Completed Projects and Reports
Rental Property ROI
Calculate the Return on Investment (ROI) for a rental Property:
ROI= (Annual Rental Income- Annual Expenses)/ Property Cost * 100
Example:
- Property Cost: $200,00
- Annual Rental Income: $24,000
- Annual Expenses: $8,000
- ROI= ($24,000 – $8,000 / $200,000*100=8%
The ROI for this rental Property is 8%
Cap Rate
The Capitalization Rate is used too estimate the potential return on an investment property:
Cap Rate= (Net Operating Income / Property Value) * 100
Example:
- Property Value: $500,000
- Annual Rental Income: $60,000
- Annual Operating Expenses: $24,000
- Cap Rate= ($60,000 – $24,000) / $500,000)*100=7.2%
The Cap Rate for this rental Property is 7.2%
Cash-on-Cash Return
This metric calculates the cash income earned on the cash invested in a property:
Cash-on-Cash Return = (Annual Pre Tax Cash Flow / Total Cash Invested) * 100
Example:
- Down Property: $60,000
- Closing Costs: $5,000
- Rehab Costs: $15,000
- Annual Pre-Tax Cash Flow: $8,000
- Cash-on-Cash Return= ($8,000 / ($60,000 + $5,000 + $15,000 / $15,000)*100=10%
The Cash-on-Cash Return for this investment is 10%