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Calculating First-Year Net Profit: A Practical Example

Calculating First-Year Net Profit: A Practical Example

Purchase cost: $200,000 Additional purchase costs: $15,000 Renovation cost: $10,000 Total investment cost: $225,000

Total income:

Annual rent: $18,000 Apartment appreciation: $200,000 × 5% = $10,000 Total income: $18,000 + $10,000 = $28,000


Annual total costs:

Maintenance cost: $1,500 Net annual profit: $28,000 - $1,500 = $26,500


Based on this calculation, the net annual profit from this real estate investment scenario is $26,500.


It's important to recognize that this example simplifies the calculation process, and there might be other factors like taxes and additional costs not explicitly mentioned here. Moreover, actual returns and costs may vary from the estimates used in this example due to real-world conditions and market developments.



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