- Joined
- Dec 4, 2007
- Messages
- 261
Given the following example:
My question is...With the example above (not the most ideal in terms of leveraging) the ROI is only 5%, but what if the cash to purchase the house at $200,000 came from a HELOC and in turn shortly there after converted to a conventional mortgage at a very good variable rate. Now that the entire amount is converted to a mortgage would this now mean that the financing was 100% from the bank? ... that the ROI now stands at 100%?Investor purchases house with $200,000 cash
House appreciates 5% in one year.
Investor sells house for $210,000 ($200,000 x 1.05).
Profit = $10,000 (sell price – purchase price = $210,000 - $200,000)
Return on Investment (ROI) = 5% (profit/initial cash investment = $10,000 / $200,000