We are starting a new series for our beloved Investors by sharing some interesting tools Investors have known to use to calculate the
How would you decide in elevator pitches whether the opportunity at hand deserves time from your schedule at all.
This is the first post from many to come. The goal of sharing these tools is educate new investors to allow them to equip themselves if they are starting on the journey of Real Estate Investments. Often when you as investors meet advisors, consultants and agents or come across certain investment opportunities in Mumbai, India or around the world you would want to have competent tools at the back of your sleeve without trying to reach out for messy calculators or excel sheets, which are more meant for full fledged analysis.
TOOL: GOLDEN NUMBER ’72’
The magic of Golden number ’72’ in Real Estate (years of return or annualised rate of return)
Typically Investors really fancy ‘doubling returns’ and they need a rule of thumb to evaluate certain opportunities whether it fits their investment thesis will this ‘property double in value’ and in what time frame with what annualised rate of return. This is where the magic number ’72’ comes to the rescue. Without using a calculator you can actually do an off hand calculation and arrive at the requisite number. Let me demonstrate this through simple examples
What is the annualised rate of return if I want to double my investment(property value) in 6 years
72 divided by 6 ~ 12%
(roughly equal to 12 percent annualised rate of return)
What is the period in years it will take to double my investment(property value) if annualised rate of return promised is 18%
72 divided by 18 ~ 4 Yrs
(roughly equal to 4 years for the investment to mature in double the value)