Real Estate Agent · Philadelphia, PA · Member since 2022 · 5 posts · 6 votes
Hi everyone, I've gotten into real estate recently but must admit that my knowledge is of a novice level. Just curious how you, as an investor, calculate ROI. I know the basics of it in terms of a purchase price, rehab, and ARV, but I know that there are other factors to consider. Is there a set end-all-be-all way to calculate? Or does each individuals calculations look different? Would love to know how you come to a specific number figure - if you can even explain in a single post.
Sounds like you are looking for the math on if you were to do a house flip. There are a few more expenses than just the rehab.
PURCHASE PRICE
+Inspections
+Lender fees (points, etc)
+Rehab
+Mortgage Interest
+Property Taxes
+Insurance
+Utilities (power, water, gas)
+Maintenance (pool, landscape, etc)
+Staging, if applicable
=PURCHASE, BUILD, & HOLDING COSTS
After that you take your sales price, subtract out commissions and seller closing costs, then subtract out the figure above, and now you have your net profit.