Does the ROI Method Always Increase your ROI

There are those who claim that this ROI Method Increases your ROI. Their argument however assumes some things such as real estate never losses its value. Recent history has shown that not always to be so. So, invest wisely. When you believe that to be the case then you can assume that the ROI method will increase your ROI. This increase in your ROI mean that you are using your money more efficiently. That is the purpose of the ROI method.

ROI is a formula or tool which is used to compare investments. It is used for all types of investments not just real estate.

 Basically, it is the percentage that your total investment. The ROI shows you what percent your investment should earn you in a twelve-month period of time. If your minimum ROI is 6% and you invest $20,000, i9n twelve months you expect to have received $12,000 from your investment. This is usually one of the first tools we use to measure our investment by.

If you were to shop around until you found a credit Union which offer a CD which has 5% return, the return being offered is the ROI.

An Example:

You have purchased a property for $350.000

And this property earns you $2,800 each month after expenses.

$2,800 x 12 months = $33,600 per year.

$33,600 divided by $350,000 =0.096 or 9.6%

There are only two number in the formula for ROI:

• Yearly profit
• Investment basis

Thus, there are to ways to increase your ROI:

• Increase your profits
• Decrease your investment basis

These seem simple enough, so how can you increase your profits.  Again, there are two methods:

• Raise rents. But every market finds its equilibrium and this increase in rents unjustly may result in fewer properties being rented, thus a lower profit
• The second way is to decrease expenses. Again, if you have a contract which say you will provide this service and you just stop providing that service or those services it could result in a loss of ROI.

• Note: Images on this blog site are from a free source or taken by the author. No image or group of photos is intended to represent the people the author serves. The author does not care about Race (that is a politically correct term that he does not like because we are all of the same Race, the Human Race. He prefers the term ethnicity, color, religion, sex, gender, marital status, disability, genetic information, national origin, source of income, Veteran or military status, ancestry, citizenship, primary language or immigration status.) He is a service provider for all people. We will all rise together when we band together and help one another. Joseph Erwin is a Real Estate Broker, DRE # O2131799, and a CA general contractor # B 696662. He’s a member of the CRMLS and The East Valley Association of Realtors located in the Inland Empire region of Southern California.

There
are those who claim that this ROI Method Increases your ROI. Their argument
however assumes some things such as real estate never losses its value. Recent
history has shown that not always to be so. So, invest wisely. When you believe
that to be the case then you can assume that the ROI method will increase your
ROI. This increase in your ROI mean that you are using your money more
efficiently. That is the purpose of the ROI method.

ROI
is a formula or tool which is used to compare investments. It is used for all
types of investments not just real estate.

 Basically, it is the percentage that your total
investment. The ROI shows you what percent your investment should earn you in a
twelve-month period of time. If your minimum ROI is 6% and you invest $20,000, i9n
twelve months you expect to have received $12,000 from your investment. This is
usually one of the first tools we use to measure our investment by.

If
you were to shop around until you found a credit Union which offer a CD which
has 5% return, the return being offered is the ROI.

An
Example:

You have purchased a
property for $350.000

And this property earns
you $2,800 each month after expenses.

$2,800 x 12 months =
$33,600 per year.

$33,600 divided by $350,000
=0.096 or 9.6%

 

There are only two number in the formula for ROI:

Ø  Yearly
profit

Ø  Investment
basis

Thus, there are to ways to increase your ROI:

Ø  Increase
your profits

Ø  Decrease
your investment basis

These seem simple enough, so how can you increase your
profits.  Again, there are two methods:

Ø  Raise
rents. But every market finds its equilibrium and this increase in rents
unjustly may result in fewer properties being rented, thus a lower profit

Ø  The
second way is to decrease expenses. Again, if you have a contract which say you
will provide this service and you just stop providing that service or those
services it could result in a loss of ROI.

Ø  Note: Images
on this blog site are from a free source or taken by the author. No image or
group of photos is intended to represent the people the author serves. The
author does not care about Race (that is a politically correct term that he
does not like because we are all of the same Race, the Human Race. He prefers
the term ethnicity, color, religion, sex, gender, marital status, disability,
genetic information, national origin, source of income, Veteran or military
status, ancestry, citizenship, primary language or immigration status.) He is a
service provider for all people. We will all rise together when we band
together and help one another. Joseph Erwin is a Real Estate Broker, DRE #
O2131799, and a CA general contractor # B 696662. He’s a member of the CRMLS
and The East Valley Association of Realtors located in the Inland Empire region
of Southern California.