calmloki
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
tryan said:Exactly ... the "sell decision" is in that calculation. Especially if you believe the run-up of the last decade will not continue.
Calmloki,
Hows your return on investment ((profits from rents)/(current market value)). Trying to see if the west coast results mirror the east coast.
Thanx in advance!
I suspect there's going to be some variation depending on location and type, but we just did a report for the tax lady Friday, so:
NOT including any depreciation for the year, and using what I think are pretty realistic projected sales numbers, also, F&C properties, so no interest expense:
a 1972 16 unit in town of 18,000: 9.23%
a 1945 8 unit in a town of 150,000: 9.2%
a 1915 3br/1ba in a college town of 8,000: 5.789%
a 1945 3br/1ba in a town of 18,000: 5.09%
The above figures also do not put any value on our management or my repair time, OTOH, the rentals buy our computers and most of my tools. OTOH, I doubt we would own a $450 drain snake (rarely used 'cause I hate using it) or a couple commercial rug machines (used about 5 times/month) if we just owned stocks and bonds. If I subtract 10% of rent for management and my labor, which is probably modest,
the 1945 3br made 4.404%
the 1915 3br made 5.05%
the 1972 16 unit made 7.777%
I figure over the long haul that appreciation matches inflation - at least that's what we tell ourselves. The past 5 years are anomalistic in my opinion.
My current favorite tool, BTW, is my Kwikset rekeying kit - that was an outstanding use of $90 - allows me to rekey and master key our locks so I can carry around 1 key instead of a box full.
Edit: just back from a showing and realized I had taken 10% of the profit as a management/labor figure. Corrected to use 10% of the gross rents as a management/labor figure.
Another interesting unit is a 3br/1ba, maybe 1955? in the same town as the 1915 house. We bought it, re-roofed, redid the bathroom, lots of yardwork and a full in/out repaint, then borrowed at 6% on a 7 year int only ARM the purchase price and the entire amount of the money we had invested. We could pay it off in full, but I'm resisting my natural impulse. That one looks like it returned a whole 1% after subtracting 10% of gross rent as a management/labor fee. So there we are (hopefully) tracking inflation and making 1% on $0! Wait a minute - that doesn't seem right....