surveyor’s ROI spreadsheet

[CA renter]

surveyor,

I think your assumptions are excellent. The entire foreclosure “crisis” could have been completely avoided if buyers used conservative guidelines when making a purchase.

We should not assume the mortgage deduction will always be there, especially on investment properties. Same with Prop 13 protection. We have record levels of debt at all levels, and that includes the state and federal governments. They will need to increase revenues, and these protections would be the first things under consideration, if I were a politician.

Inflation was a given when we had the Baby Boomers pushing up prices for things over many decades. The buying power of the Boomers (with good incomes, more stable jobs, better healthcare & pension plans, etc.) is being replaced by the lower incomes of immigrants from poor countries. We also have lower wages & benefits for Americans due to globalization. It is no longer a given that housing prices will rise in perpetuity. We may well see declines for many years, perhaps decades.

Rents do not always go up, and rent increases should not be factored into the equation, IMO. As an investor, I’m looking at what the numbers tell me **right now** and try to consider what obstacles might lie ahead (higher vacancies, recessions, neighborhood deterioration, problem tenants, etc.). If things get better, lovely, but I would never presume they will do so, especially now.

[surveyor]

thanks CA.

I’ve made enough mistakes in real estate that I really advise not “cooking” the numbers. Those guidelines I put in the calculator are really for your protection. If the property doesn’t even meet those rules, then you really have to ask if the property is a good buy, even if it’s dropped 30% to 40% (and it also shows you how out of whack our fundamentals are). I admit that a property fitting those rules is a very good property, but do you really want to go against the rules and get a less than terrific property?

Now I’m not saying you shouldn’t buy the property. Will the Mira Mesa market bottom out and start shooting up more than the 4%/yr. appreciation I’ve assumed today? It’s certainly possible, but it’s still a big risk.

Anyways, I put up the rules because certain people always asked what criteria I looked at in order to choose properties. The rules are a beginning, not an end. The ROE calculator incorporates many principles that are basic for real estate investing, but it is not a substitute for your research.

Still, if anyone does not know how the ROE works, a lot more research needs to be done.

[surveyor]

thanks CA.

I’ve made enough mistakes in real estate that I really advise not “cooking” the numbers. Those guidelines I put in the calculator are really for your protection. If the property doesn’t even meet those rules, then you really have to ask if the property is a good buy, even if it’s dropped 30% to 40% (and it also shows you how out of whack our fundamentals are). I admit that a property fitting those rules is a very good property, but do you really want to go against the rules and get a less than terrific property?

Now I’m not saying you shouldn’t buy the property. Will the Mira Mesa market bottom out and start shooting up more than the 4%/yr. appreciation I’ve assumed today? It’s certainly possible, but it’s still a big risk.

Anyways, I put up the rules because certain people always asked what criteria I looked at in order to choose properties. The rules are a beginning, not an end. The ROE calculator incorporates many principles that are basic for real estate investing, but it is not a substitute for your research.

Still, if anyone does not know how the ROE works, a lot more research needs to be done.

[surveyor]

thanks CA.

I’ve made enough mistakes in real estate that I really advise not “cooking” the numbers. Those guidelines I put in the calculator are really for your protection. If the property doesn’t even meet those rules, then you really have to ask if the property is a good buy, even if it’s dropped 30% to 40% (and it also shows you how out of whack our fundamentals are). I admit that a property fitting those rules is a very good property, but do you really want to go against the rules and get a less than terrific property?

Now I’m not saying you shouldn’t buy the property. Will the Mira Mesa market bottom out and start shooting up more than the 4%/yr. appreciation I’ve assumed today? It’s certainly possible, but it’s still a big risk.

Anyways, I put up the rules because certain people always asked what criteria I looked at in order to choose properties. The rules are a beginning, not an end. The ROE calculator incorporates many principles that are basic for real estate investing, but it is not a substitute for your research.

Still, if anyone does not know how the ROE works, a lot more research needs to be done.

[surveyor]

thanks CA.

I’ve made enough mistakes in real estate that I really advise not “cooking” the numbers. Those guidelines I put in the calculator are really for your protection. If the property doesn’t even meet those rules, then you really have to ask if the property is a good buy, even if it’s dropped 30% to 40% (and it also shows you how out of whack our fundamentals are). I admit that a property fitting those rules is a very good property, but do you really want to go against the rules and get a less than terrific property?

Now I’m not saying you shouldn’t buy the property. Will the Mira Mesa market bottom out and start shooting up more than the 4%/yr. appreciation I’ve assumed today? It’s certainly possible, but it’s still a big risk.

Anyways, I put up the rules because certain people always asked what criteria I looked at in order to choose properties. The rules are a beginning, not an end. The ROE calculator incorporates many principles that are basic for real estate investing, but it is not a substitute for your research.

Still, if anyone does not know how the ROE works, a lot more research needs to be done.

[surveyor]

thanks CA.

I’ve made enough mistakes in real estate that I really advise not “cooking” the numbers. Those guidelines I put in the calculator are really for your protection. If the property doesn’t even meet those rules, then you really have to ask if the property is a good buy, even if it’s dropped 30% to 40% (and it also shows you how out of whack our fundamentals are). I admit that a property fitting those rules is a very good property, but do you really want to go against the rules and get a less than terrific property?

Now I’m not saying you shouldn’t buy the property. Will the Mira Mesa market bottom out and start shooting up more than the 4%/yr. appreciation I’ve assumed today? It’s certainly possible, but it’s still a big risk.

Anyways, I put up the rules because certain people always asked what criteria I looked at in order to choose properties. The rules are a beginning, not an end. The ROE calculator incorporates many principles that are basic for real estate investing, but it is not a substitute for your research.

Still, if anyone does not know how the ROE works, a lot more research needs to be done.

[an]

Correct me if I’m wrong, but it seems like this calculation is geared more for investment property than primary resident. Using this spreadsheet and estimated # from 1997 for 3/2 1500 sq-ft SFR in MM, ROE was about 14%. Is it possible that some area will never get 20% ROE?

[an]

Correct me if I’m wrong, but it seems like this calculation is geared more for investment property than primary resident. Using this spreadsheet and estimated # from 1997 for 3/2 1500 sq-ft SFR in MM, ROE was about 14%. Is it possible that some area will never get 20% ROE?

[an]

Correct me if I’m wrong, but it seems like this calculation is geared more for investment property than primary resident. Using this spreadsheet and estimated # from 1997 for 3/2 1500 sq-ft SFR in MM, ROE was about 14%. Is it possible that some area will never get 20% ROE?

[an]

Correct me if I’m wrong, but it seems like this calculation is geared more for investment property than primary resident. Using this spreadsheet and estimated # from 1997 for 3/2 1500 sq-ft SFR in MM, ROE was about 14%. Is it possible that some area will never get 20% ROE?

[an]

Correct me if I’m wrong, but it seems like this calculation is geared more for investment property than primary resident. Using this spreadsheet and estimated # from 1997 for 3/2 1500 sq-ft SFR in MM, ROE was about 14%. Is it possible that some area will never get 20% ROE?

[gn]

surveyor,

Thanks for the response.

Let’s say you have $300k to invest in real estate.
When the market reaches the bottom, which is a better option:

1. Buy a number of SFHs.
2. Buy multi-unit properties (i.e. 4-plexes).

It seems like the multi-unit properties generate better cash flow. But what about appreciation ? Do SFHs appreciate better than 4-plexes ?

[gn]

surveyor,

Thanks for the response.

Let’s say you have $300k to invest in real estate.
When the market reaches the bottom, which is a better option:

1. Buy a number of SFHs.
2. Buy multi-unit properties (i.e. 4-plexes).

It seems like the multi-unit properties generate better cash flow. But what about appreciation ? Do SFHs appreciate better than 4-plexes ?

[gn]

surveyor,

Thanks for the response.

Let’s say you have $300k to invest in real estate.
When the market reaches the bottom, which is a better option:

1. Buy a number of SFHs.
2. Buy multi-unit properties (i.e. 4-plexes).

It seems like the multi-unit properties generate better cash flow. But what about appreciation ? Do SFHs appreciate better than 4-plexes ?

[gn]

surveyor,

Thanks for the response.

Let’s say you have $300k to invest in real estate.
When the market reaches the bottom, which is a better option:

1. Buy a number of SFHs.
2. Buy multi-unit properties (i.e. 4-plexes).

It seems like the multi-unit properties generate better cash flow. But what about appreciation ? Do SFHs appreciate better than 4-plexes ?

[Author]

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