To calculate the property’s ROI:  Divide the annual return ($9,600) by the amount of the total investment or $110,000. ROI = $9,600 ÷ $110,000 = 0.087 or 8.7%. Your ROI was 8.7%.  Calculating the ROI on financed transactions is more involved. The down payment needed for the mortgage was 20% of the purchase price of $20,000 ($100,000 sales price x 20%). Closing costs were higher, which is typical for a mortgage, totaling $2,500 upfront. You paid $9,000 for remodeling. Your total out-of-pocket expenses were $31,500 ($20,000 + $2,500 + $9,000).  There are also ongoing costs with a mortgage: Let's assume you took out a 30-year loan with a fixed 4% interest rate. On the borrowed $80,000 ($100,000 sales price minus the $20,000 down payment), the monthly principal and interest payment would be $381.93. We’ll add the same $200 a month to cover water, taxes, and insurance, making your total monthly payment $581.93. Rental income of $1,000 per month totals $12,000 for the year. Your monthly cash flow was $418.07 monthly ($1,000 rent - $581.93 mortgage payment).  #ROI #RealEstate #Underwriting

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