If you currently own an Investment Property and if you have owned it for a number of years, then it is about time you ask your self this question:
Am I still getting a good return on my Equity?
Whether you bought your Investment Property as a long-term investment as a means to increase your wealth and/or cash flow, you have certainly been the beneficiary of an increase in value over the years. Congratulations on a wise financial decision!
Selling, Exchanging, or Refinancing may be your nextgreat decision.
Even if you're getting a positive cash flow, and enjoying tax benefits; it's a good idea to consider how your property is performing in terms Return on Equity. Given years of appreciation and monthly principal payments, you probably have a lot more money tied up in it than you did at the beginning, unless you refinanced and took cash out.
As a savvy investor you probably looked at your Return on Investment (ROI) when you decided to buy or keep your property.Return on Equity (ROE) is the same thing, except you evaluate your return based on the current equity generating it. Typically, equity increases faster than rental income. The net effect is that as your Equity grows, your Return percentage gets smaller every year.
Don’t take my word for this. Please click and read the article by Tom Lundstedt.
He is a nationally known speaker on investment real estate. You may laugh at the Market Value used in his ROE Worksheet, but the basic calculations are valid. Just substitute your own figures in the “Your Property” column. Give me a call and we can run the numbers together...
If you think it may be time to Sell, Exchange, or Refinance your property, please reach out to me for a No Cost, No Obligation Consultation. I will gladly provide market value information, answer your questions, and give you names and numbers of lenders and/or exchange services to help you make an informed decision.
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