Return on Investment
Return on Investment (ROI) quantifies how effectively deployed capital produces financial returns in commercial property. It is expressed as a percentage: the profit earned per unit of money invested.
Two principal metrics apply to property investors:
- Gross yield: annual rental income relative to the property's market value
- Net yield: annual net income (rental receipts minus operating expenses) in relation to total investment capital
Improving ROI on comparable properties relies on negotiating lower acquisition costs, securing higher rental rates, or optimizing operational expenses.
