Historically when I compute return on investment for Oklahoma City real estate rental properties cash on cash, cap rate, and internal rate of return has been the three main metrics, but we have added another. I am asked by real estate investors what the annual appreciation would be and if you use a gross number for the whole city you get around 3% per year. The problem is that number can be for all properties from $10,000 to $5 million, and there is no way to have that as a figure for your specific Oklahoma City rental home. For this reason we have added annual equity build up as a 4th parameter to determine if the real estate return on investment is worth the money. It is computed as a combination of factors of course starting with typical appreciation but with more determinations. If you buy the home under comparable values say $10,000 that affects your number. You also are paying down principle on your 15 or 30 year loan so that is added. I computed one for a $189,000 house yesterday for a investor and the annual equity increase was 5.675% based on a seven year hold. These 4 metrics are not the only way we determine if you should buy a property. More analysis goes into the supply and demand analysis, as well as segmenting certain groups like seniors for specialized neighborhoods. Our team of builders, developers, REALTORS®, and property managers all work together to build wealth for you and create confidence that we have your best interests as a priority. Add annual equity increase for an Oklahoma City real estate investment is just another way we can say we do our homework. If you are interested to know more about Oklahoma City positive cash flow rental properties, please contact me at joe@joepryor.com.
Comments(8)