ROI mortgage calculator
ROI mortgage percentage
To calculate the ROI (Return on Investment) percentage for a mortgage investment in a rental property, you can use the following formula:
ROI % = (Net Annual Income / Total Investment) x 100
- Net Annual Income = Annual Rental Income – Annual Expenses (including mortgage payments, property taxes, insurance, and maintenance costs)
- Total Investment = Down Payment + Closing Costs + Renovations + Other Expenses
Here are the steps to calculate the ROI percentage for a mortgage investment:
- Determine the Net Annual Income by subtracting the Annual Expenses from the Annual Rental Income.
- Determine the Total Investment by adding up the Down Payment, Closing Costs, Renovations, and Other Expenses.
- Plug the values into the formula to calculate the ROI percentage.
For example, let’s say you purchase a rental property for $300,000, put a 20% down payment of $60,000, and spend $10,000 on closing costs and renovations. The property generates $24,000 in annual rental income, and the annual expenses (including the mortgage payments, property taxes, insurance, and maintenance costs) total $16,000.
Net Annual Income = $24,000 – $16,000 = $8,000 Total Investment = $60,000 + $10,000 = $70,000
ROI % = ($8,000 / $70,000) x 100 = 11.43%
Therefore, the ROI percentage for this mortgage investment in a rental property is 11.43%.