Are You Getting All You Can Out Of Your Minneapolis Duplex Investment?

Many would-be Minneapolis and St Paul duplex owners think their property is a good investment, simply because it’s producing monthly cash flow.

Yes, that is the main benefit of owning investment property. However, the rate of that return should be just as important, if not even more so.

For example, the other day I did an equity analysis for an investor doing year-end financial planning.  He wanted to know if there was a way to get a greater return on the money tied up in an investment property.  When we looked at what it was worth on today’s market, then subtracted what he owed, we realized he had approximately 60% equity.

When we compared that six-figure equity to the cash flow, we found he was getting just a 2.2% return on the investment.

Of course, cash flow isn’t the only benefit of owning investment property. There are things like principal reduction, tax savings and appreciation as well. However, when we did those calculations, we discovered his overall rate of return without appreciation was in the single digits.

When we compared his rate of return to that on a property geographically a little closer to his home, the numbers got a little better. But not better enough. While that may not have been the answer he was looking for, it did give him a chance to get a clear understanding of where things were at, as well as brainstorm around some ideas that may provide him a better return for his time.

If you aren’t sure what your current rate of return on equity is, or if your property is truly the best one for you at this time, give me a call. I’d be happy to do a free equity analysis to help make sure you are maximizing your return on your investment property.