Rate of Return in investment property

32 Replies

@Francis Dinh I bought a property very very similar to your numbers almost two years ago- mainly for the appreciation. I bought the property for $245k as a shortsale, and today it's worth about $330k. I have a good handy man that charges me extremely well. I put $10k into fixing the property. Like you I was expecting to rent it for $1800, but truth be told I ended up renting for $2000 ( part of that is a monthly pet fee I charge). I also self manage the property. Simple because tenants contact my handy guy and he handles everything. My taxes and insurance weren't quite as high as what you have, but I can so very clearly tell you that you have completely under stated the maintenance cost. I'm currently cash flow positive of about 400-500. I'd like more but DC market is tough. 

Negative cash flow. Don’t do it!

@Francis Dinh I don't know what your goals are, but this particular property is not an investment, it is purely speculative (gambling). You will be losing money every month hoping that future appreciation makes up for it.

DFW is a strong market. Maybe it will appreciate beyond your expectations. But that is completely out of your control. You are taking a huge risk for a relatively small return (9% IRR).

Originally posted by :

Francis, I forgot to answer the other question you had. You asked if it was better to use a 30 year fixed. It's easy to do the same calculations since I have a spreadsheet developed. I'm going to assume that for the 30 year fixed, it's at a higher interest. Let's just say 4% instead of 3.8%. So here is the spreadsheet with that small change:

Great idea Llewelyn A, would you mind sharing one of your spreadsheets -- would help as a starting point to do math for lot of people.

I have a question. How does the cash flown increase every year while I pay the same amount for all in 20 years?

The cash flow should increase if you increase the rents is more the increase in expenses.

@Llewelyn A. , I enjoyed going over your posts here. I'm a Brooklyn kid (Coney Island), and getting started in Colorado. I saw those rising prices on the wall and had to leave after college in 2014. Hoping to return one day to invest like yourself back into my home. Carpe Diem!

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