All Forum Posts by: Kevin Mertus
Kevin Mertus has started 2 posts and replied 5 times.
Post: Evaluating established rental properties
- Posts 5
- Votes 1
Quote from @Jim R.:
Your stock return numbers are way wrong. The S&P 500 has average annual return is 12.6 % over the past 10 years, inflation adjusted is 9.2%. Over the past 20 and 30 years the average annual return is approximately 10%. No toilets, no termites, no bad tenants.
That is kinda what I'm getting at with my question. I know a lot of people recommend real estate as a way to out-earn the stock market. But, I'm don't think I am seeing that with this specific house. Before I make that conclusion I am looking to confirm I am seeing this correctly and that I'm seeing the whole picture.
Post: Evaluating established rental properties
- Posts 5
- Votes 1
I moved out of my first house about 11 years ago and have been renting it out ever since. At this point I have nearly paid off the mortgage entirely. I am gearing up to purchase another investment property which has made me re-evaluate how my current one is performing. My question is how do you evaluate the performance of an established rental house? I have been evaluating potential deals by looking at Cash-on-Cash return, among other things. But I'm not sure if cash on cash is a good metric when the home is paid off. For example, this is a $180k house, so unless I net roughly $18k per year (10%) it seems like I should be selling it to invest in the stock market. Am I missing something? Thanks for any insight.
Post: BRRRR Calculator - Total Cash Invested Calculation
- Posts 5
- Votes 1
Quote from @Michael Murphy:
The acquisition loan is getting amortized down to 255,083.96 over a 12 month period and you have the 12,000 of loan costs. The math is:
168,800 - (337,500 - 12,000 - 255,083.96) = 98,383.96
This is exactly what I was looking for, thank you!!
Post: BRRRR Calculator - Total Cash Invested Calculation
- Posts 5
- Votes 1
Jason, thanks for looking at this. Yes, that is my understanding, but I don't see how to add up the numbers to get the result shown. I was thinking it would be:
(total cash needed at purchase) - (refinance loan amount - acquisition loan amount) = (total cash invested)
which in this example would look like:
168,000 - (337,500 - 262,500) = 93,800
But the result the calculator gives is 98,383.96. I'm not sure what the calculator is doing differently.
Post: BRRRR Calculator - Total Cash Invested Calculation
- Posts 5
- Votes 1
Hi, Can anyone write out what the formula used for Total Cash Invested? I'm new to Bigger Pockets and just looking for my first BRRRR deal. I am using the BRRRR calculator and can follow almost all of it, but I am not following what the Total Cash Invested calculation is.
