When doing your calculations for ROI, do you base it on the actual amount you have in it or on the amount that the property is worth(ARV, etc)?

As investors we're always trying to get properties for as low as possible. So say I get a market price property of $100K for $65K and put $5k into it. I'm in the property at $70K. When I make my ROI calculations based on rents, say 1300/month, am I basing it on the $70K or the $100K?

The reason I ask this, is that I have a property that has been rented off and on for 10+ years. I only owe $35K on it. I was in it for $89K, but it's "worth" $130K. The difference between these numbers can represent an opportunity cost. Obviously, my ROI looks much better if I use $70K for my basis than the $100K.

The sample numbers are similar to a cash purchase I made recently. Paid $69K, ARV is $130K, cost to renovate is $10K. Rent is $1300. If we use the 50% rule, that makes cash flow 7800 per year and that makes cash-on-cash 8.76%. But if I turn around and sell instead of holding, I get the $130K less fees and taxes on the gain. That's why I'm wondering if there is an opportunity loss calculation that needs to be part of this equation?

So now 5 years from now, the amount I "paid" into the property may be less relevant. But the market price is. So do the calculations shift after owning the property for awhile to use the market comp price to calculate ROI? If that's the case, then it seems that ROI might go down since the discount of equity goes away in the calculation?

I know I like the cash flow in any case.

Thoughts?

Brian