Still Struggling How to Calculate ROI, Get the Formula Now

NET PROFIT / TOTAL INVESTMENT COST X 100

• Net Profit: This is the total value that you have gained from your investment
• Total Investment Cost: This includes your total value that you have spent so that and this includes everything whether it is the total purchase value, tax, maintenance, renovation or any hidden amount that you have spent on it.

This formula helps in taking out the return on investment value and this can be calculated in both off plan and ready to move property with the above mentioned ROI formula.

Now let us breakdown this with an example for better understanding: - 

As this formula is applied all over the world, but we are taking Dubai as an example, so for example you have purchased a villa in DAMAC Lagoons for AED 3 million and you sold the property for AED 5 million after 2 years, and in this duration, you have spent AED 1 million on renovation or other expenses.

So the total investment cost is AED 4 million (AED 3+1 million), and now the profit in the journey where the sale price of AED 5 million + if you have earned some rental incoming assuming it AED 1 million, so it becomes AED 6 million.

And now for net profit, AED 6 million- AED 4 million which becomes AED 2 million.

So according to the formula, AED 2 million divided by AED 4 million x 100 becomes your 50% ROI in 2 years.

After this, let us draw your attention towards factors that impact ROI so that maximum benefit can be consumed by its owners: -

RENTAL INCOME: As mentioned above, when you take out the total profit from the property, rental is one of the important additions that add value to the overall ROI.

UP TO THE MARK: Your property must be alluring enough for the tenant because often frequent will lead to less ROI because there will be nothing to add to your total profit, so make sure the property is according to modern needs.

HIGH QUALITY: Regular maintenance of the property can be costly; therefore, it is advisable to use high quality materials during refurbishment. This approach reduces the frequency of necessary maintenance.

MARKET SITUATION: A bad market can lead to depreciation as well, so heads up before meeting its detrimental effects, as this way you can curtail the impact on ROI.

DEVELOPMENT AROUND: This you can just hope as near your property there is an upcoming metro or any big infrastructure that will directly shoot up the value of your property, so this way, you can hope for impressive ROI in the future.

YOU NEED TO WAIT: Time for a suggestion, it is advisable to wait when engaging in long-term investments, as they often offer better appreciation. Knowing the optimal time to exit is crucial; otherwise, it is prudent to wait for the right moment to achieve higher value.

These are some of the factors that improves the overall ROI, so even if you are planning to buy property in Dubai, then its location, rental yield, quality construction, future development are some of the key features that you can keep in your mind, so that you meet a profitable asset that has potential to serve you.

With this you also need to understand that you need to wait so that you get the best ROI because it is not a game of days, rather it takes years to strategize the return value, so see how much do you have to wait to meet its potential value?

SHORT TERM INVESTMENTS (1-3 YEARS)

The duration of this kind of investment takes at least 3 years where you can invest in an off plan property and at the time of possession you can sell the property to get its high value, and on an average 20% appreciation can be expected.

MEDIUM TERM INVESTMENTS (3-7 YEARS)

In this you can earn good rental so that the buyers can add more value when it comes to total net profit, so for this, you need to wait for 7 years so that property appreciation and rental yield can provide an intact boost to your property. 

LONG TERM INVESTMENTS (7+ YEARS)

Now this takes a long time of 10 years where stability and growth is much higher because you have given a long time to your investment and more patience will add higher capital appreciation to your rental yield, as 10 years can provide up to 50% grow in your investment.

SUGGESTION: For new projects or communities in Dubai where major developments may lead to appreciation in the future, consider exploring communities that are currently offering high return on investment.

And in case you want more information on the availability of projects, then Dubai Housing is the most trusted and informative platform to get all off plan & ready to move properties option in Dubai.

After this, you also need to see the types of ROI in real estate, so that you measure the return value from types, so let us start with it: - 

• CAPITAL APPRECIATION ROI

Capital Appreciation ROI: Current Property value- Initial Purchase Price/Initial Purchase Price X 100

• GROSS ROI

Gross ROI: Annual Rental Income/Total Investment Cost x 100

• CASH ON CASH ROI

Cash on Cash ROI: Net Annual Income/Total Cash Invested x 100

• SHORT TERM RENTAL ROI

Short Term Rental ROI: Annual Revenue- Expenses/Total Property Cost x 100

• NET ROI

Net ROI: Annual Net Profit/Total Investment Cost x 100

So these are some of types that helps to calculate the ROI for buy to let investors, long term investors or short term rental investors, and all of them hold its own importance to take out its potential value.

Finding ROI is not a daunting task if you plan out things rightly where the initial step makes the biggest difference, so for this always opt for a strong location that ensures space for future developments, a reputed builder that ensures risk free investment and well furnished property where you don’t have to put extra money in its refurbishment and find out loopholes of the property before investing in life.

First you need to pile up the initial cost that includes down payment, installments, miscellaneous fees, after the completion of the property, one can rent out the property to get an estimate annual rental income.

And then also check other expenses where service charges, management fees and insurance cost give you an overview of total annual expenses.

Now one can calculate the capital appreciation by adding rental yield + capital appreciation so that the overall value appreciation can be calculated.

So here is the list of off plan projects in Dubai that has great potential to offer high value in the future: - 

• EMAAR Palace Villas Qstra at the Oasis Dubai
• Golf Meadow in EMAAR South Dubai
• Sobha Skyvue Spectra in Sobha Hartland 2
• DAMAC Safa Gate in Safa Park Dubai
• DAMAC Seacrest in Dubai Maritime City
• EMAAR Albero Green Gate in Dubai Creek Harbour
• Sobha Starline Beach Residences on Siniya Island
• Golf Verge in EMAAR South Dubai
• Emaar Address Grand Downtown

These are some of the great off plan property options available in Dubai that has all modern features and amenities to turn out as the best choice for home buyers and investors.

After some off plan properties, now get the list of top notch communities in Dubai that can serve more than 9% ROI because of the high demand, affordability, balanced life and more robust factors are attached to it that improves the overall cost of the property, so you can consider these top 10 communities to grab high ROI: -

• Jumeirah Village Circle

An average ROI in JVC can goes up to 8% where for property choice you have apartments, villas and townhouses options.

• DAMAC Hills 2 (Akoya Oxygen)

An average ROI in DAMAC Hills 2 can goes up to 8% where for property choice you have apartments, villas and townhouses options.

• EMAAR Beachfront

An average ROI in EMAAR Beachfront can goes up to 7% where for property choice you have waterfront apartments.

• Town Square Dubai

An average ROI in Town Square Dubai can goes up to 8% where for property choice you have apartments and townhouses options.

• Dubai South

An average ROI in Dubai South can goes up to 8% where for property choice you have apartments and townhouses options.

• Al Furjan

An average ROI in Al Furjan can goes up to 8% where for property choice you have apartments and townhouses options.

• Discovery Garden

An average ROI in Discovery Garden can goes up to 8% where for property choice you have apartments based on different sizes.

• Dubai Silicon Oasis

An average ROI in Dubai Silicon Oasis can goes up to 9% where for property choice you have apartments and villas based on different sizes.

• Dubai Hills Estate

An average ROI in Dubai Hills Estate can goes up to 7% where for property choice you have apartments and villas based on different sizes.

• Dubai Creek Harbour

An average ROI in Dubai Hills Estate can goes up to 7% where for property choice you have branded apartments scattered over different sizes.

The idea of sharing these top 10 communities in Dubai with the highest return on investment that will benefit the upcoming home buyers and investors who are looking for medium term investment, and that too with minimum investment one can buy property in any of these well planned and family oriented communities that has all kinds of amenities.

Future developments in these communities will enhance the value of your property. As previously mentioned, prime developments in the vicinity significantly impact the growth of ROI by directly increasing property value.

ROI is not just a term, but it is a complete formula to understand, so that you calculate the risk factor, potential to understand the property and stay away from wrong commitments, I hope that you have gained enough information on the method to calculate the ROI, factors to improve the ROI of the property, wait for right duration to get the best value, types of ROI and communities in Dubai that can offer impressive return on investment in the future.

And if you want to make up your mind for investment, then Dubai Housing is one of the secured and risk free platform to get all property types along with accurate data on the project as well as community for a fret free investment, also their assistance will.