It is understandable to be concerned about the cash return when you’re investing in anything. After all, that is the main reason for investment. It is essential to be able to calculate the cash return to measure the success of every asset. Although property investment companies can help you in this part of the process, it is helpful to know the basics.
When thinking about buying properties, understand first how this investment will perform before deciding whether or not it is worth investing in. One important tool to utilize is a cash-on-cash return.
What is Cash-on-Cash return?
Metrics are an important part of every assessment. Metrics are what we use to measure the success of our actions. In this case, we are going to use the cash-on-cash return as the metric to measure the success of our investment.
Cash-on-cash return is a simple metric. You can get the estimated cash-on-cash return by dividing the total amount of cash you invested by the yearly cash flow you received minus all the expenses. However, it’s essential to note that this metric is not all-encompassing and perfect. There can be situations where exclusively using this metric can expose you to a huge risk, especially if not used properly.
When to and not to use Cash-on-Cash return?
When investing in a stable or appreciating market, cash-on-cash return is a great metric to depend on. It’s that simple. What has to be considered properly is when not to use this metric. In commercial properties, using the cash-on-cash return can be very tricky. It is a risky metric to use, especially for people with zero experience in business and investment.
Other metrics to consider can vary depending on your focus. If you want to focus on property evaluation, consider using gross rental yield, capitalization rate, internal rate and price to rent ratio. Cash on cash return also falls in this category. On the additional, if you intend to focus on property financing, consider using the down payment metric, debt-to-income ratio, and the loan-to-value ratio.
Who can help you?
It’s realistic to expect failure when starting something new. However in this case, we can not act hastily and rashly since a lot of money is involved. This is why it’s important to consider agencies and facilities that can help you when proceeding to your first real estate investment, commercial or rental. Luckily, there are great property investments Sydney facilities available.
One of these is the reputable Equinox Designs that offer great chances for people to increase their savings by helping them learn more about investment return metrics. On top of that, its team will also help you in various other aspects of the business such as interior design, architectural design, property development, among other things.
When choosing which property investment company to utilize, consider at least three things. Firstly, research about their experience. Ask people about their previous projects. Remember that the best portfolio they can give are the previous projects. This will show you their success rate. Like Equinox Designs, their portfolio says it all; positive reviews from loyal clients and outstanding property investment services opportunities for everyone.
Secondly, ask about their services. Remember that every transaction should be tailor fitted to your needs. This is why you need to make sure that they offer the services that you need. Lastly, consider their prices. This will take a little more time but researching various different agencies and comparing their pricing in relation to their experience and services will save you money in the long run. All these you can find at Equinox. Contact the team at 02 8029 9909
and know more about the different ways to benefit from property investments.
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