Secret of Successful Property Investment Strategy #1 – Formulation

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.

Price: 200,000

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.

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