All Forum Posts by: Danny Garcia

Thanks!

I'm looking at a buy and hold strategy for a rental property.

Apologizes if this has been answered but I couldn't find anything posted. My question is, how do you properly calculate ROI?

For Total ROI, is it just the total return in dollars divided by the down payment amount (equity) or should closing costs and improvements also be included in the denominator?

Same question for cash ROI. Is it remaining-cash-flow-from-operations/down payment?

Or 

remaining-cash-flow-from-operations/(down payment + closing costs + improvements)?

It seems you should include closing costs and improvements since that's cash coming out of pocket in order to acquire the investment, but many examples I've seen have skipped it. 

Thank you!