Return Rate Confusion

[Kelsey McCabe]

Hey All,

Would someone please be kind enough to explain how return rates and capital growth work in rental properties, and how modification that are out of character affect them? This isn't for anything specific, I'm just searching for a general understanding of the terms.  

Thank you for your time. 

[Marcus Auerbach]

@Kelsey McCabe

You have four sources of income:

1.) Cash Flow

2.) Equity (de-leverageing your loan, sometimes built into the deal, when you buy low)

3.) Appreciation, both forced (rehab) and natural (market, time)

4.) Tax advantages

Many investors will calculate ROI by deviding their annual cash flow by the down payment.

Play around with the BP Buy & Hold calculators and study the results, that will get you a good understanding of how the four factors work. Does that answer your question?