Understand the key concepts and processes involved in real estate investing.
The estimated increase in the market value of an asset over a one-year period. For instance, if a property is acquired at KWD 1,000,000 with buying costs amounting to KWD 100,000, the total investment becomes KWD 1,100,000. If the property is subsequently sold after a few years for KWD 1,500,000 (net of selling costs), the capital appreciation amounts to KWD 400,000 or 36.4%.
The overall return on investment (ROI) over a period of five years, calculated by averaging the rental income/net yield and annual appreciation on an annual basis. Typically, properties yield a total ROI of approximately 50% over five years, translating to an average annualised return of around 10%.
The payout received by an investor in an asset after deducting all costs. For example, if 10 investors collectively own a property, the dividend per investor is determined by dividing the total rent generated by the property by 10 (after subtracting all costs).
The anticipated annual percentage return generated by an investment before deducting expenses such as management fees and maintenance costs. For instance, if a property priced at KWD 1,000,000 generates an annual rental income of KWD 100,000, the gross yield would be 10%.
The amount of capital required to complete the purchase of a property. For example, if a property purchase totaling KWD 1,000,000 incurs transaction costs of KWD 50,000, the funding target would be KWD 1,050,000.
The anticipated annual percentage return generated by an investment after deducting all expenses. For instance, if a property priced at KWD 1,000,000 generates an annual rental income of KWD 100,000 with annual costs amounting to KWD 25,000, the net yield would be 7.5%.
The ratio of the total price differential of an asset plus the income generated by the asset over a specified period to the original purchase price of the asset. For example, if a property is purchased for price A and sold after five years for price B, the ROI is calculated as: (B - A + Rental income during the 5 years) / A.
A company established for the sole purpose of executing a single transaction. In the context of Xtake, each property acquisition will be facilitated through an individual SPV. This structure streamlines the investment process by granting shares in the property's SPV to its shareholders.
An official document registered with the real estate regulator that confirms the owner or owners of a property.
Additional expenses incurred during the execution of a deal in addition to the asset purchase price. For example, purchasing investment property in Dubai may involve paying transfer fees, registration fees, valuation charges, and Know Your Customer (KYC) fees.