Starting Out
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated about 10 years ago,
How to compute missing values for ROI and ROE?
I'm reading The Millionaire RE Investor and he has a chart there calculating ROI and ROE. However, I'm a little unsure how some values were calculated.
Assumptions:
Property Value: $70,300
DP (20%): $11,249 (initial investment acquired at 20% discount)
Rent and market value appreciation: 5%
Mortgage: 30-year loan at 7.43%
Now on his chart on the first year, here are the values:
Start of Year Market Value: $70,300
Annual Price Appreciation: $3,515
Year End Appreciated Market Value: $73,816
Annual Principal Debt Pay Down: $420
Year End Accumulated Equity: $29,244
Annual Cash Flow: $300
ROI: 37.7%
ROE: 16.7%
I'm curious how Annual Principal Debt Pay Down, Year End Accumulated Equity and Annual Cash Flow were gathered based from the given assumptions.
Anyone can shed some light on this?