Ntellivest

Financial planning for financial independence

Content, resources and services to help people make smarter decisions with their money in route towards financial independence (FI). Intelligent portfolio and real estate investing. Simplified financial planning and protections.

My Real Estate Investment Performance (Q2 2018)

In order to know whether or not you have a lucrative investment on your hands, it is necessary to track how well that investment is actually performing.  This is true no matter which type of investment you own (stocks, bonds, real estate, etc.).  Personally, I started acquiring investment properties in early 2016 and have been measuring cash flow performance for said properties throughout this journey.  Feel free to read on for a look at where these cash flow returns stand through the first half of 2018.

Real Estate Performance.png

As a refresher, here are the assumptions being used in the calculations:

  1. I am only looking at cash on cash returns.  These are simple percentage returns (non-annualized) based off of the total net cash flow received versus the total out-of-pocket cash amount put down at the acquisition of each property.  Appreciation, principal pay-down, and tax benefits are not a part of this calculated return.
  2. Cash flows and returns are separated by calendar year.  This will help spot trends in performance over time.
  3. Cash flows and returns are updated quarterly (and soon to be semi-annually).  Anything more would be overkill when it comes to a long-term investment like real estate.


HERE ARE THE HEADLINE NUMBERS:

2016 Cash on Cash Return (Combined) = 13.6%
2016 Best Performer = 24.1%
2016 Worst Performer = -2.1%

2017 Cash on Cash Return (Combined) = 9.5%
2017 Best Performer = 24.2%
2017 Worst Performer = -8.7%

2018 Cash on Cash Return (Combined) = 2.0%
2018 Best Performer = 17.7%
2018 Worst Performer = -19.9%


OBSERVATIONS:

  • Total cash flow during the 2nd quarter of the year came in at $3,874.  This is an improvement over a disappointing Q1 (which generated only $990), but is still below my quarterly target.
  • The saga continues for Property 9.  I was hoping to have this property stabilized with a new tenant in place by this point in time; however, the property needed additional fixes that were not noticed upon an initial inspection (and eviction of the last tenant).  Again, once stabilized, I am strongly considering selling this property and using the proceeds towards reinvestment in a more favorable market (possibly even stepping into the apartment building arena).
  • After the turnover in Property 5 has now settled, the coast is relatively clear for the remainder of the portfolio.  You can never truly predict what might be on the horizon (of course), but I am feeling good that the rest of the year will prove lucrative.
  • Although not measured by the cash flow performance in this report, it is worth noting that the properties have appreciated by around $90,000 since acquisitions were made.  This adds 37% of embedded return to my cumulative investment of $243,474.  Also, the loan balances have been paid down $26,775 (by rental income) from their original amount which provides another 11% of return on investment.  Although not direct cash flow, these are fantastic wins that have provided a nice boost to the net worth!

A detail of performance through the first half of 2018 can be found by clicking the box below.  Note that the tracking spreadsheet has recently received a much-needed facelift!  Feel free to download this same template to help track your own real estate investments.

Please note that I will only be updating these figured on a semi-annual basis going forward.  I've learned that there is too much variance that happens quarter-to-quarter, which distracts from the larger picture of true performance (and the reason for the reports).  That being said, do check back at a later date to see how these properties round out the year!