What is a Net return on Investment?
In real estate terms we previously touched on what is a Gross return on your investment. We also mentioned that parties don’t only look at residential property for investing in, they also look at commercial property. Commercial property is a different sector in the market.You will need professional guidance if you enter this field as it can be very complex and requires business minded people to further investigate this sector. Properties that have tenancies in place will more than likely be sold as a going concern, this means there is a lease in place between the current parties, the property owner and the current tenant. These leases are legally binding and is assigned when the property is sold. There will be instrument clauses in the lease that explains what, who, when, how much and how often these expenses will be paid by the tenant. Having said that it is this part of the property segment that most investors are interested in.
What is the property netting?
This term refers to rent that is paid to the owner by the tenant less any expenses and taxes, it is also described as a % net return or a % net capitalisation rate.