Business owners don't know their total return on investment

Residential property investors are inherently lazy…

Owning an investment property can seem like a pretty sweet deal*. For example:

• Bank Financing: Banks readily offer loans for property investments, making entry into the market accessible.
• Low Debt Servicing Costs: The cost of servicing property-related debt remains relatively low, thanks to favorable interest rates.
• Strong Rental Market: The rental market tends to be robust, ensuring a steady income stream from tenants.
• Easy Income Monitoring: Net rental income is easy to monitor, simplifying financial management.
• Complimentary Valuation: Local councils provide free property valuations every two or three years (part of your rates), helping track property value appreciation.
• Long-Term Appreciation: Property investments often have historically appreciated over the medium to long term, enhancing overall returns.
• Annual ROI Measurement: Total return on investment (ROI) can be calculated, accounting for rental income and property value gains.
• Marketability: Selling property is usually a straightforward process, offering flexibility for cash needs or underperforming investments.

Basically, you don’t have to do much with your investment. There are lots of nice helpers that can do things for you and take away much of your risk – conveyancers, real estate agents, accountants, builders, tradespeople, cleaners, tenants, banks, government policy.

Maybe there is added government risk at the moment associated with insane government debt being redirected to you through adjustments to land tax, rates, fiddling with rent caps, and talk of a “bed tax”.

But, the risk profile remains low and returns on investment are historically solid.

Imagine if we said that business owners (investors) are inherently lazy. They work hard in their business. BUT, what is the total return on this effort? What is the total return on the business (investment)?

Stay tuned for upcoming discussions on measuring return on business investment.

*Lots of pesky disclaimers about this not being investment advice, property returns are not guaranteed, does not apply to developers, etc, etc.