Impact of Financing on ROI : Many investors use mortgages to purchase properties. While financing can reduce the initial cash outlay required, it has a significant impact on ROI. The costs associated with the mortgage, including interest and monthly payments, need to be factored into the ROI calculation. Loan-to-Value Ratio (LTV) : The Loan-to-Value (LTV) ratio is the percentage of the property’s value that is covered by the mortgage. A higher LTV means the investor needs to contribute less upfront but will incur higher interest costs. This can lower the ROI, especially if the property does not generate the expected income. Interest Rates : Interest rates play a crucial role in determining the cost of the mortgage and can impact ROI. In Dubai, interest rates may vary based on economic conditions and banking policies. This section will explore how different interest rates affect ROI calculations. Mortgage-Adjusted ROI Calculation : To calculate ROI with a mortgage, use the following formula: In this formula, “Total Cash Invested” includes all out-of-pocket expenses by the investor. This formula helps investors understand how financing impacts their overall ROI. Calculation Examples Suppose an investor buys a property worth AED 1,000,000, financing AED 800,000 through a mortgage with a 4% interest rate over 20 years. Annual maintenance costs are AED 20,000, and annual rental income is AED 80,000. Using these figures, ROI can be calculated with the mortgage costs included.