QUESTION: Rltr. John, I am an investor. How would you answer a question on which is better, a brand new or 2nd hand condominium unit? What is the formula for computing Return of Investment (ROI) of Real Estate? ANSWER: I will answer that from the point of view that you are an INVESTOR because that is the only information about yourself that you revealed. In my opinion I would always choose a 2nd hand compared to the brand new. I don't know what's ahead of me in terms of Tenancy Rate, Ownership Costs, and ROI in brand new condos because these information belongs to the future. How can I make intelligent investment decision if I don't have these basic information? Don't talk to me about "location", I will go for it if the ROI is certain wherever that real estate investment is. I can be certain about these vital information in 2nd hand units. I would always choose a 2nd hand unit that is currently tenanted so I can get the accurate ROI.
COMPUTING ROI
The formula of computing ROI is simple.
ROI = [(Monthly Rent x 12) - (Leasing and Ownership Cost) ] / [Market Value of the Property] x [100]
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