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Updated 11 months ago on . Most recent reply

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Matthew W.
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How do I calculate ROI on a rental on something I bought over 20 years ago?

Matthew W.
Posted

Every calculator has stuff that seems irrelevant or is not true to the situation.  My purchase price was over 20 years ago, I do not remember closing costs, have refinanced twice at least and I have been renting it for almost as long.  Lots of schedule Es I can not read or understand.

I obviously know my rent "income" and my costs (especially since I make NO positive cash flow money on it and mostly loose money (last year I lost "only" -$1175) so i want to know what i made in appreciation versus how much I lost per year for the past 20 years.  And how much opportunity cost i lost had I been in the market. At this point I will have pick up about $450K in appreciation after sales costs, but that is before taxes and I am in a high bracket.  Basically I want to know how much damage i did to myself for.....reasons. 

How does one calculate this?   I know I should not have counted on appreciation and I think I been loosing money on it for a very very long time, but I had other things to attend to.  I know, I know, first world problems for sure but I loath the thought of the hassle of selling but its time.
(RE certainly did NOT make me rich as I had hoped and now I am ready to sell 2 rentals and retire sooner than later)

Most Popular Reply

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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
41,261
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28,168
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
ModeratorReplied
Quote from @Matthew W.:

You are in Corte Madera, California, right? Rent rates have probably tripled in the last 20 years. The only reason you are losing money is because you (a) haven't increased rent rates, or (b) cashed out your equity and increased your expenses.

The average home in your market was $400,000 20 years ago. It's now $1.1 million. After paying down your mortgage for 20 years, you should have $1 million or more in equity.

To answer your question, I think you should learn how to calculate return on equity (ROE). Here's a short video from BiggerPockets: 

  • Nathan Gesner
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