Why Own Investment Property — Example Return Analysis
An Investment in income property from RBS Homes provides considerable return on investment, as shown below. When reviewing financial information, remember that this analysis is an estimate only. Do your own homework to verify information presented by any seller or service provider.
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ROI Analysis for Summit Lodge, Houston, TX |
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|
Item |
Annual Amount |
|
Rent |
$14,400 |
|
Expenses |
|
|
Mortgage Payment |
depends upon purchase financing. See below. |
|
Property Mgt. Fee (8%) |
First year prepaid by RBS Homes |
|
Insurance |
$800 |
|
Utilities |
Tenant Paid |
|
Lawn Care |
Tenant Paid |
|
Maintenance (est.) |
$200 |
|
Property Taxes (est.) |
$2,150 |
|
Total Expenses |
$3,150 |
|
Net Income |
$11,250 |
|
Estimated Return on Investment (All cash purchase) |
|
|
Purchase Expenses (est.) |
$1,500 |
|
Cash Invested |
$121,400 |
|
ROI (forecast) |
9.3% |
|
Estimated Return on Investment (25% down payment) |
|
|
Purchase Expenses (est. financed in loan) |
$3,500 |
|
Cash Invested |
$30,350 |
|
Mortgage Payment (5.25%, 30 year fixed) |
$6,191 |
|
Net Income |
$5,059 |
|
ROI |
16.7% |
Comparison to the S & P 500 Index
Over the past twenty years, ownership of single-family detached homes as income property has exceeded the financial performance of the S & P 500 Index. In the decade of the 2000's, the return of the S & P 500 Index was actually negative, not even including any transaction costs. In comparison, selected income property (single-family detached homes) in Houston provided 15%+ annual cash return plus annual appreciation over 4.3%. See the comparison.