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Before making any significant investment, especially one as important as a citizenship or Golden Visa application, it is essential to understand the potential return on investment (ROI). Whether you are investing in real estate, bonds, or even in a new country, knowing how your money will work for you is key to making informed decisions.
When it comes to citizenship or permanent residency investments, where entry amounts can easily exceed $1 million, ensuring that you are maximizing your financial gain is critical. While the intangible benefits of such investments, like improved lifestyle or global mobility, are important, you also need to focus on the tangible profits.
To accurately assess how much profit you can expect from your investment, understanding how to calculate ROI is vital. This calculation allows you to compare various programs and choose the one that offers the best financial return.
In this article, we will guide you through the formula to calculate your future profits. Additionally, we will highlight which citizenship and residence programs offer the best return on investment.
Return on investment, or ROI, is a simple measurement metric. It calculates how much you will earn once you sell or cash out your asset. It also helps you determine whether your investment is profitable at its current value.
Major factors that will influence this metric are the location of your investment and the market conditions when you invest and sell your asset.
However, this metric does not take into consideration the following factors which do affect the real value of your investment:
The following are two formulas you can use to calculate this metric in terms of percentage:
This method considers the costs and value of your investment. You can calculate it with the following formula:
Gain / Total Cost = Return on Investment
In this formula, gain refers to the net income after subtracting all costs and expenses from the current value of your investment.
Another way to calculate ROI that suits real estate purchases better is the out-of-pocket method. It requires the following formula:
Equity / Property Value = Potential Profit
To calculate equity, you will need to subtract all expenses from the property value. Specifically, you should consider the following expenses:
Two of the best investments you can make are bonds and real estate. They are exceptionally efficient for long-term investors. Your profits will be more conservative with citizenship and residence programs due to the legislation that governs them and associated costs.
The following are programs that offer a potential profit:
The first visa by investment program you should consider is the Greece Golden Visa. This residence program requires a minimum $278,400 (€250,000) investment in commercial or residential real estate, which you must maintain for five years.
According to reports, the current average house price is $2,680 (€2,410) per m2. Meanwhile, reports indicate the cost of a home outside of urban areas was $750 (€670) per m2 in 2019. This means your property needs to be at least 374m2 to meet the €250,000 requirement.
Using the out-of-pocket formula, you would gain 71.02% in profit if you completed your holding period this year and only spent $10,000 on repairs.
((374 × 2,680) – ((374 × 750) + 10,000)) / (374 × 2,680) = 71.02%
After the holding period of five years, your investment could be worth around $476,000 depending on market conditions at the time.
Another option is the Hungary Golden Visa. It has a $556,900 (€500,000) real estate option. Assuming you maintain this investment for 5 years, you will have a profit of 82.73%.
This is because reports indicate that prefabricated housing estates in towns were worth just under $570 (200,000) HUF per m2 in 2019. Therefore, you would have needed at least 984 m2. Now, reports show that the average house costs $ 3,360 (€3,020) per square m2.
So, if you had $10,000 of repairs, your profit would be 82.73% if you applied the out-of-pocket formula.
((984 × 3,360) – ((984 × 570) + 10,000)) / (984 × 3,360) = 82.73%
This means that your initial investment could be worth over $1,000,000 after five years, depending on market conditions.
The Portugal Golden Visa has a $556,900 (€500,000) investment fund option. This investment migration option has an interest of up to 10% if you maintain it for 6 – 10 years. This 10% is the maximum profit you will gain. You can also prove this is your profit by using the cost formula as shown below:
((500,000 × 1.1) – 500,000) / 500,000 = 10%
Furthermore, you may not have to pay withholding tax if you are not a tax resident. As bonds are more conservative and safe investment tools, you could expect a total value of €550,000 after the required holding period.
You should consider the Spain Golden Visa's real estate option which is ending soon. To apply for this program through this route, you will need to buy a property worth at least $556,900 (€500,000), and maintain this investment for 5 years.
For example, if you made a purchase in 2019, you would have a profit in 2024. This is because reports claim the average house price per m2 was $1960 (€1,763) in 2019. At the time, you would need a property that is at least 284 m2 to meet the requirements. Meanwhile, reports attest it is $2,220 (€1,998) in 2024. Using the out-of-pocket method, the profit is 10.13% if you had repairs worth $10,000.
((284 × 2,220) – ((284 × 1960) + 10,000)) / (284 × 2,220) = 10.13%
In other words, your property might be worth around $613,000 after 5 years, depending on market conditions.
Though the St. Lucia Citizenship by Investment $300,000 bond option bears no interest, it still has a good non-financial return on investment. After successfully applying for this citizenship, you will have access to a favourable tax regime, which you can use in your legacy planning. In addition, you will also be able to apply for a 10-year visitor visa to the US.
Lastly, you can gain real estate return on investment through the Türkiye Citizenship by Investment. This route has a $400,000 investment requirement which you must maintain for 3 years.
Notably, the ROI for this Citizenship by Investment program is 88.5% ― which is the best return on investment in this list. According to reports, it has this percentage because the average cost of properties is $980 (TRY 33,460) per m2 in 2024. Conversely, reports claim it was $110 (TRY 3,800) per m2 in 2021. Therefore, you would need at least 3,640 per m2 to meet the requirement.
Applying the above numbers to the out-of-pocket formula to a Türkiye real estate with $10,000 of repairs gives the following:
((3,640 × 980) – ((3640 × 110) + 10,000)) / (3640 × 980) = 88.5%
In other words, you could be looking at a property value of over $750,000 after three years.
As you now know, many citizenship and residence programs can lead to profits. To select the one that offers the most profit, you should consult Vancis Capital. Our advisory boutique specialises in investment programs. Through consultations, we will evaluate your goals and needs. Then, our experts will empower you with the knowledge you need to make the best investment to meet these goals.
Once you have selected the best investment option for you and your family, we will guide you through your application and beyond. Our tailor-made approach will ensure a smooth journey toward your new passport or visa.
A good ROI is 10% or above. However, the specific number depends on the industry. Your personal risk tolerance and aim will also play a factor in what you may consider a good return on investment.
To calculate the total return, you will need to use the following formula:
(Ending value – beginning value + dividends on interest) / beginning value × 100 = Total Return
This formula allows you to measure the level of performance of your assets.
To calculate your rate of return over five years, you should use the following formula:
((ending value / beginning value)(1 / number of years) – 1 = Annual Rate of Return
This formula takes into account compound interest.
Now you know how to calculate ROI of migration programs with either the cost or out-of-pocket methods. While Greece, Hungary, Spain, Portugal, and St. Lucia have great migration programs, Türkiye's has the best return on investment.
Nevertheless, the most profitable option will depend on your own personal circumstances. This is because there are many factors beyond the monetary sum you gain after your residency or citizenship application. Therefore, consult investment program experts such as Vancis Capital to discover the return on investment of each program.
Get in touch to discuss how we can help you with your citizenship or residency by investment goals. One of our investment migration experts will contact you to discuss your case. With over 16 years of combined experience our team has helped hundreds of families achieve freedom.
