My question is specific to properties you already own. My family has a portfolio of around 50 commercial units that have been purchased over the last 20 years or so. I would like to start analyzing these properties to see what our ROI is so we can make more informed decisions about future acquisitions. How are you keeping track of ROI, cash on cash return, cap rate, etc. on your properties? Are you using excel, quickbooks, a property management software (I use AppFolio), or something else? I am very curious to see how other investors are tracking their returns.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
I don't. It doesn't tell me anything of value. I want to know how much equity I have, and what my cash flow is...period. These are what matters since these are numbers that are in dollar$, and not in percentages. Percentages are imaginary trophies. Dollar$ are measurable realities.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
I don't. It doesn't tell me anything of value. I want to know how much equity I have, and what my cash flow is...period. These are what matters since these are numbers that are in dollar$, and not in percentages. Percentages are imaginary trophies. Dollar$ are measurable realities.
Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
4y
I use Excel, but I don't do a lot of math after the initial acquisition. Although I will admit the math is easy on NNN properties. Like Joe, I just need to know my cash flow, and potential equity. The equity is important to know if you want to sell or pull money out to do another acquisition. I usually evaluate the equity every 5 years, but I end up keeping the property because I'm giddy about the cash flow. One of these days I may trade up, but right now I'm addicted to the current cash flow.
I think spreadsheets are important for commercial properties--all properties, for that matter. Of course, you can use a napkin to get a slice-of-life picture of how it's performing today. You cannot use a napkin to look at historical performance and future projections, though. You need to look at other things that are harder to calculate like, depreciation, cost recovery, taxes, principle pay-down, capital gains/losses, changes in basis...
I made my own spreadsheets to look at all this. Since I made it myself, only I understand how to use it so it wouldn't be useful to you.
Investor · Cincinnati, OH · Member since 2018 · 136 posts · 87 votes
4y
I like to keep it simple so I look at cashflow, equity, and ROI (which depends on the cashflow and equity). I use a simple excel sheet that I made tailored to my liking. If excel isn't your thing, Stessa does a great job of highlighting certain metrics. At the end of the day, metrics depend on what's important to you. I believe in cash flow, but it has to make an adequate return for the dollars invested; and if the equity isn't doing much in a property where it could be put to work in another opportunity that is when I sell.