thefed
Thinks s/he gets paid by the post
- Joined
- Oct 29, 2005
- Messages
- 2,203
After reading this passage, I wondered if there's an easy way to figure this out. I think I could fake it, but am wanting to get someone else's opinion;
There are four parts of understanding the numbers of real estate: appreciation, cash flow, loan reduction and tax benefits and how they work together to produce a rate of return on equity that you have in a property.
I UNDERSTAND each of these 4 parts, but am not sure how to put it all together for a standardized (if there is such a thing) "rate of return" over a given length of time.
MY guess is to figure ou a time, say one year. In that year, you assume 3% appreciation, include cash flow from renting (or sitting vacant), figure out how much of your note is paid off after one year, and the tax deductions, if any, you get from owning the property. you add and subtract to get your total gain or loss, and compare it to your initial investment.
There are four parts of understanding the numbers of real estate: appreciation, cash flow, loan reduction and tax benefits and how they work together to produce a rate of return on equity that you have in a property.
I UNDERSTAND each of these 4 parts, but am not sure how to put it all together for a standardized (if there is such a thing) "rate of return" over a given length of time.
MY guess is to figure ou a time, say one year. In that year, you assume 3% appreciation, include cash flow from renting (or sitting vacant), figure out how much of your note is paid off after one year, and the tax deductions, if any, you get from owning the property. you add and subtract to get your total gain or loss, and compare it to your initial investment.