a property then you need to note down the prices and property details from the developers and then come to a decision. It’s also seen that those who explore and research their area tend to bag a better deal than those who don’t.

Look for Long Term Benefits

There is a significant amount of capital invested in any real estate transaction, and thus you need to think of long term investments prior to making a deal. You must think as to what you intend to do with the property 5 to 10 years down the line. It’s necessary to evaluate the value of the property in the coming years. Evaluating long term goals is extremely critical in real estate investment.

Speak with an Expert

You can make a better income property by taking advice from a real estate expert prior to investing. This is because these experts have a better understanding about the dynamics of the market and will guide you in getting a good deal. You can also invest in real estate companies such as Excellence Shelters Pvt Ltd. It’s one of the trusted companies from Pune, that offers NATP sanctioned plots for investment. These plots are loaded with several offers and amenities and you can make your hard earned money worth by investing in these plots. The company has launched several of its plotting projects in the past out of which Aurum city is the one to look for. The company has also come up with a new plotting project called ‘Celebrations’ where you can get NATP sanctioned plots at affordable prices and that too loaded with several amenities.

Examine the Property

This is a very important point to remember, as examining the property before closing the deal is extremely essential. This is an extremely important feature of real estate purchase and you should not ignore it. If required, take the help of someone who can tell you the exact price of the property and help you get a good value for your money.

Go Through the Documents Properly

Last but not the least, read all the documents well before buying. Ensure that there are clauses that lets you back out from the deal if you find any flaws in them.

Making your income properties needs smart investment in the realty sectorFeature Articles, one effective way can be to buy them from top real estate companies.