ROI - Return on Investment. ROI calculation:
Let’s see what kind of ROI the property generated for me with the cash transaction. Two examples below.
|Cash Transaction: Year 2010||Cash Transaction: Year 2011|
|Annual income: $14,400 ($1,200/mo rent)||Annual income: $18,000 ($1,500/mo rent)|
|Total investment: $111,159.88
||Total investment: $98,959.88
As you can see, even paying cash yields a great ROI, something you cannot get by putting your money in the bank or the stock market. Unless you are Warren Buffet or those billionaire portfolio managers, and even they cannot time the market, I would not recommend putting money in the stock market. If you have read my About Me page, you know that I do own some stocks and half are damn losers! But this is another topic for another article .
Now, let’s see the ROI on my cash out finance transaction!!!
|Cash Out Finance Transaction: Year 2015||Cash Out Finance Transaction: Year 2016|
|Annual income: $21,524.05 ($1,600/mo rent + $2324.05 equity)||Annual income: $26,248.10 ($1,800/mo rent + $4648.10 equity)|
|Total investment: $68,769.41
||Total investment: $50,289.85
Some good shit, right! I am certain some of you may argue or question the method I use to calculate my ROI each year. Regardless of what method or how I calculate the ROI, the point is that the ROI for this property is well above any ROI you can get from the banks or stocks.
I would love to know how you calculate the ROI for your rental properties so please comment below. Thanks for reading and have a good one!
Disclaimer: All content is the opinion of the author. No investments is guaranteed to generate income. Please do your own research before you jump into anything crazy.
Credits: wordpress tips, author panos (justpi)