Tripex Los Angeles - [Calc Review] Help me analyze this deal

[Amanda Cheng]

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[Allen Tracy]

Originally posted by @Seth Borman:

Originally posted by @Allen Tracy:

Appreciation is probably better in Los Angeles but cash flow and return on investment will be low here.  Your calculations show 3.55% return on investment.  This is quite a bit lower than just putting your money into the stock market.  

You need to consider earned equity/principal payoff. Every time you make a mortgage payment you are creating equity than can be accessed down the road. That's why multi year models are important.

Very true.  I tend to focus on cash flow these days since I'm nervous about a bubble burst in the next 5-10 years which could greatly reduce or completely wipe out most of the equity.  That being said as long as you plan on holding it long term you should be able to recoup any losses. The last bubble burst didn't last very long at all.  And investing in markets like LA may be very difficult to get good cashflow so equity/principal payoff would be important.