I just joined this forum as google pulled it up quite frequently.
I am about to purchase my first investment property and would like to know the formula to find out the ROI. I would like cash to be in my pocket instead of spending it all on the property and taxes etc. I understand most will be going to the property but if my ROI is above 9% I will be happy...still looking for that perfect deal - I have viewed many properties so far and the numbers look good according to the broker and agent - but they do not have property invested so why should I take their word - if possible please provide and see if you can provide me all the proper formulas with investing in property
if you're about to invest in your first property and don't know the "formula to find out the ROI" - stop.
you're no where near ready to buy anything except a cheeseburger at McDonald's.
i'm not saying that to make fun either...even though it is funny :D
seriously though - welcome to the forum!!
just keep banging around on here and read up on real estate. a 9% return on investment, that's not ideal, but it depends on your investment strategy.
if we're talking rentals - say out of pocket expenses to purchase a property is $3000 (example ONLY) - and the unit cash flows for 125 a month - that's 1500 for the year.
you're roi would be 50% - 1500 divided by 3000
9% would yield you 270 bucks for the year or 23 bucks a month.
just to point out the difference. i used SMALL numbers and really this should help you see that 9% roi is not ideal.
for a rehab say it costs you 3000 to rehab it - now you're making a REAL ESTATE INVESTMENT - that entails putting alot on the line (this also depends on your investment strategy) you want to buy a house, rehab it and sell it for $270 bucks?
up the ante - cost is 35,000 out of pocket - you want to do all that for $3150?
word to the wise - don't get all wrapped up in the lingo. LEARN IT AND UNDERSTAND IT before you go off the "deep end".
keep in touch.
I have posted a "HOWTO" for analyzing deals, just look at the link in my signature.