We just closed a property that a client bought three years ago for $44,500, after putting $14,000 or so in rehab and mainatenance when tenants moved out and netting $500 per month in monthly cash flow, they will have made $18,000 in three years from rents (excluding vacancy). The property just sold for $68,500, which means that even after subtracting renovation and turn costs that the client made another $10,000 in profits from appreciation. This $28,000 return on a $58,500 investment for acquisition and renovation means that our client made 48% ROI (Return On Investment) in a short three years. This doesn't count tax advantages from depreciation, and this is also with NO LEVERAGE. Had the client financed the property instead the return on investment would have been 191%.
These numbers take into account property taxes, management and insurance costs, but don't factor in vacancy for when tenants may have moved out (as I don't have that data presently). The point is that if you can find an expert who specializes in high return real estate investment property you can do very well as a diversification of your portfolio as well as having an excellent hedge against inflation.
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