Anonymous
Anonymous asked in Business & FinanceRenting & Real Estate · 6 months ago

When calculating the ROI of a property rental which you have bought outright without a mortgage, do you use the current property valuation?

Or do you calculate the ROI of such a property by calculating the initial purchase price of the property?

Say you bought a property 5 years ago for $150,000 and now it is worth $200,000, which figure do you use when calcultating the rental ROI of this property?

3 Answers

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  • 6 months ago

    What you actually paid. Of course, the increased equity is part of the ROI.

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  • 6 months ago

    You also have to include the net rental income you received.

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  • 6 months ago

    Use the current value.

    But unless the property doubled in value in 5 years, it's highly unlikely that you have a positive ROI for a property you paid cash for after 5 years.

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