Calculation of Return on Equity

  • Erstellt am 2019-04-16 03:45:28

HilfeHilfe

2019-04-23 07:39:11
  • #1


then your real estate empire is a hobby. If you were really a Trump, you would know that the CF statement or also the cash flow statement of a company is one of the most important key figures

Cash is king

If you need cash, you have to play by the rules

everything else you write are meaningless novels
 

aero2016

2019-04-23 07:47:20
  • #2
That's nonsense. It is a completely common practice to pay off a real estate loan without cash flow through the tenant. Once the loan is paid off, the property generates passive income.

Sure, there are other models as well, but this is probably the most widespread one for private investors.
 

HilfeHilfe

2019-04-23 10:33:44
  • #3

If the OP really has real estate in the millions without positive CF, he makes himself unbelievable
 

ghost

2019-04-23 19:16:03
  • #4
First of all: My comments were intended as help because my impression was that the numbers in your first post didn't quite add up. Of course, it is clear that one can also do a rough calculation in one's head. I cannot guess your 80% approximation.

What is wealthy and paper wealthy?
Assets - liabilities = wealth
Whether one is wealthy or not depends on the definition of wealth (at what amount of wealth = wealthy).
Paper wealthy = Someone thinks that their wealth corresponds to the value of the assets.

Your comparison of the different asset classes is, of course, not entirely correct in this respect, since you compare debt-leveraged assets (real estate) with non-leveraged assets. At least regarding the return of the asset.
You are right about the equity return, but that precisely depends on the debt leverage.

Cash flow neutral or slightly negative cash flow financing is certainly standard at the moment, but also increased risk. Just like you, these rely on further value increases.
This has worked excellently in the last 10 years.
Maybe this model will also work in the next 10 years, or maybe not.

The forum is also there to listen to other, even opposing, opinions.
Therefore I tell you: Your Achilles heel in your plan is falling real estate prices.
 

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