How Do Simply Do It Calculate the TOTAL ROI
How ROI is calculated?
We use 3 factors to calculate the ROI:
- Net cash flow
- Minimal appreciation rate (4.5% to 5% per annum)
- Mortgage principal payoff
As a baseline for calculation, we use your total cost of purchase – not just the down-payment.
We also measure performance over 5 and more years, i.e. how the property will perform over the next 5+ years and not just over the first 1 or 2 years.
Once we have the 5-year performance, we draw annual averages.
To make sure of accuracy, we try to use realistic numbers and not miss any factors. This means we factor management fees, HOA, repairs, insurance, property taxes, and vacancy.
We have a full Excel we sell online with a tutorial that explains the analysis in full detail.