Is this calculation correct?
Tell me if my calculations make sense as im thinking about buying a 50k sfh rental.
I buy house for 50k. put 10k down on it. 2.5k closing costs. 12.5 total cash investment. No immediate repairs needed.
It will rent for 735. When following the 50% rule, it will cash flow around 60 dollars a month. That is 800 a year.
So my return on investment would be:
800 cash flow yearly
3% property appreciation=1500 yearly
principal paydown=600 yearly
total yearly=2900
2900 divided by 12500 = .23
23 percent total return.