I've done an analysis with the following assumptions:

-$250k investment

-$1000/month rent

-10% operating costs + 1 month's rent (to represent the amount of time the place is vacant), on average

-25% marginal tax rate

-2.5% avg rate of inflation

-30% Land value

-4% discount rate (this should capture the cost to borrow money and the opportunity cost of leaving it invested in the boring stock market)

So, I did a 30 analysis (years 0 - 29). I depreciated the home on a 27 year schedule (I know it is technically 27.5 yrs). The home's value raised with the rate of inflation (may or may not be a good assumption). After 30 fun years of landlording, the home is sold, depreciation is recaptured and proceeds are taxed at LTCG.

The numbers pooped out:

-$418k discounted NPV

-$607k undiscounted NPV

-1.67 discounted ROI

-2.42 undiscounted ROI

So, these numbers are hardly anything to get exciting about. If my assumptions are correct.

I would first like to

**ask the community if they see any flaws analysis method?**I figure most people, if they put $50k down on place would calculate ROI based on that, and not the entire $250k invested. And perhaps the analysis should reflect that since an avg joe/jane couldn't borrow another 80% to invest in the stock market, but let's discuss that and I plan to eventually put that analysis together as well.

I know home values and rents vary market to market. Tax rates vary as well. I will generate type curves if the analysis above seems reasonable.

Thoughts?