Are you looking to invest in real estate and new to the process? There is a lot to learn but thankfully you can enlist the help of a trusted and experienced agent. You need someone by your side who can help you navigate the ins and outs while helping you make a great financial investment. As you jump into starting your real estate investment portfolio you are going to hear a lot of terms. One of the big terms you will hear a lot is ROI. What is ROI? How does an investor determine their ROI? Let’s take a look.
What is ROI?
ROI stands for return on investment. This is where you use a formula to evaluate your investment and how well your property should perform for you, In some cases, you see this in business development too. You can’t make an informed investment without understanding what your potential return will be. This is the whole point of investing. You want to ensure you will have a positive return that generates additional income and builds wealth for you.
How Does An Investor Determine Their ROI?
ROI can be calculated using various methods. Typically you see the net income divided by the total cost of the investment. If you use this formula then you will get a percentage that you want to multiply by 100 to see your net percentage. If it doesn’t work out in a positive direction then it may be the best investment property for you. You can also calculate ROI by taking your investment gained and dividing it by the investment base.
While you look for your investment property keep in mind that there are several ways to calculate your ROI so maybe consider using several calculations to determine if it is the right investment for you. Ultimately make sure you identify what calculations informed your decision the most so you better understand yourself as an investor for the future,
What is ROI used for?
ROI is used to evaluate your investment decisions, Sound simple, but it can be a process, This is a great way to take the emotional side of things out and focus on the numbers. This is used to ensure you are making a sound decision that helps you obtain your overall goal of building an investment portfolio with additional income and potentially generational wealth.
In Conclusion
As you consider investing in real estate you want to work with an experienced and trusted agent who can help you determine if an investment is a right fit for you. Do you need someone who can continue to help you build your investment portfolio? As you learn along the way you need an expert by your side. Mesa, AZ is a great place to be and an even better place to invest in. For more information on investing or buying or selling any real estate, contact me.
More Tips for Real Estate Investors: