Fact or fiction? The return on property is at least 3%: The Echo wanted to remove any doubt, and asked for our opinion on the matter. As far as OWN is concerned, a return of 3% on the asset is more than feasible. Below that amount, we believe that the property in question shouldn’t even be considered an investment!
Besides this, we take advantage of the article to draw attention to the difference between return on asset (difference between the annual rental income and the total investment amount) and return on equity (difference between the annual rental income less the interest rate, and the capital invested on a debt-free basis). As far as we are concerned, the real return that today’s investors should worry about is the return on equity which, if the leverage effect is properly managed, may far exceed the return often used, i.e. the return on asset!