How do you calculate ROI?

[Roy H.]

Hi all,

Doing research for my first deal (still).

There doesn't seem to be a "method" to calculate returns on properties- at least not like traditional rentals (50% rule, 1% rule, etc.) They have the "back of the napkin" method for quick assessments.

How do you quickly "size up" to see if a property is worth a second look?

Right now, I do this:

1. Pick a location.
2. Pick a house for sale online.
3. Check comps of nearby similar homes (amenities, rooms, etc.)
4. Compare mortgage/expenses against average occupancy rate and ADR.

Is this a good start? Or am I missing a huge part of the calc?

Thanks.