Calculating Profit/Loss/ROI

[cuervosail]

I`m looking for some clarity on determining ROI. I`m trying to determine financials if I sell a rental property (house) now or enter into a Lease Option arrangement. I took out a $240K mortgage when I purchased in `07. Remaining principal is $227K. I lived in the house for the first 6 months. I`ve had tenants for the past year, paying $1300/month. My mortgage is $1527/month. Mortgage + insurance + taxes = $1890/month. I`m confused about which amount to use and the calculation method when trying to determine whether I`ve made any ROI.

If I sell now …..

$310,000 Sale Price

-$305,000 Initial Purchase Price

-$ 13,300 Realtor Commission

-$ 4,000 Legal + Closing Costs

-$ 7,080 Monthly Rent Loss (1890 – 1300) x 12

+$ 13,000 Mortgage Reduction (Initial $240K – now $227K)

$ (6,380) Profit (loss)



OR do I calculate using my mortgage costs only (excluding taxes, insurance)



$310,000 Sale Price

-$305,000 Initial Purchase Price

-$ 13,300 Realtor Commission

-$ 4,000 Legal + Closing Costs

-$ 2,724 Monthly Rent Loss (1527 – 1300) x 12

+$ 13,000 Mortgage Reduction (Initial $240K – now $227K)

$ (2,024) Profit (loss)


OR is this calculation valid? …



$310,000 Sale Price

-$ 13,300 Realtor Fees

-$ 4,000 Legal Closing Costs

+$ 15,600 Rent Received ($1300 x 12)

-$227,000 Mortgage Principal

$ 81,300



$81,300 - $65,000 downpayment = $16,300 (profit?) $16,300 / $65,000 = 25.07% ROI ??

Somewhere in here I think I`m comparing apples to oranges. Any and all advice is appreciated.