My introduction and discussion about national returns

2 Replies

Hey, I'm completely new here I'll combine an introduction with a burning question that i've stumbled upon.

My name is Tyler and I'm in the Army, currently serving in Japan. I became involved in investing as soon as i graduated college and I could afford to do more than just invest in keeping myself fed. I was putting up to 50% of my take home pay into my retirement portfolio as a Target Retirement Fund. After a while I became very dissatisfied with the knowledge that I'd lead a relatively unexciting life, only living off half my pay, only to be rich once I already have one foot into the grave.

This was about the time that I read the Rich Dad, Poor Dad book and it really changed the way I looked at investing. I loved the idea of being able to leverage other people's money in order to make my own returns. I've been reading quite a bit about real estate investing and am now finally getting into actually researching and crunching numbers, which leads me to this head scratching moment...

I'm perusing and am looking at the national data for apartments. (

I see that the average NOI is $593 on a property that is $86,630. I now plug these values into a mortgage calculator:

Loan: $69,304 (80% of value)

APR: 5% (would this be accurate for an investment for someone with 750+?)

Prop Tax: 1%

= $444/month

So the annual NOI is $7116 and annual mortgage payment is $5328, so there's $1788 profit per year, minus income tax. That puts cash-on-cash at about 10% average for the nation. This all seems kind of low to me. Is this really the kind of return that you guys are seeing typically?

I suppose if you go to Louisiana, where property tax is 0.18%, you'd be seeing better returns, but I digress...

I appreciate your help in advance and hope my post finds you well.


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@Tyler Warner Thank you for your service.  It is pretty smart of you to take advantage of the fact that all of your needs are taken care of while you serve.  You have a great opportunity to invest now, while living within your means.  Cars and electronics ruin Soldiers' personal finances - ask me how I know.

You have lots of pieces to the REI puzzle that you are putting together that appear to fit, but they are really all misleading. The reality is that national averages don't help much, if at all in REI. REI is local down to the subdivision. Returns an individual gets are based on market conditions and individual investor savvy. What one investor will say can't be done, another will do on a regular basis.

And just like other factors, property taxes vary in LA from one municipality to the next.

CSM (RET) Robert Leonard

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