ROI - Leverage
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Provided by Jed Wunderli of Noble Home Loans
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702-812-1214
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With Mortgage
No MortgageLeveraged*
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Purchase Price: $ 200,000.00 $ 200,000.00 $ 1,000,000.00
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Down Payment %:20%100%20%
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Down Payment $: $ 40,000.00 $ 200,000.00 $ 200,000.00
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Closing Costs: $ 4,800.00 $ 2,000.00 $ 24,000.00
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Investment Amount:
$ 44,800.00 $ 202,000.00 $ 224,000.00
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Loan Amount: $ 160,000.00 N/A $ 800,000.00 25% $ 146,400.00
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Interest Rate:5.125%N/A5.125%28% $ 223,050.00
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Loan Term - Months:
360N/A360
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P & I Payment: $ 871.18 N/A $ 4,355.90
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Property Tax: $ 153.33 $ 153.33 $ 766.67
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Hazard Insurance: $ 58.33 $ 58.33 $ 291.67
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Total Monthly Pmt.: $ 1,082.85 $ 211.67 $ 5,414.23
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Rental Income: $ 1,400.00 $ 1,400.00 $ 7,000.00
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Management Exp.: $ 140.00 $ 140.00 $ 700.00
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Net Rental Income: $ 177.15 $ 1,048.33 $ 885.77
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Annual Appreciation:
4%4%4%
Gain from Leverage:
Rental Income by Year
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Home Value - Year 1:
$ 208,000.00 $ 208,000.00 $ 1,040,000.00 $ 8,049.25 w/Mortgage
Net w/Mortgage
No MortgageNo Mtg. NetLeveraged
Leveraged Net
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ROI:22.602%10.188%22.602%2 $ 1,442.00 $ 219.15 $ 1,442.00 $ 1,090.33 $ 7,210.00 $ 1,095.77
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Home Value - Year 2:
$ 216,320.00 $ 216,320.00 $ 1,081,600.00 $ 39,378.50 3 $ 1,485.26 $ 262.41 $ 1,485.26 $ 1,133.59 $ 7,426.30 $ 1,312.07
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Home Value - Year 3:
$ 224,972.80 $ 224,972.80 $ 1,124,864.00 $ 74,038.95 4 $ 1,529.82 $ 306.97 $ 1,529.82 $ 1,178.15 $ 7,649.09 $ 1,534.86
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Home Value - Year 4:
$ 233,971.71 $ 233,971.71 $ 1,169,858.56 $ 106,083.85 5 $ 1,575.71 $ 352.87 $ 1,575.71 $ 1,224.05 $ 7,878.56 $ 1,764.33
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Home Value - Year 5:
$ 243,330.58 $ 243,330.58 $ 1,216,652.90 $ 141,568.58 Total Net Income: $ 15,822.73 $ 68,093.48 $ 79,113.66
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Stagnant Inc.
w/Increase Inc.
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Total ROI w/Leverage:
120%132%
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Total ROI w/Cash:53%55%
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Net Benefit w/Leverage:
$ 141,568.58 $ 162,342.50
vs. Cash
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Annualized ROI - cash:
8.656%9.044%
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Annulized ROI - leverage:
15.967%17.221%
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Tax Considerations:
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Straight-line Depreciation:
$ 7,272.73 $ 7,272.73 $ 36,363.64
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Tax Bracket:25%25%25%
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Net tax benefit: $ 1,818.18 $ 1,818.18 $ 9,090.91
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Benefit of Leverage vs. Cash Per Year: $ 7,272.73
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There will also be a substantial tax benefit for the mortgage depreciation expense.
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