Rental Property Investor · Greenville, NC · Member since 2020 · 29 posts · 5 votes
We are planning to move overseas, and in other to implement our income, we wanted to purchase a couple of properties. With that said, all calculators I find include mortgage, once I enter 0 amount. The whole final number goes out of whack. I am trying to find out the return on investment percent/rate. Can anyone direct me on the right direction?
You are asking about cash on cash (CoC return). You can calculate it many ways with a mortgage and without. If you buy a property for 100K put 20% down you are 20,000 cash in. This is disregarding closing cost and other expenses. The property cash flows at $300/month that's $3600 annually. That is an 18% CoC annual return. All cash offer is as @Matt B. described.
CTO of BiggerPockets · Seattle, WA · Member since 2019 · 178 posts · 178 votes
6y
@Diego LLerena I suggest you take the Capitalization Rate (cap rate). It’s net income per year / purchase price. Net income is yearly rent - operating expenses. It doesn’t include financing. Think of it as dividend yield, it’s the amount of free cash it generates as a function of amount invested.