# Look at numbers: Return on Investment

The simplest way of calculating the Return on investment is: Rental income / House value.

For example: at Sensato Living, rental income is around US\$1000/week, assuming 50% of the time the house is owner occupied, the total rental income for the year is \$30,000. Assuming the house value is \$200,000, the return on investment is 15% (\$30,000/\$200,000).

In Calgary, rental income is around \$1500/month for a half million dollar house, the annual rental income is \$18,000. The rate of return is 4% (\$18,000/500,000).

The actual rate of return is bit more complicated than than mainly because:

1. In Mexico, the cost of owning a rental property is much lower than in Calgary: Property taxes is 30% of what is in Calgary, utilities is 30% of what it is in Calgary.
2. If you deduct the cost of owning a rental property from the rental income, that is your new income from the rental property, then divide by the price of the house, that would be the true rate of return on your house.
3. Use net rental income to calculate the rate of return on one house at Sensato Living, it’s 13.4%; while for house in Calgary, that number becomes 1.4%.

I believe my math is correct but please go do your math and let me know if you get the same results.

Thank you and happy investing!