The myth surrounding ROI
Many people have asked why we do not promote ROI (Return On Investment), we simply do not use this term as it is completely subjective to the individual investor and is really just a “buzz” word used to gain traction and interest.
Time and time again we see these “deal sourcers” or “deal packagers” who have attended a “get rich quick” property training course, suddenly they are investment property experts flouting their apparent expertise across social media platforms. The term ROI is used most frequently used due to the high percentage figures which can be associated with it. Let me assure you, it takes much more than a highly priced training course with a “guru” to become experienced enough to offer recommendations.
In our opinion, there is so much more to be considered and that this is a term used by the inexperienced.
Common practice is to show the ROI set against a 25% deposit of a property purchase. Whilst this statement has an element of truth behind it, it does not paint a clear picture.
Yes, you did invest £xxxx.xx which equates to a 25% deposit, but you have also taken on the burden of a 75% LTV (Loan to Value) mortgage which you are now responsible for until it is fully repaid. You may also have heavy refurbishment costs to enable this investment to produce the return claimed!!
One major issue we see with this is the full extent of the purchase is not explained.
Any investment properties we present to our clients will fully explain ALL the costs involved, which include:
- Purchase price
- Stamp duty (SDLT)
- Sourcing fees
- Service charges
- Any required refurbishment fees
- Legal fees
- Selective licensing fees
- Management fees
- Predicted annual maintenance costs
Only once you are fully aware of all applicable costs relating to any investment, can you truly see what return you will achieve.
All of the above points to our transparent nature and showing that we will show you exactly what your investment will return as a yield.
Contact us today to see how we can help with your property investment requirements.