Updated almost 7 years ago on . Most recent reply
Calculating Return Ratio
I purchased a house with a detached garage. I remodeled the garage and now live in it. I rent out the house. My mortgage is $537 and I charge $650 to rent the house.
Doing the math, I'm only keeping $113. If my investment to remodel the garage was $20,000, then 1,356 (113 * 12 months) is my return or 6.78% ROI. But what do I call rest of the money (that which goes to the mortgage)? Would it be correct to say that my Net Operating Expense is $537 and my ROI is $113? I'm not paying any rent though, so should I take that into account?