On one hand I look at a property like this. I paid $33,000 for a two unit and I put $8,000 into it. I found it now nearly 20 years and it has been paid off for almost 10. The money that I put into the two unit has cash flowed however now the property is worth over $200,000 and am I getting enough cash flow for it based on the $200,000 profit? In other words I need to make 10% or more to make it worth the risk I have owning a property and the work I have because it's not passive. On one hand I can look at the return based on the initial investment plus rehab and say that I'm earning a super high return, on the other hand I could say if my property is worth over $200,000 I could net $200,000 selling it and make 10% on average in mutual funds that's how I look at property I know many landlords don't but I've been doing it 26 years and I want to know what you think of this do I base my profits on what I paid for it years ago or do I base them on the fact that it is worth over $200,000 now to consider my net return I'm trying to wealth not just live a lifestyle

Nothing unusual about your analysis. It's called "return on investment" compared to "return on value."

You are making some good analysis, providing you paid cash for the place. Where you paid $33,000 for the place - you could have only put down about $7,000 to buy the place without any creativity.

Well the S&P 500 index will certainly give you the 10% return. Looks like you did better then 10% with just property appreciation on your down payment.

This is really more a lifestyle decision. I sold out of the hood after 30+ years. Not based on ROI (properties beat market returns) ... rather to improve my lifestyle. The hood is not for the faint heart.

There are two separate concepts at play here.

ROI = Return on Investment. Return / What I put in.

ROE = Return on Equity. Return / What's the thing worth.

An investment's ROI can be great, but as your example shows with a property that has gained significant value already, it's ROE can be marginal or pitiful based on what it's doing today were you to liquidate it and invest elsewhere.

Considerations to include are paying the capital gains tax and depreciation recapture on the property. So it's not as simple as $200,000 real estate swapped for $200,000 worth of mutual funds.

That said, it still may make sense. You should be able to roughly estimate your net proceeds after taxes. Depreciation recapture is 25%. Capital gains are 15%, unless you're a super high income earner, then 20%. There are online calculators you can plug this into.

When comparing active investments (landlording) to passive investments, I factor in a "premium" of 10%, since that's what it would cost to outsource to a property manager and turn your active landlording biz into a passive investment like a mutual fund. So for me, a 20% return from real estate is a break even with a 10% return from stocks. I'd want to see 24% or more, which is typically how I invest when buying new property.

That said, for an apples to apples comparison you also need to include appreciation gains along with cash flow, because stock returns include share price increase (appreciation) along with dividends (cash flow). But that can be challenging. You'll need some good comps for sure. Too, if you've only owned the building 20 years, you are still taking depreciation against it for another 9.5 years.

Lots to think about, certainly. A CPA could probably run the scenario for you given your numbers for a nominal fee.

My father once taught me something about apartment buildings when I decided to buy some -->

When you purchase an apartment property, you must take care of it for the first 10 years. Upgrades, improvement, remodels and many repairs -- a money pit.

But after the first 10 years, then that property will take care of you for the rest of your life.

One of my First small apartment property yielded $30,000 in gross rents. The profit was nothing, I only got tax write offs that put me in the black.