QUOTE (C2Ventures @ Nov 23 2008, 08:47 PM) ROI on house investment = 31.2% (simple interest) based on 25% down payment. [*]1981 avg home price in Calgary = $114,838 (25% down payment = $28,709.50)[*]2007 avg home price in Calgary = $356,957 (source, Thomas Beyer post on Calgary avg house prices)Capital appreciation of $242,119 / $28,709.50 = 843% / 27 years = 31.2% (non-compounding, not including mortgage paydown)
CORRECTION!! ROI for the Property is INFINITE (you can`t even calculate a ROI!)
A house that was bought in 1981 for $114,000 is now worth about $350,000.
25% Down payment required in 1981 was $28,000
Assuming the investor RE-FINANCES the property right now at 50% LTV = 175,000
$175,000 - original down $28,000 = tax-free gain of $147,000 (can easily re-invest in two other cash-flow properties! Plus NO capital taxes like stocks/mutual funds!)
The property is now sitting at 50% LTV ($175,000) and can easily generate $400-600 of CASH FLOW each month.
*A property that is worth $350,000 is either a single-detached or bungalow which easily rents out $1500-1900 (mortgage payment is roughly $750 + other expenses).
The original principal is gone and taken away, and yet the return of $400-600 a month is still there. I don`t know which investment can be as good as this one.
mmmmmm.... wish I had a property back in 1981!
Good luck investing real estate!
Tommy