Rate of Retun of Investments

[Don.W]

Hi Guys,

I have attached a word document that highlights the Rate of Return calculations for a studio property. This is what I used to assist us in with our investment decision of purchasing a studio in France, so I thought I would share it with fellow members of this forum (my way of giving something back for all the bits and pieces of helpful advice I have got from all the posts).

Well I hope it helps + if anyone would like an Excel version (one which you can use to tweak the numbers), please email me.

all the best

[georgihh]

IC prices are cheap

I have bought a studio 2005 mid for 237000 DHS
At the end I have paid total of 258000 inclusive of all the charges from building owners
Government and agents
OK 260000DHS
With 10% interest per year that’s makes it 300000DHS.
Today if you get net 340000DHS its OK
So 40000DHS profit – not bad but not much
The rent is almost 42000DHS at the moment.
So if I don’t get 420000DHS net I won’t sell.
And even for that price I still get 10% out of the selling price
And this is the only place in Dubai with that much return

Conclusion – The prices for a studio will pass 400000DHS in a very short time.
Do you agree?

[eyeC]

lets hope 400,000 AED will be worth 300,000 AED in two years time otherwise

you are making more negative profit

have you reached break even to think about making profit



if you think money now is equal to money in the future buy US bonds

good luck

[georgihh]

Originally Posted by eyeC

lets hope 400,000 AED will be worth 300,000 AED in two years time otherwise

you are making more negative profit

have you reached break even to think about making profit



if you think money now is equal to money in the future buy US bonds

good luck

lets hope 400,000 AED will be worth 300,000 AED in two years time otherwise

That's the problem good point.
Dubai is full of surprises and most of the time very bad ones.
I have wasted 6 years of my live in Dubai.
I had enough of this place and I am leaving very soon.
But still 1000$ a month (from rent) is a very good income.
Let’s hope this place won’t be a desert in a couple of years

[eyeC]

Originally Posted by georgihh

But still 1000$ a month (from rent) is a very good income.

i agree with you 1000$ monthly income is good IF AND ONLY IF you can get back your initial investment

and if you get back your initial investment money you want it with the same purchasing power

otherwise its a loss

[georgihh]

agree with you 1000$ monthly income is good IF AND ONLY IF you can get back your initial investment

and if you get back your initial investment money you want it with the same purchasing power

otherwise its a loss


Ok here is the trick

Now you buy a studio for 400000 DHS all inclusive including the service charges for 3 years.
Get the money from the bank and pay 7% interest per year = 28000 DHS per year

3 x 28000 = -84000 Dhs interest for 3 years
3 x 40000 = +120000 Dhs rent for 3 years
Balance 36000 DHS
Plus sell the studio after 3 years for 500000 net and pay the bank 400000

Total profit 136000.00 DHS

You don’t spend nothing and make 136000 DHS from one studio
With the above money after 3 years whatever you buy a Mercedes or a Hyundai
IT’S A PROFIT
Cant go whrong

[eyeC]

Well if you can sell for 1 MILLION after 3 years i guess you will make even more profit


but lets keep it as you say 500,000 AED for a studio which makes roughly 1050 AED/sft

1000+ AED/sft right now can get you better locations else where

so for you to get your 500,000 AED for a studi in IC other locations need to increase in price too to become say 3000-4000 AED/sft and i dont see this happening any time in the near future

[georgihh]

Only one year ago and i was spot on

[nabeelc]

good prediction.

so have you left the country yet?

[georgihh]

Originally Posted by nabeelc

good prediction.

so have you left the country yet?

I am in the country Business is good (not the property).