By: Neil Bayley-Hay

Real Estate Investment & ROI Analysis Tool

Tags: Real Estate Investment & ROI Analysis Tool

 

If you’re looking to invest in Barrie real estate, understanding the math behind your investment – and how much money you stand to make (or lose) is critical.

Understanding Real Estate Investment Math

 

Investment, Income and Expenses

When evaluating whether or not to buy a particular investment property, you’ll need to estimate:
 

Your Investment

You need to have a good understanding of all the costs that make up the initial purchase price – that’s the real amount of your investment. Your investment includes:
 

Income

To help you decide if a property is a good investment, you need to forecast the potential income. Your REALTOR should be able to estimate potential rent, based on how much similar nearby properties are renting for. Make sure to include the following in your income calculations:
  You should also estimate a vacancy allowance, to account for times when the property isn’t occupied or rent isn’t being paid.

Expenses

You won’t know if something is a good investment until you estimate all of the potential costs. Make sure to include these operating and financing costs:

Key Investment Metrics

While experienced property investors have their own favourite ways of evaluating investment properties, the metrics they usually use include:
 

Return On Investment (ROI)