How To calulate ROI or Yield - Posted by Paul Stryer

Posted by Lonnie on September 03, 2003 at 07:49:34:


Go to the ?How To Articles? section. My article ?How To Work A Financial Calculator? will explain it all.

Best wishes,


How To calulate ROI or Yield - Posted by Paul Stryer

Posted by Paul Stryer on September 03, 2003 at 07:01:56:

I have read Deels On Wheels and no where does he tell you how to calulate all the info in his little charts. So I went on line and found out how to calulate ROI (cost/sell price)x 100 and that is what I have been doing with all my deels.

I went back and tried this fomula on Lonnie’s deels in his book and none of them came out to his number with my formula. Can some one tell me how he does this as well as how I should be calulating it

I have done 5 deel in my first month and all of them are from 350% to 577%

Here is one deel.

Bought home for 5K
Sold the home for 20K
Downpayment was 3K
Plus about 350 on other expenses

So what is my ROI on this deel

thanks Paul

Re: How To calulate ROI or Yield - Posted by Jeff_AL

Posted by Jeff_AL on September 03, 2003 at 15:24:41:

Paul, you are missing some important points the way you are calculating. First, your calculation does not account for any interest that you earn. Second, since you are getting a return of your capital in the form of monthly payments, as time progresses you have less and less invested because of this return. What Lonnie is figuring is the true YIELD on your investment by accounting for these items. First you should input the sales price minus the down payment into th PV field. Next enter the interest rate divided by 12 into the I field. Enter the time in months into the N field. Press PMT to figure the payment amount. Now, take the total of all monies that you have invested including repairs, lot rent, etc. and subtract the amount of the down payment received. Place the result in the PV field. Finally, press the I key to figure your yield. Multiply this amount by 12 and that will reveal your annual Yield. I was going to run the figures for your comparison, but you failed to list the interest rate you were charging and the number of months. Hope this helps.