Return on Investment
ROI (Return on Investment) measures the gain or loss generated on an investment relative to the amount of money invested. ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company's profitability or to compare the efficiency of different investments.
For the purpose of this conversation, one can simply decide what the property can be sold for at a future date, (the profit less all costs), versus what other investment vehicles can I use to better this return or not.
Example: If the property costs R2,0m and you believe you can sell it for R3,0m net in 5 years time, then your ROI would be 8.45% compounded annually if you invested in the property.
Can you get a better return from any alternative investment? - You must decide.