How To Earn 20% Return On Your Property Investment

If I were to tell you that you can invest in a property today and earn 20% return on your investment… you probably would say – “what is the catch?” or that “it is too good to be true”.

Well, last week I had numerous conversations with one of our most successful investors, who has built a solid portfolio with the assistance of Colordarcy. We discussed several projects, and he pointed out that the return on investment from a particular property that we are marketing is somewhat higher than what we are showing on the website!

 

So, what is ROI?

Well, ROI is the acronym for Return On Investment. It measures the gain or loss generated on an investment against the amount of money that was invested.

The calculation is based on the amount that was placed into the investment.

Let us assume that you bought a property for £100,000 – with £50,000 deposit that you paid for in cash, and £50,000 that you borrowed as a mortgage.

Let’s say the property yields £500 Net Rental Return per month, which equates to £6,000 Net Rental Return per year.

 

Let us calculate the ROI.

Most properties are advertised with a simple Net Rental Return (NRR) calculation, which in our scenario would look as follows:

NRR = (Net Rental Profit / Property Price) x 100
So; £6000 / £100,000 x 100 = 6% Net Return

The above calculation, however, does not give us a true picture of the return that the invested amount generated.

Why? It’s because you should do the calculation based on the amount of money that you actually spent – as such, you do not include the mortgage amount.

Let us have a look at your actual Return on Investment (ROI):

ROI = (Net Profit / Money Invested) x 100
So; £6000 / £50,000 x 100 = 12% ROI

As you can see, if you can find an investment like in the example above, you will be making a great return.

 

How do we get a 20% gross return on investment property?

This is easier said than done. However, the good news is that our most popular opportunity – Parkwood Court – will provide you with a 20% gross ROI. Yep, that is correct! Let me explain…

With Parkwood Court investors benefit from paying their 50% deposit via monthly instalments over the construction period.

After the property is completed, you are provided with a 50% developer loan – no questions asked.

You are assured a 10% Net return per year for 5 years.

Therefore, on a £60,000 one-bed apartment, you would invest £30,000 and receive a £6,000 rental assurance per year.

 

So, let us do the ROI calculation:

£6,000 / £30,000 x 100 = 20%

There you have it… a 20% gross return on investment.

Why are you calculating using £30,000 instead of the property purchase price of £60,000, I hear you say?

Well, remember that you only actually put £30,000 into this property investment, the other £30,000 is via the no questions asked developer loan. With ROI calculations, we are focused on what you actually invested – the money you actually put in.

Another way you can look at Parkwood Court is that you are paying half the price for the property.

This is one of the main reasons why Parkwood Court is our fastest selling property by a long way.

 

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