Return on investment – important criteria for an investment
The term „return on investment “refers to the ratio between of income and expenditure for a capital investment. The return on investment is usually expressed per year and as a percentage. In the case of a condominium that is rented, the net rental return is important. It indicates what proportion of the cost of acquisition plus incidental costs over the annual rent flows back to the owner-occupier.
Would a condominium for example cost 100.000 Euro, amounted to five percent real estate transfer tax, the commission fee seven percent and notary fee 1.5 percent, the total investment cost would be 113.500 Euro. The annual rental income would be 7.200 Euro if the monthly net rent would be 600 Euros.
Since the housing fee includes not only the fixed running cost (difference between cold- and warm rent) one has to subtract the „non recoverable cost“ of the economic plan from the net rent.
total investment cost: 113.500,00€
annual net rent: 7.200,00€
non recoverable costs: 600,00€
(7.200-600) % 113.500 = 5,81% p.a.
Whether Prior to an Acquisition...
Even ahead of an acquisition, the Accentro Real Estate Encyclopaedia offers interesting facts and decision guidance: We will coach you through the first steps on your path to homeownership. For instance, it provides information on the process flow of a condominium purchase. It will also tell you what sort of documents you need in order to buy property, and where to obtain them.
... or after – Our Real Estate Encyclopaedia Provides the Answers You Need
Once you have bought a property, you may wonder who is going to manage your condo and how. After all, caretaking your property is one of your main obligations as a condominium owner. In addition to numerous tips and suggestions, you will find answers here to many questions involving the property management subject, such as: What does “individual freehold ownership” mean? What exactly do “condominium regulations” govern? And what does the term “condominium fee” imply? In addition, we elaborate subtle differences between terms such as “real estate management” and “corporate real estate management.”
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