There are tons of reasons why one should invest in real estate in Ethiopia. One of the main reasons is that real estate in Addis Ababa has high profitability and return on investment due to the high-demand of housing in the cities capital. Especially when you are working with a company like us, that believes in building the best home and deliver it on time, your investment is for sure worthwhile. In the next few weeks, we will walk you through the benefits of investing on Metropolitan. But for today, let give you some information about real estate investment.
Here are some of the terms you should know about real estate investment
Commercial Real Estate
Commercial real estate is defined in opposition to residential real estate. The definition of commercial properties encompasses industrial properties, medical facilities, office buildings, retail centers. It can also refer to land that will be developed into a commercial project in the future.
Residential Real Estate
Residential real estate includes both new construction and resale homes. The most common category is single-family homes. There are also condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes, and vacation homes. Here’s more on residential real estate.
Appreciation refers to the increase in the value of a property over time. Appreciation can be caused by a number of things including inflation, the increase in demand or a decrease in the supply of properties. Appreciation can also take into account added value as a result of property improvements (such as upgrading a kitchen, adding a room Appreciation is usually projected as a percentage of the property’s value over the course of a year.
Return on Investment
Return on investment (ROI) stands for the calculated benefit of an investment (called the return), divided by its cost. Your ROI is impacted by several variables, such as renovation and maintenance costs, and how much you originally borrowed in order to invest in your property.
Internal Rate of Return (IRR)
The IRR of an investment is the point at which the net value of investment expenses equals the net value of asset income. These are both calculated at the current value of the investment and not the purchased or future value of the property.
The internal rate indicates at what point an investment could be considered profitable
The net operating income minus the total of all debt service payments.
We hope this helped give you some idea on most common real estate investment terms.
Metropolitan real estate PLC, is an American company, building quality homes in Ethiopia to fulfill the needs of luxury house for sale in Addis Ababa and all of Ethiopia as well