Home Buying in San Francisco>Question Details

Ivy, Home Buyer in 92407

ROI on rental property that has been paid off.

Asked by Ivy, 92407 Wed May 14, 2014

I bought a rental unit for $285K and paid by cash. The property is now $310K and I'm receiving rent for $1800/month and $372 HOA monthly. What is my ROI? I'm unable to find any formula that calculates the ROI on a property that doesn't have a mortgage loan with it.

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2
Let me try:
($1800x12-$372x12-$300x12)/ $285K=4.7%

But you need to factor in the insurance, $3600 (last figure was assumed to be your property tax.
repairs
vacancy: we assumed 100% occupancy rate

If you sell it at $310 the return on the investment would be 4.3% before all other expenses

You are doing good with that kind of ROI for the Bay Area.

Sam Shueh
Keller Wms Cupertino Realty
2 votes Thank Flag Link Sun Jun 15, 2014
Hi Ivy,

The formula for ROI is as follows:

gain from investment - cost of investment / cost of investment

Check out this website for a great, easy to use calculator to help you come up with your ROI:
http://www.rentalpropertyreporter.com/resource-center/invest…

Hope this helps!
-Ryan
1 vote Thank Flag Link Fri Jun 13, 2014
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