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Calculating Potential Returns

A critical aspect of investing in property is calculating potential returns to assess the viability and profitability of an investment. Key metrics to consider include:

• Cash Flow: The net income generated after all expenses, including mortgage payments, property management fees, and maintenance costs, are deducted.
• Capitalization Rate (Cap Rate): This is the ratio of net operating income to the property's purchase price, providing insight into the potential return on investment.
• Return on Investment (ROI): This measures the overall profitability of an investment by considering both cash flow and property appreciation over time³.

By analyzing these metrics, you can make data-driven decisions and identify properties that align with your financial objectives.