33.24 How do you Evaluate the ROI of your Real Estate Investment?

Evaluating your Stock Investments is relatively easy.

But in Real Estate, this can be a little harder.
All the data are not transparent and there is more to it than what meets the eye!

In our previous newsletters, We saw that the actual average Asset Price Appreciation from Real Estate in India is:
~3 - 4%.


But we also discussed why this is the only metric to evaluate our investment.

Let’s take a deeper look:
Real Estate returns depend on 3 things

Property Appreciation

What is Rental Yield?

Since most of us focus on residential businesses let’s stick to that.

Tax Efficiency

So most of the real returns are not captured in the official data.
You pay a lot of charges for your Real Estate Deals:

But if you use debt diligently and make smart tax-saving decisions.
You can make a better return on your invested capital.
Now if you put it all together.
The actual return on a Real Estate Investment could easily be >10%.

Pretty good, right?
And it’s definitely possible.

You just need to focus on getting good Real Estate at the right price.


Thoughts 🤔 by Soumendra Kumar Sahoo is licensed under CC BY 4.0