What is Return on Investment and How does It work in today’s real estate market?

With the nature of today’s lucrative real estate market, it’s not uncommon to hear terms like ROI or return on investment thrown around. Return on Investment is much like the name suggests, it is the amount of return an investor makes on their cash layout. For example, if someone were to buy a house and complete a rehab and have 70,000 invested, if the that person were to sell the house for 100,000 they would pocket a 30% Return on Investment. In most markets the numbers are not this simple, but the concept is the same. Today houses are selling for record numbers, but it also makes it difficult for investors to buy them at decent prices and leave them room to implement value adds and extensive rehabs. The rising prices combined with the inflated prices of building materials make rehabbing in today’s real estate market as risky as ever before; investors oftentimes find themselves banking on their house selling for record numbers to pocket a decent return on investment. According to the article “How The Pandemic Has Affected The U.S. Home Flipping Market—And Three Predictions For The Future” by Forbes, home flipping has been on a decline since the Coronavirus Pandemic struck the United States in March of 2020. The home price surge brought on by the Pandemic’s low interest rates bring Forbes’ claim to light. With the amount of inventory on the market shrinking, investors must turn to other avenues to acquire properties that are not overpriced, many of these investors are turning to a business known as “whole selling” to find these properties. Whole sellers often earn themselves a bad name as they get a property under contract with no ability to close as they hope to assign it to an investor for a fee. In many cases these whole sellers never find that investor and leave the home owner with false hopes of selling their home. At Helpful Homes, we farm real estate just as whole sellers do, but every house we go under contract on we intend to close on and have the funds to do so; sometimes when we have a few more properties under contract than we care to rehab at a time, we will assign them to other investors. We know the difficulty of acquiring investment properties in today’s market and are doing what we can to provide these few and far between deals to investors that don’t have the time to find them themselves. All of our deals have been analyzed by our team to make sure they have an adequate return on investment and make sense for an investor to take down as they were originally intended for our company. Real Estate investing is a numbers game and one of the most important is the return on investment, pandemic era real estate has made obtaining a decent ROI more difficult than ever, but with the help of Helpful Homes earning a decent return on investment is guaranteed.