Calculating ROI on a rental ....HELP!

[Anthony Mikolich]

Hello All!

I am considering a duplex in my area with an asking price of 250K. Each unit can be rented for $900 a month generating about $500 a month in cash flow.

I use this formula for my calculations but I'm confused as to which figure to plug-in in one spot.......

Monthly rent x 12 months x .6 divided by cost.

Am I calculating the cost of the house [250k] or the up front cost to me of 60k [50K down and 10k for repairs]?????

So, is it.........1800 x 12 x .6 divided by 250k = 7% ROI

or................1800 x 12 x .6 divided by 60k = 21% ROI

I know which one I like better!

Thank you in advance