Here are some important formulations which I found to be useful in making property investment decisions:
1. Adjusted Rental Yield = (Rental x 11 months)*100% / (Purchased Price)
We can fix the our expected rental yield before searching for the right investment. An example: twice the inflation rate (say 3%), then expected rental yield can be 6%. We can also benchmark this against the bank’s fix deposit (FD) rate instead.
2. Return on Cash = (Net Profit / Initial Cash) x 100%
For example: bought a new studio.
Initial cash: 4,000
Selling price: 300,000
Return on Cash = 5000%
3. Occupancy Rate ~70%, as high as possible especially when you are expecting rental income. Observe and roughly estimate the units with lights on/hanging clothes/renovation over total units in a building/neighborhood/area.
4. Historical growth
Price appreciation/depreciation of a property over the years can now be checked at various websites such as I-property, Propwall, BRICKZ etc. For instance, we can simply benchmark its average/recent growth rate against inflation rate to get an idea of the performance a specific property.
These are the 4 meaningful numbers (not limited to) which I found relevant and practical for property investment. Happy investing! Check out our cost/fee estimation upon purchasing a property here.