I am wondering if anyone has a fairly simple calculation of ROI in Real Estate Investing. I tried to look it up on google and just got confused. I thought ROI was just your monthly rent you collect / your total cash investment. I know that this is something I will need to understand for REI and especially for approaching JV partners in the future.
Calculating ROI
- Thread starter Thorin
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QUOTE (Thorin @ Oct 17 2009, 04:14 PM) I am wondering if anyone has a fairly simple calculation of ROI in Real Estate Investing. I tried to look it up on google and just got confused. I thought ROI was just your monthly rent you collect / your total cash investment. I know that this is something I will need to understand for REI and especially for approaching JV partners in the future.
ROI means return on investments. What did you invest? Your down payment plus any future renovation costs (not maintenance). What did/do you get in return?
1: positive cashflow (accumulated during years of ownership)
2: Upon sale of your unit or when refinancing that portion of the mortgage principal that has been paid off
3: Sales proceeds minus purchase price minus the costs of renovations (other than plain maintenance which is financed out of cashflow).
So your profit or return is 1+2+3. Return on investment (ROI) is the percentage of profit in respect of your investment:
ROI = Profit/investment x 100% = (1+2+3)/(downpayment+renovation costs)x100%
Hope this helps.
ROI means return on investments. What did you invest? Your down payment plus any future renovation costs (not maintenance). What did/do you get in return?
1: positive cashflow (accumulated during years of ownership)
2: Upon sale of your unit or when refinancing that portion of the mortgage principal that has been paid off
3: Sales proceeds minus purchase price minus the costs of renovations (other than plain maintenance which is financed out of cashflow).
So your profit or return is 1+2+3. Return on investment (ROI) is the percentage of profit in respect of your investment:
ROI = Profit/investment x 100% = (1+2+3)/(downpayment+renovation costs)x100%
Hope this helps.
QUOTE (gwasser @ Oct 17 2009, 05:23 PM) ROI means return on investments. What did you invest? Your down payment plus any future renovation costs (not maintenance). What did/do you get in return?
1: positive cashflow (accumulated during years of ownership)
2: Upon sale of your unit or when refinancing that portion of the mortgage principal that has been paid off
3: Sales proceeds minus purchase price minus the costs of renovations (other than plain maintenance which is financed out of cashflow).
So your profit or return is 1+2+3. Return on investment (ROI) is the percentage of profit in respect of your investment:
ROI = Profit/investment x 100% = (1+2+3)/(downpayment+renovation costs)x100%
Hope this helps.
Thank you yes it helps a lot
1: positive cashflow (accumulated during years of ownership)
2: Upon sale of your unit or when refinancing that portion of the mortgage principal that has been paid off
3: Sales proceeds minus purchase price minus the costs of renovations (other than plain maintenance which is financed out of cashflow).
So your profit or return is 1+2+3. Return on investment (ROI) is the percentage of profit in respect of your investment:
ROI = Profit/investment x 100% = (1+2+3)/(downpayment+renovation costs)x100%
Hope this helps.
Thank you yes it helps a lot
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There are several ways to calculate ROI. This subject has been covered before. Do a search to find the other methods.
What you need to be clear about is that everyone who is relying on YOUR ROI calculation understands what method you have used.
What you need to be clear about is that everyone who is relying on YOUR ROI calculation understands what method you have used.
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QUOTE (Thorin @ Oct 17 2009, 06:14 PM) I am wondering if anyone has a fairly simple calculation of ROI in Real Estate Investing. I tried to look it up on google and just got confused. I thought ROI was just your monthly rent you collect / your total cash investment. I know that this is something I will need to understand for REI and especially for approaching JV partners in the future.
Hi Scott,
I`m happy to share the ROI sheet we use as a starting point for your calculations...drop me a line and i will forward to you.
[email protected]
Philip
Hi Scott,
I`m happy to share the ROI sheet we use as a starting point for your calculations...drop me a line and i will forward to you.
[email protected]
Philip
QUOTE (GoRentFreeFast @ Oct 19 2009, 06:14 AM) Hi Scott,
I`m happy to share the ROI sheet we use as a starting point for your calculations...drop me a line and i will forward to you.
[email protected]
Philip
Hi Phillip
Thank you I sent you an email
I`m happy to share the ROI sheet we use as a starting point for your calculations...drop me a line and i will forward to you.
[email protected]
Philip
Hi Phillip
Thank you I sent you an email