Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
General Landlording & Rental Properties
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated 11 months ago,

User Stats

4
Posts
4
Votes
Yury Maslovskiy
  • Investor
4
Votes |
4
Posts

Calculating ROI on a rental unit converted from primary residence

Yury Maslovskiy
  • Investor
Posted

Hello, I'm very new to RE investing, although I've been a landlord for the past year...this is probably a very basic question, but nonetheless it puzzles me - what is the most correct way to calculate ROI for a rental unit that has been converted from a primary residence? I couldn't find a specific answer for my scenario anywhere. Here's the scenario:

A little over a year ago my wife and I converted our primary res. to a rental without too much financial analysis. I know that it would've been better to do it back then, but better late than never, right? Anyway, now we are trying to decide whether we should sell or continue renting it out. So how do we calculate current ROI ? Here are the numbers (rounded up):

- Original purchase price ~ $180K

- Current value ~$230K

- Remaining balance ~ $140K

- Mortgage payment + HOA ~ $1,300

- Current rent = $1,700

To calculate ROI at the current time should I base it on the initial investment amount (downpayment) or the current equity position? I've read somewhere online that you should do the latter, but at the same time if I were to calculate ROI as if it was a potential new purchase I would base the calculation on the downpayment, right? Or should I add up the original DP to all mortgage payments we made while it was a primary residence and use that number as the total investment? What is the correct way of doing this? Thank you.

Loading replies...