How to calculate ROI

[Amir B.]

Hi BP, I am making $425 positive cash flow per month. I bought the house for $86,500. I used an online calculator and it shows I make 9%. I am not sure if that is correct. Please note the $425 excludes property management, maintenance, vacancy, and capex. Please help. Thanks in advance.

[Troy Luster]

ROI or return on investment has to be calculated with what cash it cost you to buy the property. If you paid cash your ROI would be almost 6%. If you put down almost $57K your ROI would be 9%. If you put 20% down, your ROI would be almost 30%.