The Return in Dollars Quadrant™ is the amount, in dollars, of each of the four primary returns in a real estate investment.
The four primary areas of return are:
- Cash Flow
- Cash Flow from Depreciation™
- Debt Paydown
In some cases, we will also include the return earned on reserves as well. This is especially true if we are calculating returns and including the drag from setting aside reserves to invest in real estate. This is a more correct methodology since you really need reserves to prudently make investments in rental properties.
We typically display this graphically as:
Or, with actual return numbers as:
Check it out for yourself by editting one from your Properties page.
If we are using the more correct version with reserves it might look like this:
With actual numbers it might look like this:
Return on Investment Quadrant™
If we divide the amount of the return in dollars by the initial investment for each quadrant, we get the Return on Investment Quadrant™.
If we divide the amount of the return in dollars by the equity in the property for each quadrant, we get the Return on Equity Quadrant™.
While the Return in Dollars Quadrant™ is not explicitly shown on The World’s Greatest Real Estate Deal Analysis Spreadsheet™ to avoid clutter, the numbers for each are present in the spreadsheet since they used to calculate and then display the Return on Investment Quadrant™ and Return on Equity Quadrant™ as well as the charts for each.
Return in Dollars Quadrant™ Report
The Return in Dollars Quadrant™ is now available as a report for each
Here are samples of the chart and table from the report page:
Read more about the Return Quadrants™ including how the top/bottom and left/right parts of the quadrants have special meanings.