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Doing research: what is the pre-tax return on investment in your country?
Thread poster: Olga Simon

Olga Simon  Identity Verified
Hungary
Local time: 15:42
English to Russian
+ ...
Aug 22, 2002

Hello everybody,



I need to put together a table showing the ROI (return on investment) on real estate (residential and commercial) in as many countries as possible. (Well, I am planning to include about 20 ).

I have already browsed through a few websites, looking for answers and discovered that it will take me a week to find out all necessary information.



To be more clear let me give you an example.

Today I interviewed a woman from Bologna and according to her a house (apartment/condo/etc) in Bologna which costs appoximately 200,000 USD can be rented for 1,000 USD monthly, where all utilities are to be paid by the tenant.

So the owner/investor gets USD12,000 a year gross.

I am not interested in the net ROI as tax rates differ in different countries.

What I am interested in is what is the total amount the investor can count on before the taxes and after all utility bills have been paid? In Bologna it made 6% (12,000 annual gross income/200,000 house).



If in your country the utilities are usually on the Landlord, then just tell me the average monthly rental price, approximate value of property and an average utility bill, I will calculate the rest.



I am not expecting you to get into maths (unless you want to ), what would already be a huge help if you could just give me a few figures (or a URL???).



Thanks a million,

Olga.


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Evert DELOOF-SYS  Identity Verified
Belgium
Local time: 15:42
Member
English to Dutch
+ ...
Did you already check FIABCI? Aug 22, 2002

Hi Olga,



Did you already try:



http://www.fiabci.com/search/



You should find lots and lots of useful information there. One e-mail to the world\'s leading professional real estate bodies should return a nice answer, I assume.



Good luck!
[addsig]


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Jacek Krankowski  Identity Verified
English to Polish
+ ...
Depends on the city, location and type of property Aug 22, 2002

I know an area in Warsaw where the ratios are exactly the same as in your Bologna example. But I also know areas where a $75,000 apartment will yield $600 a month in rent. There are also extremes. One Polish government official used to rent a $5 million property in Warsaw for $2,000 a month instead of $4,000-5,000 which is its market value, media said. Well, for those of you whom this piece of news has encouraged to move to Warsaw, mind you, there are not that many vacant $5 million properties around available for rent...

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jccantrell  Identity Verified
United States
Local time: 06:42
Member (2005)
German to English
+ ...
Agree with Jacek Aug 22, 2002

I live in the USA. When you start to factor in such things as rent control, location, desirability, etc. you will be all over the map (pun NOT intended).



For instance, here in L. A., you can rent a 2 bedroom apt in a nice neighborhood for $3000/month, while a few block away in Santa Monice, virtually the same apartment will be $350/month!



A beautiful condo in San Francisco may be priced so only the Sultan of Brunei can afford it, but the SAME condo in Omaha Nebraska will be much more affordable.



I believe that a survey such as you are undertaking will be full of misleading data wherever you get it. Real estate booms are localized and fleeting.



What you might want to do is to see if there is historical data of ROI for real estate covering the past several decades, but then, with governments falling and inflation rampant, even that data will be suspect.



I wish you luck, but I believe that you are tilting at windmills with this task.


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Olga Simon  Identity Verified
Hungary
Local time: 15:42
English to Russian
+ ...
TOPIC STARTER
Thank you for your ideas, but I still hope that more people will pitch in :) Aug 22, 2002

To Evert:



Hi Olga, Did you already try:

http://www.fiabci.com/search/

You should find lots and lots of useful information there. One e-mail to the world\'s leading professional real estate bodies should return a nice answer, I assume.



Yes, Evert, thank you, I will absolutely write to them (tomorrow - it\'s midnight already, I can not think straight ), but agents are agents everywhere. I am already communicating with about 12 of them. I was interested in a more realistic picture, what the residents see themselves.



To Jacek -



Thanks a bunch, Jacek - in this case the ROI is 9,6% - not bad at all! Especially if utilities are not included... But as I understand from your explanation this is not a typical case in Warsaw, is that correct?



To jccantrell:



\"For instance, here in L. A., you can rent a 2 bedroom apt in a nice neighborhood for $3000/month, while a few block away in Santa Monice, virtually the same apartment will be $350/month! A beautiful condo in San Francisco may be priced so only the Sultan of Brunei can afford it, but the SAME condo in Omaha Nebraska will be much more affordable.\"



Well, that is clear. (And I am not looking for cheaper solutions - I am not going to rent anything ). But there is no way that these apartments have the same value! Yes, the rental price is much (maybe a lot!) lower, but the total value of the property is not as high either. What would be a standard ratio between the purchase value/cost of an apartment and its rent (pre-tax, excluding utilities)?





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Alexandru Pojoga
Romania
Local time: 16:42
Japanese to English
+ ...
Romania Aug 23, 2002

Apartment in the $10,000-15,000 range fetches $120-200/month depending on location.



HTH


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