double beta

Three Areas of Opportunity for the Bold

Real estate is geographically diverse which is well known. However, from what many old investors tell me there have not been many times in history rental properties will produce a 2:1 coverage with a 20% equity injection. If the property is producing $370/mo or $4,440 per year after PITI payments he is realizing an unadjusted 13.1% cash on cash return. Not bad. Assume he has 10% operating expenses and a 5% recoup on the taxation side over the life of the property. ($1,300*12= $15,600 gross. $15,600 * 5%= $780. $4,440 - 780= Adjusted NOI of $3,660 and results in an adjusted cash on cash return of 10.8% with no accounting for future appreciation. Not a bad return, if you can do better right now let me know.