Total ROI Calculation Help please

[Bob Gillar]

Prior to buying my first beach vacation (out of state) rental property, I wanted to use numbers and calculations to asssss my potential investment.  

I'm making an excel sheet with all the calculations found on this website (I will link at the bottom) such as ROI, Cash flow, etc.

I'm hoping someone can please help me with the data needed for TOTAL ROI. The article mentions taxes gained and lost - is this the place to factor in taxes paid on the income from the property (is that taxed at a rate of ordinary income?) - and is this where a deduction of mortgage rate interest is calculated or is that not necessarily a factor?

When factoring in the Equity Accrued; is this basically the equivalent of whatever portion was paid down from the principal of the loan?  Is theoretical appreciation of the propery used in this equation?   

As it's possible the article couldn't include every single item, are there any other items which a first time buyer should include in a TOTAL a calculation prior to the purchase?

Thank you! 

Link: https://www.biggerpockets.com/renewsblog/2010/06/3...

[Christopher Phillips]

@Bob Gillar

You're kinda over-analyzing things if you get into Total ROI due the complications of dealing with personal tax returns.

Most investments for 1-4 family properties should focus on annual Cash on Cash return and CoC ROI. If you start getting into Total ROI, it will take forever to analyze properties.

Here's the thing. When you have rental property, you will have the ability to itemize the expenses for the upkeep, utilities you pay, general maintenance, property mgmt fees, mortgage interests, and other misc. expenses.

On top of that, you also get to use depreciation over 27.5 years. So, depending on the scenario, you usually don't pay taxes on the passive income as long as you have enough expenses and depreciation to itemize. Then you only have to worry about taxes when you sell it or when you no longer have depreciation.

Since everyone assumes the ability to show a net loss on rental properties, it's not really worth digging into Total ROI to determine if a property deal is good or not.

Vacation rentals are still fine as long as you only personally use it no more than 14 days of the year. If you stay in there longer than that, you'll be able to deduct expenses associated with the rental income, but you can't show a net loss on your tax filings anymore. You're just trying to earn a little income to offset your vacation spot.

On your other topic, yes, Equity Accrued is the equivalent of paying down your mortgage every year.