Quick answer: A 1,000,000 property bought with 30% down plus 5% costs, rented at 6,000 a month and sold after 10 years with 3% yearly price growth, returns 155.21% in total on 350,000 of cash, or 10.34% a year.
How it's calculated
Each year: net income = rent × 12 × (1 − vacancy) − running costs, both rising with rent growth; cash flow = net income − finance payments. At the end the property is sold for price × (1 + growth)^years, minus selling costs and the remaining loan.
Total ROI = (all cash flows + sale proceeds − cash invested) ÷ cash invested. The annualized return is the internal rate of return (IRR) of those cash flows, so it counts when money comes in.
Finance magnifies results both ways: a smaller down payment raises the return when the property earns more than the finance rate and lowers it when it earns less. For a one-year view of cap rate and cash flow, use the rental property calculator.
Worked examples
- 1,000,000, 30% down, 5% costs, 5% over 25 years, rent 6,000, 10 years, 3% growth: ROI 155.21%, IRR 10.34% a year
- Same with 0% price growth: ROI 58.91%, IRR 5.09% a year
Frequently asked questions
What purchase costs should I include?
Transfer fees and taxes (4% Dubai Land Department fee, 5% Saudi real estate transaction tax), agent fees, valuation and finance arrangement fees.
Is price growth guaranteed?
No. Gulf property prices have risen and fallen in cycles. Try 0% or a negative rate to see how much of the return depends on it.
Does it include tax?
No. Saudi Arabia and the UAE do not tax individuals' rental income, but zakat or other taxes may apply to companies and to owners elsewhere.
Why does finance increase the return?
Borrowing means you put in less of your own cash but still get the whole property's growth. It works in reverse too: a price fall hits your cash harder.
How do I test a bad scenario?
Lower the price growth and the rent, and raise the vacancy. If the plan only works with the best numbers, the risk is high.
What is the difference between total and yearly return?
Total return is the whole gain over the period on your cash. The yearly figure is the steady annual rate that would give the same result.