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John Marion is a Real Estate Agent with REMAX Town & Country in Canton, GA

Real Estate Investing ROI

Calculating Return On Investment in Real Estate Investment Deals


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Other People's Money - OPM

Real estate investors look for the return on investment when evaluating a potential deal. Here is how the ROI is calculated.

Real Estate Investors like to use Other People's Money (OPM) in order to get into a deal. OPM can be money from private lenders, hard money lenders, or a bank loan.

The goal is to get into a profitable deal with as little of your own money as possible and to maximize the return on investment of your own out of pocket money.

A Buy, Rehab, and Resell Investment Example

Here is a real example of a deal an investor was in for 3 months in Ball Ground, Georgia. The numbers are typical of the deals beginning investors are getting into in the North Metro Atlanta area.

The investor bought a house with $13,520 of his own money toward down payment and closing costs. The rest of the money needed to fund the deal came from a bank loan. The investor made some minor repairs to the property, rented it out to a lease purchase buyer and sold it after owning it for only 3 months.

His additional expenses during his holding period totaled $1,246 so his total out of pocket expense were $14,496.

At the resale of the house, the investor paid back the bank loan, paid a commission to the real estate agents received all his money back PLUS an additional $3,701 which was his profit.

How to Calculate Return On Investment

The ROI in the above example is calculated by dividing the amount of profit ($3,701) by investors out of pocket money ($14,766):

$3,701 / $14,766 = 0.25 = 25% ROI

The annualized return on investment is 100% (25% divided by 3 months x 12 months).

This is a Great Deal!

The above example is a great deal and is typical of the returns beginning real estate investors are getting on their money in North Metro Atlanta. Often deals can be found where the ROI is much greater.

Get Started Investing in Atlanta Real Estate Today

Is your money sitting in a bank account getting little interest?

Do you want to get started investing in real estate?

Contact me today to begin the conversation of how you can get started investing in real estate for a good Return On Investment.

The funds needed to get started are about $10,000 for a small deal like the one described above.

And of course there are plenty of opportunities to get a great ROI on larger amounts of money secured by real estate investments.

My cell phone number is 703-371-9548. Feel free to call or text me to begin the real estate investing conversation.

 

John Marion is the agent who buys houses in Cherokee County Georgia and throughout North Metro Atlanta
Call or TEXT John @ 703-371-9548