What is the formula for calculating the rate of return of shops?

The formula for calculating the return on investment of shops: return on investment = (rent x yuan/square meter * area * 12)/ purchase price * 100%.

If subdivided, the return on investment of shops can also be divided into two calculation methods: loan and non-loan.

Full cash payment: net present value return on investment = annual rent/(total price of the store+invested capital-resale price including tax);

Mortgage loan: NPV return on investment = (monthly rent after tax-monthly repayment) * 12/ (down payment+total repayment-transfer price including tax).

There are also the following formulas for calculating the return on investment of shops:

Rent yield method: (monthly after-tax rent-monthly mortgage repayment) × 12/ (down payment+mortgage repayment within delivery time);

Rate of return analysis: (monthly rent after tax-monthly property management fee) × 12/ total purchase price. The greater the ratio calculated by this method, the more worthwhile the investment;

Internal rate of return method: the formula of real estate investment is: accumulated total income/accumulated total investment = monthly rent × accumulated rent months during the investment period/(mortgage down payment+insurance premium+deed tax+overhaul fund+furniture and other inputs+accumulated mortgage payment+accumulated property management fee) = internal rate of return;

Simple evaluation method, the basic formula is: if the annual income of real estate × 15 = the purchase price of real estate, it is considered that the real estate is worth the money. This is a simple method for an international professional financial management company to evaluate the investment value of real estate.

We often see that the 8% return on investment mentioned by developers is actually a nominal figure, because in reality we still need to exclude additional expenses such as property fees, management fees and vacant fees, so it is difficult to reach this level of income.

Under normal circumstances, new shops with a rate of return of more than 5% (within 8 years of property rights and a pool area of no more than 15%) and new projects under construction (or municipal traffic planning) in the surrounding commercial ports belong to high-quality shops. Because most shops (referring to new shops and second-hand shops) have a return on investment of 2%-5%.

References:

Shop investment profit manual Baidu encyclopedia