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53 thoughts on “R.O.I. Is THE Most Important Thing When Buying Rental Real Estate

  1. So does that mean at $700.00 the rental would have to cost around $50,000 so your ROI would be about 10% 10.08 or so.

  2. Excellent video, thanks Morris.
    and .. playing with the formula…we may use the 72 value:

    Minimal Rent Required for 10% ROI = Purchase price of the House/72

  3. Do you look at the net rent vs current property value ratio too? I see a lot of CITES property value go up very fast but the rent is not synchronized much. For that, do you think it is building bubbles?

  4. But what if you're only putting 20 percent down payment? Your ROI would be much higher, no? Because then for instance for a $40k house, you invest only $8000, and say you get 600 monthly rent. ROI would be about 54%?

  5. Great video. I really liked your rule of thumb advice on having at least 10% net ROI for the properties. I am wondering does the same goes for California market as well. As you know a typical 1-2 BR property in the California coastal cities sell for upwards of 500-600K and usually rent for about 2.5-3 K, which is about 4% net ROI. IMO, most people buy these properties anticipating the 3-4% annual appreciation of property value to get them to 10% ROI range eventually. Should I stay of this market altogether and look into other states or areas?

  6. Hey Morris love the videos. Awesome information. I have a question about the ROI. Do you take the mortgage out when you account for 10% return or is it included with it?

  7. im sure you have gone over this a few times but i can't find it. how do you figure out the ROI if you don't have anything into the home? example if i buy a home under value and rehab it and then refinance it and i end up having little to no money of my own in it. how then do you calculate roi? the home would have a payment and maybe some of my own personal money into it
    buy a home for 50,000 put 30,000 into it home appraises for 100,000 i do a HELOC and get 75,000 back i would only have 5,000 into it of my own money. Heloc at 4.75% thats $3562 a year in interest and 5000 of my own money the home should bring 800 a month and it will have all new major systems in the home
    thanks jon !!!

  8. I like this and use it to calculate what my rent should be for an apartment. Calculating rent can be done by reversing the formula. Then I look at the number and see if it works for the place and is it comparable to the area.

  9. Hi Morris i just saw few of your videos. You definitely give great suggestions end it's easy to see how much you are passionate about it. Unfortunately is not possible to apply them here where i live. In Australia in fact there are no property at allfor 40 or 50 k.

  10. I have a question and its been on my mind for a while now, im 21 and buying into my first property now im looking into a $60,000 home it has 4 rooms 1.5 baths now should i buy my first single family home as a rental property or should i live in it for a year as a home then rent it?

  11. ROI…I haven't seen a YouTube on reducing property taxes by filing a complaint against the valuation. Every county's auditor has a Board of Revisions. I do it on every purchase and it has saved me a lot of money… The county has the property valued at $80k and I purchase it for $40k . They want a form and settlement statement and WaLa my ROI instantly increases.

  12. Clayton, can I use this formula from the current principal bal on my mortgage? Even tho it's not from the original purchase price(bc it's been paid down).

  13. There is no calculator. For a house of 100k buying using credit with a downpayment of 50k. How dow you calculate the ROI?

  14. Clayton, I've emailed you and tried reaching out.

    I'd like to send you my free book and tell me what you think.

    I feel there's no way to contact you. Reach out!

  15. Does the same formula applies to a property that is mortgaged with a 40% downpayment and the 60% being mortgaged. Or just use the 40% as the basis for the property price since the balance will be paid by the tenants.

  16. Is Buying cash on cash the only way to get 10% to 12 % net Having a mortgage on the prooerty lowers roi to 10% gross and 6% net . It wouldnt be worth it right ?

  17. Just made a spread sheet to track this. I'm now monitoring the ROI based off the total cost of the property and the total original investment.
    if your just going off of what you put down the ROI is crazy HIGH!! thanks for the info will be binge watching your channel. this info is too good!!

  18. Define House All In. Does that include holding costs, closing costs, repairs, etc? I need to know what you add to get your house all in number.

  19. Hi Clayton, Long time viewer here. Thanks for all your hard work making these videos! What are your thoughts on Rochester, NY properties and do you think your ROI formula should work on most properties there? I'm a little nervous that the cost of maintenance may be higher than usual since most homes there are very old. However, the market is very affordable to enter, the rent price to home price ratio seems high and it's reasonably close to where I live (Boston), which would be ideal for my first property.

  20. How can I calculate the ROI on a house I currently own? I charge $1700 for rent. We paid $155k (plus $10k upgrades) 3 years ago. It’s now worth $225k. Thank you for the video!

  21. If you were to purchase a house with a credit card how would you calculate a monthly credit card payment

  22. Your numbers used, if I'm seeing them correctly, are $700 on a $40,000 investment. Given the scenario you are showing 12.6% ROI. That's nice but it's just speculation unless you show actual expenses. Things like taxes, mortgage payments, insurance, PM, utilities etc as applicable. I have several SFRs and on $40K invested in each my ROI is usually between 5 and 6%. I'm still making money, but dang 12% would be real nice! Now if I removed property management I would be in the region of 10%. And that's got me thinking…

    Hey thanks for the video, much appreciated!

  23. Hi Clayton, how do you balance between the location of the property and the ROI? Usually properties in better locations have lower ROI

  24. I want you to help me find my first investment property! You know exactly what to look for and what to look out for and I don’t have the experience. Is this something you can assist with?

  25. Why does no one include house appreciation or atleast the concept that it exists?! Loot yah you have monthly rent income but you also have to account for appreciation of property value

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