Posted by Mark Sweeney on October 04, 1999 at 19:02:56:
Hi Bud,
You aked the following questions my answers follow.
Was there no cash flow or expenses during this time period? I have just recently got a postive cash flow after payment, taxes and insurance of 210.00 monthly.
Or is this the appreciation over what you purchased the investment for? Yes I paid 97,000 now it’s floating around 130,000 to 136,000. My outstanding balance is at 52,7000. Since my purchase I’ve put about 11,000 dollars over the years in maintance.
A property that has a “real” appraisal vs a tax value or market analysis can have the top 10-15% of value evaporate if it has to be sold. Deferred maintenance and equity build by paying down principle also need to be considered in determining the yield on a real estate investment.
If you invested $137,500 two years ago, and the value of your investment is now $161,500 (with no withdrawals), then the total return on your investment is $24,000 (assuming no other contributions).
Dividing 24000 by 137500 results in a total yield of 17.45%. On my calculator, this works out to about 8.376% annually.
Was there no cash flow or expenses during this time period? Or is this the appreciation over what you purchased the investment for? A property that has a “real” appraisal vs a tax value or market analysis can have the top 10-15% of value evaporate if it has to be sold. Deferred maintenance and equity build by paying down principle also need to be considered in determining the yield on a real estate investment.