During uncertain economic times it is not only cost-cutting saving tips that we should be exploring, but more importantly, how we can make smarter choices to increase our income, profits or return on investment (ROI).
A ROI is simply the ratio of a profit or loss made in a financial year that is expressed as a percentage.
Most investors would agree that, over time, an average annual return of 5 to 12 percent on your passive investment dollars is good, and anything higher than 12 percent is excellent.
ROI = Net Profit / Total Investment * 100
For example: If you invest $15,000 on improvements to the property that results in a $50 rent increase per week the ROI on would be 17.3%.
Calculation: $50 rent increase x 52 weeks = $2,600 / $15,000 * 100.
When planning to improve your property, always take into consideration the ROI prior to investing your money.
10 TOP TIPS TO INCREASE YOUR ROI
A few simple changes can make a big difference.
There are lots of ways that you can increase your income (weekly rent), profits and ROI. But remember, spending money on your investment property does not always equal and increase in the weekly rent or produce a return on your investment. Sometimes, improving the property is simply to keep it up to date with market standards.
Take the time now to calculate a couple of ROI improvements.