Below is an sample calculation on a duplex property which shows how to 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.
