I like the DRIP plan because its important to start when you are young because you have plenty of time to let it grow, However if you have means of a high cash flow, it would be interesting to see how leveraging it would be with a mortgage, and getting a mortgage for me now shouldn't be hard considering i have assets, and could front a healthy down payment. my biggest hindrance in pulling the trigger on getting a mortgage is my location, there is something that frightens me about buying a home from a city 100's of miles from my home. maybe along the lines of lack of control, as in if something happens i can't be there right away kind of thing.

dude, you are legit retarded.

In post 392, I include both leveraged and un-leveraged examples.

The sooner you admit you know nothing and know your role, the sooner you can learn from us, and maybe you will amount to something more than a paltry net worth $500k at 42 after years and years of investing.

edit - stop speculating what the bank would think, have you ever dealt with a bank? they don't give a F what your yield is. All they care about is establishing a reliable value for the property so in the event you can't service the loan, they can sell it to recoup the loan (thats why they make you get a certified valuation) and then secondly, verifying you can service the loan.

Do you really know how leverage works? you don't. It multiplies your returns. Do everything right and you will get double digit returns, 25, 50%. Do it wrong (ie miss a few weeks occupancy, maybe have to replace the roof or something) and get hugely negative ROI's.

You said you where on min wage jobno offence dude, but min wage job strongly strongly correlates with low education. No wonder you have such a hard time grasping these concepts.

Now your'e using semantics as the basics for your argument. Yes you might find ROE and ROI defined differently if you look hard enough on the internetz, but you by large the investment part of ROI defined as the amount you put in.

Think of it another way, its like going 50/50 with someone on a 200k house that you plan to rent out. Your partner might tell you "spare me the drama and the ups and downs - you manage it, just give me a 5% return on my money, if you do better than that you can keep the profits.".

You both put in $100k. Your investment is $100k. Its not $200k like you seem to think it is, its $100k.
If you get really good tennants, keep maintenance costs down and make $20k. What is your ROI?

You seem to think is calculated as $20k / $200k = 10%. Its not. Thats what it would be unleveraged, if you where in it 100% yourself

Your ROI is on the money you put in. You put in $100k, You get $15k back after paying your friend $5k. Your ROI is 15%.

Now lets say you have it vacant for 8 months and thus the rent is $6k. You pay your friend his 5% = $5k. You get whats left. $1k. Your ROI is 1%. Its not 3% ($6k/$200k) - thats what it would be if you where in it 100%. This is what leverage does.


This is exactly the same as what happens when you borrow from the bank. Think of it as a business partner that wants a set guaranteed return.

I know you are poorly educated, but there is no excuse to be this ignorant of basic concepts.

I don't wanna call myself an expert on property investment


but I'm an expert on property investment.


I can take you though the pros and cons of property, using leverage, buying for yield vs cap growth.


I have looked at literally 1000's of properties, done detailed due diligence on probably close to 100, and brought and sold a handful in the 15 years I have been property investing.

Post 392
"Lets look at how much you invested - how much of your own money you put it. This was $12,000. You get back $2,880 each year. So, by using leverage (ie the banks money at 4% to fund most of this project), you have multiplied your ROI. Your ROI here is $2,880 / $12,000 = 24%."

This is RUBBISH

You have included the mortgage payment as an expense that affects your roi, and yet somehow not included the 48k as part of the value of the investment.

That makes NO sense. ZERO. Why not just borrow another 11k so you have just 1k of your own money invested, then tell the bank, or us, your roi is 200%. Or more. Brb 100% mortgage, none of your own equity, brb INFINITE roi!

Hahahahahahahaha

Everything you have typed since that post is just trying to weasel out of what you know is wrong. Sadly you are not enough of a man to admit that, and just resort to abuse 'you don't understand leverage only 500k net worth ' etc etc

I'm not rich and never claimed to be. The only relevance of my net worth is in relation to what I have earned over 20 years of mostly minimum waged employment. 99% of people who have earned similarly over the years have close to no net worth AT ALL. I used leverage on my first two properties and in my business, and couldn't have done it any other way.

Be a man. Correct your post 392. Never had a problem with a kiwi before, always found them to be proper men who know what's right and what isn't. You are the first I've known that doesn't, congratulations.

dude, you really are clueless.

in fact, google 100% mortgage, they do (or at least did) exist.

your'e actually retarded. like legitimately.

Can you, for the entertainment of the misc, do an ROI calculation on the following.

Property Price $500k
Funded by in investor deposit = 25%
Mortgage 75%
Mortgage annual interest rate 5%

Weekly Rent $800.

Can you tell us what the ROI on that is? Show us all... show that miscer who called you financially illiterate that he was wrong!

Not looking up exact figures but 375k at 5% is about 1700 pcm.

Rent about 3400pcm

So roi is 3400k * 12 (40,800) minus mortgage (20,400) = 20,400, then divide into the cost of the house (500k) so about a 4% roi.

According to your post 392, however, the value of the house is irrelevant (lol what) it's merely that same 20,400 divided into what you put up (125k) or about 18%...

Sick of you now, so I'll make you a bet. Go into a bank, film yourself, go up to a mortgage advisor, tell them you want to buy a property, and that you already have a property letted out with a 100% mortgage. When they ask you the roi, I want you to tell them:

'It's infinite!'

If you do this, I will take a perma ban. Srs.

The grizzly guy is right

If parents gift your deposit and the rest is mortgaged, your ROI is infinite because you haven't invested anything (and assuming the appreciate covers the interest cost)

Link me to any serious financial website, anywhere, that says that. Rep for life.

Just the simple formula?

ROI = (Net Profit / Cost of Investment) x 100

Inputting the numbers if profit is positive ie=1, then 1/0 is infinite.

What I'm getting at is the cost of investment to person A is zero since it's a gift hence the ROI to A is infinite (infinite gains over zero cost) The cost of the mortgage and the interest (liability) is offset by the current value of the house (asset) and the future interest is offset by the appreciation in value.

This is probably not what started the argument but just replying to the scenario a few pages back. Also if its not a gift this obviously doesn't hold.

if i have 10 bucks and i borrow 90 bucks to buy a 100 dollar asset, then sell it for 200 bucks. what is the return on my initial 10 bucks? for simplicity, assume immediate flip so no interest cost.

Because that is relevant to buying a house over 25 years with a mortgage you pay interest on..

well yes, most people sell their homes well before their mortgages are fully paid off.

Assuming you pay the loan back immediately after the return?

200 - 90 = 110
10 > 110 = 1000% ROI

Post 426. Using his example WITH a mortgage

I am talking about ROI on THAT investment - I'm saying that including unused equity in the calculation results in the exact same error as including borrowed funds for ROI.
You can name-call if it makes you feel better but your math is still wrong. It's obvious if you take the argument to it's logical conclusion. Say you have $100,000, property cost A is $100,000, property cost B is also $100,000, rental income is $10,000 for either property, and simple interest is 5% due at year end.

Scenario 1: Invest all $100,000 into property A, receive $10,000 income.
Property (A) ROI = $10,000/$100,000 = 10%
Total Return: $10,000

Scenario 2: Borrow another $100,000 and invest in both properties
Property (A) ROI = ($10,000 - $2,500 interest)/$50,000 = 15%
Property (B) ROI = ($10,000 - $2,500 interest)/$50,000 = 15%
Total ROI = ($20,000 - $5,000 interest)/$100,000 = 15%
Total Return: $15,000

ROI of A is the same as B is the same as both. And itremains the same even if you didn't invest in B.


It makes zero sense to include the principal of the borrowed funds because it's not your money and not your costby definition, and the implicit assumption is that when you do have to pay back the principal, you can simply sell the property and do so.

Yes, in the real world there's risk and transaction fees and yadda yadda, but that is a completely DIFFERENT discussion than just the ROI.
.... Well, yeah, that would be infinite ROI and a great idea if you could tolerate the risk. That's the risk/reward part of leverage, otherwise why would anyone do it if they could self-finance?

How ROI is calculated depends on the situation. samsbolton found some definition that would be used by financial analysts and tried to apply it to real estate. That is wrong. Including the loan value in the cost of investment is useful when comparing how effective corporations are with their money, but for real estate purposes the cost of investment is what came out of your pocket to purchase the property.

lol, you just embarrassed yourself.

tell me, why are you including mortgage payments, if you include the full cost of the investment at $500k. If you fully funded the full cost of the investment (ie the "Investment" part of the ROI), then why do you have a mortgage at all, if you fully funded it?

Not to mention you are including capital payments on the mortgage instead of just interest. You are treating capital payments like the are an expense. They are not. They are building equity.

The thing is here Sam, you are not only dumb, you are next level dumb. Not just dumb enough to realize "oh right I am wrong, I see that now, thanks for educating me", nope, you are so dumb, you can't even see why you are wrong.

Like in this example, if you use $500k as the value in the ROI calc, its means you have funded the whole thing yourself, so then why are you including mortgage payments???????

dude he won't understand that. He said before he has a minimum wage job with minimal education. Hes stupid, but actually next level stupid because he can't see why hes wrong, even when its flashed in his face in the most obvious plain as day examples

this explains so much

Howd you get into this? Where did you buy your machines from? All drink vending or different products?

Lol. OP is a civil servant. shocker. the only people in cuckada making any money.

must spend 60-70 hours a week to make that kind of OT in the chithole hospital breathing in the smell of old peoples chit. just saying.

surprised ashin didn't mention the ultimate passive income machine in cuckada.

be a Syrian refugee, have 10 kids. profit.

70k a year passive income. hours worked: zero.

Did not read

Hawking wrote the entire history of the universe without a single equation

Your first paragraph makes no sense. Read it 3 times. In the uk it's the overall cost of the mortgage including principal repayment that is the basis of your roi, don't know why. Wouldn't argue with anyone who only counted the interest, just the way we do it.

So you haven't found a single source to say you don't include borrowed funds, and you won't film yourself telling a mortgage advisor you have an infinite rate of return, even to get me perma banned. You can keep posting silly gifs as if you have proved something, you aren't impressing anyone.

Playing the man and not the ball always mean you have lost the argument. You can't provide any evidence from anywhere on the entire internet for anything you have said. I have linked you to my source and could link a dozen more. Get stuffed.

bSam, I know you're fn stupid, you keep proving this again and again. But at least give me a glimmer of hope....

Can't you see how wrong you are? - if you use 500k as your investment, then you don't need a mortgage - you have fully funded it yourself.
So why then are you also including mortgage costs? - if you fully fund it, you don't have a mortgage.

And don't use this "it's how we do it in the UK" thing, I worked in the UK 2.5 years. It's not the "UK" , it's you - you don't understand basic financial concepts.

Everyone in this thread is telling you you are wrong and mocking you. I made you do that ROI example cause I knew you had no idea how to do it lol.

I think the answer to all of this is to look at it like this:

Whose money is it

What is the ROI on each persons money

Ie
Parents give Ashin "the disappointment" Simpson 50k. ROI on the 50k is whatever, didn't read, say 10%.

Ashin has a mortgage to pay 25k off, whatever amount, didn't read.

His return is only 5% or whatever, due to interest costs.

His parents give "the disappointment" their ROI as a gift. (Yes it's in his name makes no difference).

"The disappointments" total ROI (including the gift) is therefore 8.7%

Simple really.

Lol I had no idea people where this fn stupid.

Retard miscer pops into a thread and comes up with his own way to define ROI.

No wonder so many of you are broke paycheck to paycheck peasants trying to look the part but with debt up to your eyeballs

What is this 'don't need a mortgage ' rubbish? What post did I say that in?

The only thing you are measuring with your (made up, can't be referenced anywhere on the entire internet) method of calculating roi is.. how leveraged you are. So what? I have an 80% mortgage. I have a 60% mortgage. WHATEVER. Your method doesn't tell you anything at all about the profitability of an investment which is the whole friggin point..

Twat.

lmao you are an absolute retard.

You strongly strongly imply your example uses a mortgage, BECAUSE YOU INCLUDE MORTGAGE PAYMENTS.your "investment" is what you put it. There are no 2 ways around this.

If your investment, as you defined in your "ROI" calc, is $500k, then you have paid for the whole thing yourself. You therefore don't need a mortgage.

So I ask you again, you minimum wage, poorly educated bum, if you fund the whole thing (the whole 500k yourself), then why do you need a mortgage? why have you included it in your ROI calcs???

If you fund the whole thing yourself, the whole $500k yourself, then you don't have mortgage costs. You simply have the 800 per week rent / the $500k = 8.32%

But for some reason you have put mortgage costs in there. You deduct non existent mortgage costs off the rent for some reason.

You're poorly educated ass is so confused and embarrassed by this thread, you do the investment part as though its funded outright (no leverage) but then do the cashflow part as though it is (by including borrowing costs - and you even get this wrong, only the interest component is a borrowing cost).

Mortgage costs = borrowing costs, which you only have, if you have a loan. You do not have a loan, if the property cost $500k, and your investment in it is $500k - this mean you brought the whole thing outright.

Are you really this fn dumb? I know your'e min wage, but this is beyond comprehension of financial principles, its going into simple logic now.







Jokes bro I'm toying with you now, I acknowledge your IQ is probably bottom 10th percentile, and that you don't understand a thing I am saying.