Example 2

 

3 Bed Terrace house purchased for £190K would require £74 150 from the investor to purchase and cash flows £1180.42 per month after all costs.

Key performance stats

ROCE : 19.10%

ROCE plus growth predictions = 31.92%

The magic happens after 6 months  when we go back to the bank and have the property refinanced at its new value.  In this case the value came in at £220K which means we are able to pay down the investors loan to £51 650 whilst the property is still generating a whooping £1124.17

Key performance stats

ROCE : 26.12%

ROCE plus growth predictions = 47.42%

Overtime as the investors loan is repaid the ROCE increases until we are earning an infinite return and the investors loan is paid back in full.