Roi after owning 20 years
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Roi after owning 20 years (by Jason [PA]) Nov 21, 2023 10:58 PM
       Roi after owning 20 years (by don [PA]) Nov 21, 2023 11:56 PM
       Roi after owning 20 years (by Sisco [MO]) Nov 22, 2023 7:10 AM
       Roi after owning 20 years (by Ray-N-Pa [PA]) Nov 22, 2023 7:36 AM
       Roi after owning 20 years (by tryan [MA]) Nov 22, 2023 8:49 AM
       Roi after owning 20 years (by S i d [MO]) Nov 22, 2023 8:49 AM
       Roi after owning 20 years (by Jim in O C [CA]) Nov 22, 2023 10:37 AM
       Roi after owning 20 years (by Robert J [CA]) Nov 23, 2023 1:59 AM
       Roi after owning 20 years (by don [PA]) Nov 27, 2023 8:40 PM


Roi after owning 20 years (by Jason [PA]) Posted on: Nov 21, 2023 10:58 PM
Message:

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

--71.207.xx.xx




Roi after owning 20 years (by don [PA]) Posted on: Nov 21, 2023 11:56 PM
Message:

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

When comparing your return on value to stock market gains, are you considering only the cash flow from rental income, or are you also considering the continued appreciation in the value of the propert? If you are netting out $12k in rent and the appreciation is averaging 5% then you have an 11% return. --73.141.xxx.xxx




Roi after owning 20 years (by Sisco [MO]) Posted on: Nov 22, 2023 7:10 AM
Message:

You need to plug in your maintenance reserves and management fees into your analysis. --149.76.xxx.x




Roi after owning 20 years (by Ray-N-Pa [PA]) Posted on: Nov 22, 2023 7:36 AM
Message:

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.

Creativity and negotiation skills have yielded some of the most highest returns I have ever had. --24.101.xxx.xxx




Roi after owning 20 years (by tryan [MA]) Posted on: Nov 22, 2023 8:49 AM
Message:

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.

Your results may vary. --198.168.xx.xxx




Roi after owning 20 years (by S i d [MO]) Posted on: Nov 22, 2023 8:49 AM
Message:

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.

--184.4.xx.xx




Roi after owning 20 years (by Jim in O C [CA]) Posted on: Nov 22, 2023 10:37 AM
Message:

I donít know how to figure ROI. Paid $42,500 and put $3,000 down using my credit card because I didnít have $3,000 at the time. I did pay off the credit card. Tenants paid 99% of the payments. Today itís worth $850,000. Rent started at $410 and today $3,000 going up to $3,075 next year. --146.70.xxx.xxx




Roi after owning 20 years (by Robert J [CA]) Posted on: Nov 23, 2023 1:59 AM
Message:

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.

That same property, some 35 years later, now brings in around $100,000 in gross rents, and the profit before income tax is $80,000 a year. Imagine that! --47.155.xx.xxx




Roi after owning 20 years (by don [PA]) Posted on: Nov 27, 2023 8:40 PM
Message:

Sid--You forgot the 3.8% Obamacare tax --73.141.xxx.xxx





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