Remember that the appreciation is a low estimate. We anticipate 4% but who knows it could be more. In those situations, the ROE would return more than 24%. So a 24% CAGR is very sustainable because of the low estimate of appreciation (which we carry out over a period of ten years). In the ROE calculation, cash flow should generally improve over time and appreciation should be higher than what you anticipate (not a huge amount, but decent).
By refinancing and getting that equity out to invest in more properties, making it work even harder, the ROE keeps getting better and better. It does get hard to calculate later and later though but so far it looks good.
Thanks SDR for the good words, the investments you make should make your family life better, not worse and we all have different situations that make certain investments unpractical. I know a few who want to get into real estate but they are unable to convince their spouse (which is pretty critical). For me, I am lucky that I am able to put money into both real estate and the stock market. My stock market account has been going gangbusters, too! Still, I have run the numbers and based on effort, return, and making all your money work for you (including your home’s equity), real estate was the only way to go.
I will say that because I am able to invest both in real estate and the stock market, I can tell you in 10 years which performs better. Stick around for that. Hahahaha.
