How do you come up with your ROI?

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Im well on my way to putting in my first offer on a triplex but I can't seem to find out how to find out what my cashflow would be. 

If any one could be as detailed but as simple as possible in helping me out I would really appreciate it.

Thank you all!

[Chris Ramos]

Howdy

Good Question.

And really everyone has their own variation, but I like to be conservative and include as much as possible in expenses. 

Okay let's do the all cash purchase ROI.

First add up your rental income and come up with your gross annual rents. Then you start subtracting. Subtract any Management fees, Taxes, Insurance, City certification fees, Utilities if Owner (you) are paying any, Lawn maintenance, Snow removal, Vacancy rate I like to go with around 8% (of annual gross rents) which about equals one months rent, Repair rate - once again I like the 8 ish percent which equals one months rent. After subtracting all of that from the gross annual rents your left with your Net annual rents. Divide that by the purchase price and you get your ROI.

If you finance any of the purchase then you can figure out your Cash On Cash return by putting your mortgage payment into the subtraction column and instead of dividing your Net annual rents by the purchase price you divide it by the actual cash you have in the deal and then you'll have your cash on cash return. Leverage. Hope this helps. If you have any other specific questions feel free to send them.  Good Luck

If anyone see's something I'm missing please feel free