reddick property rating: how to choose the best real estate investments
TRANSCRIPT
Fort Myers, FL
Year Median Sales Price Appreciation1989 $66,5001990 $69,100 4%1991 $71,100 3%1992 $70,900 0%1993 $76,900 8%1994 $77,600 1%1995 $77,500 0%1996 $78,500 1%1997 $85,500 9%1998 $88,600 4%1999 $94,200 6%2000 $97,400 3%2001 $125,100 28%2002 $133,300 7%2003 $151,900 14%2004 $187,200 23%2005 $269,200 44%2006 $268,200 0%2007 $252,100 -6%2008 $152,600 -39%2009 $87,600 -43%2010 $88,900 1%2011 $102,900 16%2012 $128,100 24%2013 $166,100 30%2014 $188,700 14%
Annual Average 6.1%
Indianapolis-Carmel, IN
Year Median Sales Price Appreciation1989 $71,2001990 $74,800 5%1991 $79,100 6%1992 $83,700 6%1993 $86,600 3%1994 $90,700 5%1995 $94,600 4%1996 $98,000 4%1997 $103,700 6%1998 $108,400 5%1999 $110,900 2%2000 $112,300 1%2001 $116,900 4%2002 $116,800 0%2003 $121,100 4%2004 $121,700 0%2005 $123,800 2%2006 $119,300 -4%2007 $120,500 1%2008 $111,200 -8%2009 $114,200 3%2010 $123,300 8%2011 $123,900 0%2012 $129,600 5%2013 $136,700 5%2014 $144,600 6%
Annual Average 2.9%
Appreciation Cap / Floor
Cap � A Class = 5% � B Class = 4.5% � C Class = 4%
Floor � All Classes = 0%
Fixer Upper vs Rent Ready
� Renovations less than $10,000, multiple every dollar spent by 1.2
� Renovations greater than $10,000, multiple every dollar spent by 1.5
Rules for Remodeling
Maintenance Example
A Class Monthly Gross Rent x 5% = Monthly Maintenance Cost $1,250 x 5% = $62.50 per month
Cash on Cash vs Return on Investment
Average Class Cash-on-Cash Annual ROI
A 3.55 19.61 B 3.98 18.19 C 4.39 16.60
Median Class Cash-on-Cash Annual ROI
A 3.22 19.83 B 3.47 18.08 C 5.32 16.03
(using Conventional Financing)
How do you mathematically measure the success of each
investment?
Appreciation: Highest Return-on-Investment
Cash Flow: Highest Cash-on-Cash Return
◦ ROI (Return on Investment): =(Profit from sale / Total Cash Invested) / # of years held
+ accumulated net cash flow $35,506.61 + equity from principle paydown $39,355.59 + equity from appreciation $103,612.50 - Selling expenses (typically 9%) ($23,140.13) = Profit from sale $155,334.58
◦ ROI (Return on Investment): =(Profit from sale / Total Cash Invested) / # of years held
+ accumulated net cash flow $35,506.61 + equity from principle paydown $39,355.59 + equity from appreciation $103,612.50 - Selling expenses (typically 9%) ($23,140.13) = Profit from sale $155,334.58
=(Profit from sale / Total Cash Invested) / # of years held $155,334.58 $45,631.25 15
◦ ROI (Return on Investment): =(Profit from sale / Total Cash Invested) / # of years held
+ accumulated net cash flow $35,506.61 + equity from principle paydown $39,355.59 + equity from appreciation $103,612.50 - Selling expenses (typically 9%) ($23,140.13) = Profit from sale $155,334.58
=(Profit from sale / Total Cash Invested) / # of years held $155,334.58 $45,631.25 15
ROI= 22.69%
Cash-on-Return: 8.16%
◦ Cash on Cash Return: =Annual net cash flow / Total Cash Invested
� $2,804.4 $34,326.38
Chris'n Tabar Real Estate Advisor/Realtor Phone: (949) 885-‐5162 Email: [email protected]
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