Comments on: Apartment Investing – A Look at Five Year Investment Returns

By: Jay

Jay — Tue, 26 Jul 2011 12:44:06 +0000

Hi Ted,

In the Mortage repayment, there is a paret that goes towards interest and there is another part that goes towards the pricipal repayment. Do you ADD the part that goes towards principal repayment as a + cashflow for calulating IRR?.

Thanks
Jay

By: Ryan

Ryan — Sun, 01 Aug 2010 14:04:34 +0000

I agree with the numbers, and see this as a fair estimate, but it’s a tough sell to compare investing in the stock market versus investing in an apartment building. If someone is willing to work hard it’s a great way to start your own business, which should easily beat a passive investment because your labor is included for “free”, but just to hypothetically beat stocks, probably not so much. Either way, nice breakdown of the numbers, and let me know when you find a deal priced so low

By: James

James — Sun, 10 Jan 2010 04:59:08 +0000

my question how can I fine a 6 to 8 unit apartment building in my area less than 5oo.000.00
built before 1985!
area north palm beach, fl

By: Anonymous

Anonymous — Wed, 20 Aug 2008 16:08:03 +0000

Thank you for sharing with actual numbers. That really helps to understand visually as to what you are talking about.

By: Anonymous

Anonymous — Tue, 19 Aug 2008 23:26:58 +0000

First of all, thanks for a great case study Ted. I have been buying shopping centers for years and I wish we had a few more good tools for commercial real estate in general. I just found your site for the first time…great site by the way! I added you to my bookmarks!

By: Brock

Brock — Mon, 18 Aug 2008 14:11:32 +0000

Matt, 3% of the expenses is less than 3% of the rent. You’ll see a net gain with the numbers given.

I was confused like Mike. I’m glad he asked his question.

It’s pedantic (because it really doesn’t matter from the investor’s point of view), but the rent really isn’t going up in real dollar terms. It’s flat. That 3% increase is just the inflation protection that real estate enjoys and few other investments do. The Fed can inflate the supply of money, but it can’t inflate the supply of land.

By: Matt

Matt — Sat, 16 Aug 2008 18:02:45 +0000

Great article thanks for posting –
One question based on this statement:

“We will assume that the building’s income has grown by 3% a year. We will also assume that the expenses have increased 3%.”

If the expenses also increased by 3% how did the NOI jump to $32,169.86 ?

By: Ted Karsch

Ted Karsch — Fri, 15 Aug 2008 15:34:36 +0000

Great question. Taxes, insurance and other maintenance expenses are subtracted from the Gross Income to give us the Net Operating Income, which is the figure we are working with above.

By: Mike

Mike — Fri, 15 Aug 2008 15:25:34 +0000

I’m confused, what about taxes, insurance, other expenses? Do you factor these into your calculation?

By: David Kendall

David Kendall — Wed, 13 Aug 2008 22:47:04 +0000

I don’t know where you are – but in my area there is no way to purchase an eight unit building for $300,000. Can you point me to where such properties are available?

By: Joey Martini

Joey Martini — Wed, 13 Aug 2008 10:03:39 +0000

Nice plan you have put together here, yes this is the problem with real estate it takes time for it to increase, but the profits are crazy. I think it’s much better then putting your money in the bank, and I don’t think that there is that much risk in real estate.

By: Alice Spencer

Alice Spencer — Wed, 13 Aug 2008 09:41:34 +0000

Are there any sites that offer similar calculations for property deals?