Return on Investment and Return on Equity – Nomad™ 2017 Edition

When you're buying a property, you want to look at what the returns you're going to get for appreciation, cash flow, debt paydown and Cash Flow from Depreciation™... all divided by your initial investment. This will give you an idea of what type of returns you're going to get on your initial investment.

However, after you own the property thinking about your return on your initial investment makes less sense. Instead, you then want to consider what the return you're earning... from the same 4 areas of return (appreciation, cash flow, debt paydown and Cash Flow from Depreciation™)... but now divided by your equity in the property.

In this class you'll learn:

  • What is Return on Investment (ROI) and how do you typically calculate it?
  • What are the 4 components of your return on rental properties?
  • What might typical ROI returns look like for an unleveraged (all cash purchase)? How do these returns change with traditional non-owner-occupant leverage (buying with a 20% down mortgage)? How does it change with Nomad™ leverage (5% down payment)?
  • How do returns vary over time with an example?
  • Switching from "initial investment" to "equity" and why it makes sense to do so
  • A detailed example of returns for a Nomad™ strategy
  • What are reasonable returns on some other, non-real-estate, investments? How do they compare to real estate?
  • Comparing Return on Investment (ROI) to Return on Equity (ROE)
  • How changing your down payment amount impacts return sensitivity
  • Or, do you just care about cash flow?
  • Using Nomad™ with Lease-Option exits to maintain an exceptionally high ROE
  • Cash out refinances and boosting ROE
  • Strategies to improve and maximize ROE over time
  • The risks of optimizing for ROE and how to avoid them
  • Plus much, much more...

Duration: 1 hours and 34 minutes
Recorded: August 29, 2017
Instructor: James Orr