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Accurate property investment return calculations

Download our example of a comprehensive property investment return calculation [ Microsoft Excel .xls file 261KB ]

An accurate calculation of residential property investment return is only possible if all the property variables that have a significant influence on investment return are included in the calculation. The number of variables that need to be taken into account makes an accurate calculation of investment return quite complicated. If an investment return calculation ignores some of the variables that have a significant influence on the investment return, the calculation would be inaccurate and the calculation results would be rendered almost entirely useless.

The following property variables need to be included in an accurate property investment return calculation:

  • 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, marketing costs, bond cancellation fees, etc.)
  • Annual capital growth rates (used to determine the appropriate annual market values)
  • Property Income tax and capital gains tax
  • Average inflation rate (for comparing actual investment return to the average inflation rate)

Home owners and property investors need to develop a thorough understanding of all the variables that influence the calculation of property investment return. We have included guidance on all of these property variables on the Calculation Variables page of our website. Including all the necessary property variables in the calculation of property investment return is the first step in ensuring that an accurate investment return calculation is facilitated but it is just as important that the correct investment return calculation methodology is used in order to produce the results that can be used to analyze investment return. We have included guidance on the various investment return calculations that are commonly used on the Methodology page of our website.

We believe that the most important investment return measurement for overall or cumulative investment return is the internal rate of return (IRR) and that the most important investment return measurement for annual investment return is the return on equity ratio. Other measurements that are commonly used are the net present value (NPV), average annual capital growth and gross & net rental yields. Our Microsoft Excel based residential property templates are the most comprehensive & accurate property investment return calculation solutions that you will ever find and include all the property variables and investment return measurements that we mentioned above. Download the investment return calculation example at the top of this page for an example of the property investment return forecast which forms part of our unique range of residential property spreadsheets or view samples of all our unique templates by clicking the link at the bottom of the page.

When compared to the cost and financial obligations that are involved in acquiring a residential property, the cost of a comprehensive property calculation solution is minimal. It is also very difficult to put a value to the lifelong benefits that can be derived from a comprehensive & accurate property calculation solution and probably even harder to quantify the cost of not having the information available when making property investment decisions!

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