some real numbers

[Escoguy]

Maybe I’m a fool for posting this but I thought it might be helpful for some to see actual numbers for how a portfolio of homes can do over time.

tag

Thanks Coronita for the pointer on posting images.

If anyone feels strongly that I should take this down, pls let me know.

This is a sheet I put together to give to lenders when I refinance etc as it puts everything in one place.

Appreciation is 2% so is only illustrative. Obviously, recent gains have been higher but this is meant for mid-longer term planning.

[Coronita]

You totally rocked this!
Holy fcking shit. Kudos. Great job.

I see you picked up 3 in 2013. Nice.
I think think the difference between your transactions and my transactions is yours are an order of magnitude larger, ha ha…

[Coronita]

How the hell did you get a 1.5% loan???

[sdrealtor]

Nicely done and a great example of the power of time and leverage. Over time those rents will rise and cash flow will improve dramatically over time. That ROE should only get better and better

[flyer]

Nice to see more success in real estate investing. As sdr mentioned, and as we’ve seen, you’ll find the ROE will get better and better over time, and your kids will thank you.

[gzz]

My three places have better percentage gains, but where it counts, net profit, you got me beat!

[gzz]

Is the ROE so low for the primary because it isn’t rented?

You got to live there however, so you need to add what the government calls owner’s equivalent rent into the returns there.

Kudos for twice pulling the trigger during the pandemic too.

[Escoguy]

[quote=Coronita]How the hell did you get a 1.5% loan???[/quote]

The 1.5% is from First Republic Bank, got this in 2016 as 30 year.
It is a variable rate tied to the 11th district cost of funds plus 70 bp.
I think at the time, the bank thought rates would start to rise
The offered a 0.9% back on a primary.
My regret is I could have done all four refis at the rates of 1.5% and 0.9% but trying to “manage risk” I only did one variable.
Needless to say, they don’t offer this anymore.
But they do offer a 2.25% unsecured line of credit but I haven’t had a chance to use that as the term is 7 years. Keep as a backup.
The backstory is, I read how Mark Zuckerberg had a loan with FRB at 0.9% on his primary residence. The article talked about loans for the 1%.

[Escoguy]

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[Escoguy]

[quote=Coronita]You totally rocked this!
Holy fcking shit. Kudos. Great job.

I see you picked up 3 in 2013. Nice.
I think think the difference between your transactions and my transactions is yours are an order of magnitude larger, ha ha…[/quote]

The three in 2013 were all short sales.
Two rented back and went on to buy again after three years, so I think they did fine in the grander scheme of things.
I was coming in after working out of the country for 10 years and fortunately had held about half my funds in bonds through the 2008 debacle.

[Escoguy]

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[Escoguy]

[quote=flyer]Nice to see more success in real estate investing. As sdr mentioned, and as we’ve seen, you’ll find the ROE will get better and better over time, and your kids will thank you.[/quote]

It’s funny you mention my kids, I do need to pay more attention to them, I’m sure they will be fine, but you know “teenagers”.

[Escoguy]

[quote=gzz]Is the ROE so low for the primary because it isn’t rented?

You got to live there however, so you need to add what the government calls owner’s equivalent rent into the returns there.

Kudos for twice pulling the trigger during the pandemic too.[/quote]

gzz,

Good point, I should add that, my primary would probably go for about $5300/month in this market. At the moment, I didn’t include that but you are correct.

I was fortunate that I received a reasonable inheritance in 2020. I had thought about buying more for a few years but the timing did work out.

The pickup in 92127 made me a little nervous and briefly I thought I may have overpaid but found out quickly I was on the right side of it.

My friend who trades bitcoin/stocks was discouraging me from buying more.

The second house was contracted in August 2020 but only closed this year, it was a BK as the seller had to complete that process which took six months. So kind of a rare situation big picture. But patience paid off.

[Escoguy]

[quote=sdrealtor]Nicely done and a great example of the power of time and leverage. Over time those rents will rise and cash flow will improve dramatically over time. That ROE should only get better and better[/quote]

Speaking of leverage, it bothers me that Dave Ramsey is so anti-leverage and that I’ve never heard him make an exception for anyone on his programs. Maybe that’s the ‘advanced seminar’ that they charge more for. LOL

I really think he does his listeners a disservice by always telling them to try and buy investment property in cash.

Given I did have two paid off when I bought the third (which was helpful as my wife never had a W-2 income), but if I had not borrowed, I would have stopped at house number 3 or 4 and foregone at least 1M in appreciation in less than 8 years.

I am a little torn about new money today, part of me would like to pay off one more just to have that peace of mind, but by and large I don’t worry or even think about the debt.

But there is also this part of me that would like to get something closer to the coast if only just for fun.

[Coronita]

Yeah, I don’t think I did as well as I should have. I guess I played things way too safe and for the longest time was anti-leverage.

I put whatever cashflow from rentals and bonus I got into paying down my loans as quick as I could…only to go the opposite direction and take out a cash out refi last month on one property…

I should have taken more risk and instead of fvcking around with just condos mainly, done SFH in MM. The appreciation would have been way better.

And that and my first property in SD, I generally bought at the wrong time in 2004ish when prices were already pretty high in 92130. what I should have done earlier is the moment I paid off my primary, I should have moved out earlier into another place in 92130, and rented out the older place, and rinse and repeated.

Thanks for confirming another thing that I already knew. 92130 might be good for appreciation but sucks donkey but from a cashflow perspective. especially if you can get $5300/month in escondido.

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