If you land on a green “Opportunity” square, you’ll receive an offer to invest your money: in business property or financial securities. Let’s talk about real estate.
Real estate has a moderate ROI and requires little to no of your time.
Property can be:
- Small – the cost is below ₮300k – a land lot, a billboard, or a country house.
- Mid-sized – residential and commercial property under 3 million.
- Large – big-budget projects that cost more than 3 million.
Choose the type you can handle.
The cost, projected revenue, and time needed per month are displayed in the “Purchase” Window.
These numbers determine whether you can handle this project. You cannot get into real estate if you don’t have enough time. Real estate requires much less time than business.
Evaluate the quality of a property before purchase, its ROI, and viability.
Return on Investment
ROI essentially means payback. How long will it take for the company to recoup invested funds? 50% ROI means that in one year, you will get half of your money back, 20% ROI – only 20%. You'll get invested money back & start making profit in two and five years respectively.
10% ROI means that you will get back 10% of your money in one year and 100% of your investments in ten years.
Please mind that this specifically refers to the income you get from rent.
Viability is the main investment goal when buying real estate. For some property, ROI will be mainly based on rent. Sometimes, though, income from rent can be small or even negative, and yet you can still get profit from reselling your property with a high margin.
Let's say you bought a property for ₮1.000.000 and sold it in four years with a 40% margin. It means that the ROI, in this case, is 40% in 4 years (or 10% annually).
Another example: you purchased that same property for ₮1.000.000 and rented it for four years for 5.000/month, and then sold it with a 40% margin. This means that the ROI here is 64% in 4 years (or 16% annually).
If you have enough time and money, you can buy a property. Push the “Purchase” button and drag the data into your Balance Sheet.
- Your income from real estate – to Income
- The cost of your property – to Assets
- Required time – to Time Flow
- Mortgage payments – to Expenses.
- Mortgage loan – to Liabilities.
The price of your property changes every month, along with changes in the real estate market. To see the latest real estate market news, click the Stock Market icon. The purchase price and current market price of your property are displayed in the Balance Sheet.
Sometimes you have to sell your property in order to get money for other projects. You can do it at any time, just click on the title of your property in Assets.
The Chance of Selling
Unlike with Business or Financial Securities, you determine the prices of your property yourself:
When you up the price, the chance of you selling your property goes down. When you lower the price, the chance of you selling your property goes up.
It also depends on the real estate market. For example:
You’re trying to sell the property for ₮1.000.000, its average market price. The chance to find a buyer is 50%.
Let’s say, the next month the market goes down. The price of ₮1.000.000 is too high, so that probability decreases.
If the next month the market goes up, the price of ₮1.000.000 is quite low, so the chances increase.
In case of a successful deal, cross all the data off the Balance Sheet:
- Cross the income from your property off the Income Sheet.
- Cross the time spent off the Time Flow Sheet
- Cross the cost of the property off the Assets Sheet.
With real estate, you can make money off of rent. You can also resell your property. Real estate requires less of your time and brings less return when compared to business. Ensure that your income from rent exceeds your mortgage payments. That way, you’ll be able to purchase real estate with a fraction of its actual price on hand.
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