How To Workout The Return Of Investment
Hello. My name is Samuel Leeds and I am your property guide. Today you will see me teaching
my students in the crash course. I have many students who really want to learn about property
investments. So, I thought of sharing one topic from the class so that you can also take
advantage and learn something new. The other companies usually don’t tell you everything in
one go but they keep selling you courses to learn this and that skill but here I am giving this
advanced training course where you will learn each and everything.
So, my topic was how to work out the return of investment. You must know this as a property
investor. This will help you a lot for sure. So, let’s see what I have taught to my students.
How does it work?
Firstly, what return on investment, good or bad looks like? It’s like you are buying a property so
you will see how it looks right? Similarly, if you are packaging and selling deals and selling
property to investors then you need to know what it looks like. It is important to know whatever
you are doing.
I started with the average rate of house which is 200k pounds and the money you need to put
down for the house is 25%. You need to learn some formulas. Also, you can calculate 2000
multiplied by 25 percent which is equal to 50,000. So, we got a deposit which is 50,000. There
will be legal fees and staff duties which will vary. Well, when you buy a house, you need to
understand the actual deposit which is 29%. This means that 29% of 200k pounds is 58,000
pounds of savings you need if you are buying a 200k pounds house.
The formula to work out the return on investment is:
Annual profit divided by Total investment x 100 = ROI (Return on investment)
If you see from above house rate. What’s the total investment? It’s 58,000. So, you will divide
annual profit with the total investment and you will get ROI.
Let’s say if you are buying a 200k pounds house then what do you think would be the estimated
rent? A little house for rent might cost you 50 to 70% that you bought for 200. So, if it is 800
pounds a month then what it will be per year? The rent will be 10,200 pounds, and if the house
is on mortgage then definitely you have to pay the mortgage first from that rent, you also have to
pay the house maintenance, management fees and other stuff as well. You can’t get off from
that money like you have to be responsible for paying for everything.
Let’s work on the formula by calculating the supposed amount.
Annual profit = £10,800
– Expenses (20%) = £2,160
Profit = £8,640
Divided by ÷
Total invested = £58,000
ROI = 14.9%
This is how it works for the return on investment. You need to learn this formula and then apply
when buying a house. These crash courses help my students a lot in property investments. You
can also learn property related stuff to have a good return on your investment. Join my crash
courses and explore. Hope you understand today's topic. For more informational videos, do
subscribe to my Youtube channel. See you!
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