Thread: Real Estate ROI calculations
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05-19-06 23:24 #9
Posts: 340A property is worth what a willing, informed buyer will pay. So by definition, a product advertised for $100K and sold for $80K is worth $80K. Just because you think you resell it for $100K doesn't make it worth $100K. If it was that easy, the original seller would have sold it for $100K.
If you buy, hold, and sell, your profit (should you be lucky enough to get one) is a return on the risk you incurred for holding the property. The only time there is a free lunch available is when somebody (usually the government) interfers with the market and economic profits become available to selected parties, aka cronies.
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05-19-06 12:11 #8
Posts: 311Both can not be right, only DH is right!
Originally Posted by MCSE
Your problem was this statement. Your dollar figure is right, but your % figure is wrong.
Bandy
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05-19-06 05:28 #7
Posts: 296Let's move on:
MCSE: My Porteno amigo. Dickhead is stating your potential loss as a percentage 12%. Your stating your potential loss in dollars 10k. Your both right.
See you in a few days.
Judd
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05-19-06 04:34 #6
Posts: 547Originally Posted by Dickhead
(100 - 30)+20=10
Please admit your mistake now and avoid an humilliating explanation.
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05-19-06 02:37 #5
Posts: 3510My math is fine. Yours is wrong. I invite you to mathematically demonstrate my mistake. I have demonstrated yours.
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05-19-06 02:31 #4
Posts: 547Originally Posted by Dickhead
What we're dealing with here is a total lack of respect for the maths:
The property actual cost is 100k.
So if I buy at 80k I can sell it for 100k.
Perhaps, the property worth is 100k not 80k.
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05-19-06 01:44 #3
Posts: 3510Actually you would lose 12,5%:
Property is "worth" 100k for example, but you are such a great negotiator you buy it for 80k. It then devalues 30% from 100k to 70k. Your loss is (80 - 70) / 80 = 10 / 80 = 12,5%.
So you are underestimating your loss by 20%.
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05-19-06 01:38 #2
Posts: 547Originally Posted by JoeNasty
No I'm not.
I'm starting up a business that will provide loans for buy property (mortgage) This business target is Argentinean people, we will finance up to 30-40% of small 1 to 2 bedroom apartments, and the buyers will be commited to furnish and rent temporary their property, as we know this may least for a couple of years more, we may recover big part of the capital in a short time since my company will administrate those apartments, in addition the same real estate agency will charge a commission for both parties buyer and seller. In case property get devaluated the loan is insured with the property itself and if they claim bankrupcy mortgage loans by law has the first choice to claim the debt, even sending the property to an auction. This is the kind of business I like because everyone wins. But, on the other hand, there is always a risk. If you have no experience, reliable information about when the property devaluation is coming and sale before that happens, as a free favor I advise, you better don't do it!
I buy property for a 20% less than advertised because I'm an excellent negotiatior, because I've studied and worked and investigated, so if I had to sale for a 30% less, I will only lose 10% , and try to recover that later, but for you guys buying inflated, you may lose 40% of your investment. So my point is not contradictory since I'm fully covered. The question is, are you guys covered?
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05-19-06 00:03 #1
Posts: 146Originally Posted by MCSEOriginally Posted by MCSE