How to Evaluate Property Return on Investment (ROI)

Every investor should know how to measure property performance. ROI helps you determine if your investment is profitable.

1. What Is ROI in Real Estate?

Return on Investment (ROI) measures how much profit you make from your property compared to what you spent on it.

Formula:
[
ROI = \frac{\text{Net Annual Income}}{\text{Total Investment Cost}} \times 100
]

2. Example

If your annual rental income is PKR 800,000 and your total investment (purchase + taxes + renovation) is PKR 10,000,000:
[
ROI = \frac{800,000}{10,000,000} \times 100 = 8%
]

So, your ROI is 8% per year — a strong return for residential property.

3. Key Factors Affecting ROI

• Location: Prime areas yield higher rent and faster resale.
• Maintenance: Well-kept properties attract better tenants.
• Market Conditions: Economic stability increases rent demand.
• Holding Period: Long-term investors benefit from appreciation and lower CGT.

4. Boosting Your ROI

• Upgrade interiors and facilities.
• Market your property on high-traffic platforms like Ashiana.pk.
• Choose reliable tenants and maintain timely rent collection.
• Reinvest profits in new, upcoming projects.

Tip: Always track expenses and income in detail — clear records help evaluate profitability and simplify future sales.