Warren
Hickernell
Realtor-GRI
"Top Producer"
Prudential Palms Realty
Warren@RealEstateInSarasota.com
(941) 232-5738
Caluclating Your overall Return on Investment
Below is an sample calculation on a duplex property which shows how I
compute my investors overall return on investment:
Investment Calculation* |
|||||||
| Purchase Price | $253,800 | Monthly Income | 1,370 | ||||
| Down-payment @ 20% | 50,760 | less: | |||||
| Mortgage @ 80% | 203,400 | Mortgage @ 6.0% | 1217 | ||||
| Taxes | 212 | ||||||
| Down Payment | 50,760 | Maint fees - 2 units | 246 | ||||
| Closing Costs | 5,000 | * Utilities paid by tenants | |||||
| Total Cash | $55,760 | Monthly Net: | -305 | ||||
| Year #1 | Year #2 | Year #3 | Year #4 | Year#5 | Total | ||
| Annual Income | -$3,654 | -$3,604 | -$3,554 | -$3,504 | $-3,454 | -$17,770 | |
| Cash % Return | -6.55% | -6.46% | -6.37% | -6.28% | -6.19% | -31.87% | |
| Depreciation | $6,922 | $6,922 | $6,922 | $6,922 | $6,922 | $34,609 | |
| Tax Savings (@ 25%) | $1,730 | $1,730 | $1,730 | $1,730 | $1,730 | $8,652 | |
| Total Cash Return | -3.45% | -3.45% | -3.45% | -3.18% | -3.09% | -16.62% | |
| Mortgage Paydown | $2,493 | 2,647 | 2,810 | 2,984 | 3,168 | $14,102 | |
| Appreciation - 7% per year | $17,766 | $19,010 | $20,340 | $21,764 | $23,288 | $102,168 | |
| Total Return: | 32.88% | 35.48% | 38.25% | 41.20% | 44.35% | 192.17% | |
Note: Tenants pay electric and water
*The above calculations are based on actual rental income per the owner of the subject property; no assurance can be made of these rates in the future.
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