How To Calculate ROI On Rental Property? β The Top Guide
How To Calculate ROI On Rental Property? β The Top Guide
Abstract
What Is ROI On A Rental Property? Rental returns is a percentage that measures the profitability of your rental home based on how much it earns compared to maintenance costs. Several factors can affect rental return, total rental such as total rental income, total operating cost, mortgage payments, and type of property. To understand how to calculate ROI on rental property, you need to determine how the rental property was acquired in the first place. How to Calculate ROI on Rental Property In Case Of Mortgage Transaction? For example, you purchased a rental property for $200,000, where you took out a mortgage. Your return on investment on the property with mortgage is 14.3% How to Calculate ROI on Rental Property In Case Of Cash Transaction? For example, you purchased the same property for $200,000, where you paid cash instead of taking a mortgage. Your return on investment on the property with a mortgage is 9.07% Conclusion The intention of buying a rental property is to generate alternate income. A good ROI on a rental property is if the ROI is equal to or higher than 10%. The thing to note is that if your initial investment is less your ROI will be higher if your initial investment is higher, your ROI will be less.
