ROI on a New Note
I have an opportunity to buy and sell a mobile home. I can offer seller financing but am trying to calculate the ROI. I would be taking title to the mobile home and immediately turning it around with seller financing at the same price I buy it for. The cost will be $40,000. The note will be written for $36,000 ($4,000 down payment) at 12% for 5 years. Based on an amortization schedule, that will yield $12,048.01 interest over the 5 years. When I take that "profit" and divide it by the $36,000 "investment" and divide that by 5 "term", I come up with a 6.69% number. If my interest payment was 12% why am getting 6.69% for the ROI? Is that really my ROI on this note? I'd really appreciate input and direction if my calculation is incorrect.