Return On Investment (ROI) or Yield… Finance Analysis on Your Next Property Investment

Should you use Return on Investment (ROI) when carrying out analysis on your next investment property?

I think that’s a great big “YES” 🙂

If you walk into any Estate Agent (Real Estate agent) across the land and ask to see their finest investment properties… I can pretty much guarantee they’ll put some deals in front of you and start quoting “Yield”. Now I’m not saying there’s anything wrong with this and it’s certainly a good place to start – however I personally ALWAYS use Return on Investment (ROI).

Return on Investment gives you the ability to compare one deal against another – regardless of the finance you’ve used to buy the place so you can get the biggest “bang or your buck”. Obviously, ROI shouldn’t be the ONLY factor – but I believe it should be your go to calculation when choosing an investment.

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6 thoughts on “Return On Investment (ROI) or Yield… Finance Analysis on Your Next Property Investment”

  1. Hi Tony, very helpful video. I will be using "ROI" as my measure moving forward. Thank you for taking the time to produce the video.

  2. Hi Tony, Great tip and very nice video. I believe a 5% yield must be an average which as you sightly mentioned most agents do rekon. What would you take as a good ROI? If i were to ask you – What would you settle for the worst ROI to go ahead for the deal?

  3. Another great video Tony. I absolutely get your point that every single property has to be assessed individually because every property is unique and has individual merits. When we are considering long term investment this fine tuning at the outset, in order to establish the highest ROI, can make such a huge difference on the eventual outcome.

    Establishing the ROI is so important when comparing our property investments to other investment strategies such as stocks and shares. However the advantages of exponential leveraging in property each year, in my opinion, always seems to demolish the arguments for investing in the stock exchange.

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