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# Hassle-free Cashflow Minute Lesson 2: Using ROI

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Learn the math behind solving for "return on investment". Real estate investing can be profitable AND hassle-free. To learn more, you can watch a video of this presentation at:

http://hasslefreecashflowinvesting.com/investor-education-videos/

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### Hassle-free Cashflow Minute Lesson 2: Using ROI

1. 1. Hassle-free Cashflow Minute Lesson 2: HOW and WHEN to Use ROI Investor Educational Series by Professional Investor / Developer David Campbell www.HassleFreeCashFlowInvesting.com ©2011 All Rights Reserved
2. 2. Extension of Ideas from LESSON 1ROI = Profit / Capital Invested www.HassleFreeCashFlowInvesting.com
3. 3. Annualized ROI = ROI / Years Also expressed “ROI per year”www.HassleFreeCashFlowInvesting.com
4. 4. CASE STUDY: (Annualized ROI = ROI / Years Invested) When to solve for annualized ROI? * apples to apples www.HassleFreeCashFlowInvesting.com
5. 5. CASE STUDY: (Annualized ROI = ROI / Years Invested) ROI = 25% Years Invested = 6 months 6 months / 12 months per year = 0.5 years 25% ROI / (0.5 years) = 50% ROI per year www.HassleFreeCashFlowInvesting.com
6. 6. Manipulate the AlgebraROI = Profit / Capital InvestedProfit = ROI x Capital InvestedCapital Invested = Profit / ROI www.HassleFreeCashFlowInvesting.com
7. 7. CASE STUDY: (ROI = Profit / Capital Invested)When to solve for ROI? * step prior to annualized ROI www.HassleFreeCashFlowInvesting.com
8. 8. CASE STUDY: (ROI = Profit / Capital Invested) Profit = \$25 Capital Invested = \$100 \$25 / \$100 = 25% ROI www.HassleFreeCashFlowInvesting.com
9. 9. CASE STUDY: (Profit = ROI x Capital Invested)When to solve for Profit? * budgeting* deciding if a deal is worth effort* dividing funds between partners www.HassleFreeCashFlowInvesting.com
10. 10. CASE STUDY: Profit = ROI x Capital Invested ROI = 25% Capital Invested = \$100 25% x \$100 = \$25 profit www.HassleFreeCashFlowInvesting.com
11. 11. CASE STUDY: (Capital Invested = Profit / ROI) When to solve for C.I.?* allocation of investment capital* need based reverse engineering www.HassleFreeCashFlowInvesting.com
12. 12. CASE STUDY: Capital Invested = Profit / ROI ROI = 25% Profit = \$25\$25 / 25% = \$100 Capital Invested www.HassleFreeCashFlowInvesting.com
13. 13. David Campbell \$500 million of real estate experience real estate investor / developer houses / apartments retail / office / land / resort condos / condo conversion financial strategistwww.HassleFreeCashFlowInvesting.com