How do I calculate the return on investment (ROI) for a rental property?
How do I calculate the return on investment (ROI) for a rental property?
To calculate the ROI for a rental property, divide the annual net income by the total investment cost and multiply by 100. For example, if your property earns $15,000 annually after expenses and your total investment (purchase price, renovations, and closing costs) is $200,000, the ROI is 7.5%. Be sure to factor in all costs, including property management fees, maintenance, and potential vacancies, for an accurate calculation. Comparing this ROI to other investment opportunities helps determine if the property is a worthwhile investment.
