All Forum Posts by: JC Skweres

Another way of explaining what you stated is your ROI after 1 year is around 100%

Your principal was 32k
After 12 months you've had a 24K return
Your property probably had 2% appreciation = 2K
It also paid of a small amount of principal = let's say 5K
Total $s made in 1 year were 31K or almost a 100% return

Thanks Kelly,
I really appreciate you sharing your perspective with me and your very clear example. The lack of clear data on averages / median returns really makes me hesitant to take the plunge in any REI (besides REIT where it is very clear). Another point of data that would be helpful (can you tell I'm a numbers guy?) would be the amount of average time needed for each niche.

I get stuck on the long term equity in the home because it could still be reinvested elsewhere for a return. So in your example the home will eventually be fully paid for (100K in equity). Let's say you are then getting 2K per month then the ROI is capped at 24% on the equity unless you consistently reinvest the equity for another self sufficient property into perpetuity. Conceptually people could keep investing into more and more (or larger) properties, but eventually I have to believe they stop because of time constraints/limited opportunities. Because of these constraints the ROI eventually caps out.

I'd only consider infinite returns if someone consistently invested the equity into other properties which keep paying the money back, otherwise the long term ROI will end up being slightly higher than 24% (the return on 100K in principal that could be invested elsewhere).

JC

Has anyone see average & median ROI for different real estate niches over longer periods of time (like 5, 10, 15, 20, 30 year)?

I'm trying to compare stock portfolio return to returns from different real estate niches to determine if I should focus my time on REI. I keyed in on the following article which seemed to imply that single family homes have less return than other options, but it didn't offer any specific numbers:
http://www.biggerpockets.com/real-estate-investing/strategies-niches
- Raw Land
- Single-Family Homes
- Duplex/Triplex/Quads
- Small Apartments
- Large Apartments
- Commercial
- Mobile Homes

Ideally it would be published by a 3rd party organization somewhere..

I've been digging through different articles / forum posts and maybe I'm search inept, but I can't find a nice table with everything together. I see people talking about infinite returns, but eventually you run out of time maintaining current properties and finding new opportunities so I see this as a false argument. Maybe the first 3 properties have a high return, but eventually it slows down and I'm interested in the longterm returns the average / median person achieves. I know there is turnover involved and generally the people I've observed who own property don't go beyond 3 properties (I have no idea if this is the rule or my limited experience).

You all have an incredible amount of knowledge so I appreciate any help you can give on helping expand my mind.

Thanks,
Jim