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Calculating Property Investment Return

Residential property investments are influenced by a number of variables which results in the calculation of investment return being relatively complicated.

It is of utmost importance that all variables which have a significant effect on the investment return which will be achieved are taken into account in the calculation. Should the effect of some of these variables be ignored, it could lead to inaccurate calculations and therefore contribute to the incorrect financial decisions being taken.

The following groups of variables affect the investment return derived from a residential property investment:

Property Financing (bond amount, bond period, interest rate)
Transfer & Bond Costs
Rental Income & Occupancy
Operational Costs (rates, levies, property management fees, repairs & maintenance, insurance, etc.)
Selling Costs (agents commission, advertising costs, bond cancellation fees, etc.)
Capital Growth => Market Value
Income Tax and Capital Gains Tax
Inflation (recommended for comparing investment return against inflation over time)

Home owners and investors need to develop a thorough understanding of each of these variable groups to facilitate accurate residential property investment return calculations.

Even after understanding the impact of all of these variables, investors and home owners require a solution to assist them in performing accurate calculations of investment return. In terms of its comprehensive design and flexibility, a residential property software solution is the most effective tool for these purposes.

Instead of going into a long explanation as to why an accurate residential property software solution is required by all home owners and investors, we have included a demo of its capabilities. Consider the functionality involved in providing such comprehensive and flexible calculations and then have another look at the spreadsheet which you may have set up for this purpose!

View the demo here.

When compared to the cost and financial obligation involved in acquiring a residential property, the cost of a comprehensive property software solution is minimal. It is also very difficult to put a value to the life long benefits which can be derived from these solutions and probably even harder to quantify the cost of not having the information available when making investment decisions!