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Do you use XIRR to track your real estate portfolio?

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  • llmgwc
    replied
    Thank you.

    Leave a comment:


  • ENT Doc
    replied
    Originally posted by llmgwc View Post
    Thanks for the tips. I decided to go with equity minus transaction costs as my ongoing ending balance, to estimate the return at any given time. It doesn't take into account business expenses such as CPA and attorney fees, unfortunately, but it should give me a pretty good idea of what each property is doing performance-wise.

    How would you all incorporate cash-out refis into this system? Call the refinance a positive cash flow, but reduce the ending balance equity on the property?
    Well it’s the same thing - cash flow. Whatever you get out, minus closing costs, is your positive cash flow. Whatever your new loan terms are then dictate the cash flows moving forward. Equity is affected as well.

    Leave a comment:


  • llmgwc
    replied
    Thanks for the tips. I decided to go with equity minus transaction costs as my ongoing ending balance, to estimate the return at any given time. It doesn't take into account business expenses such as CPA and attorney fees, unfortunately, but it should give me a pretty good idea of what each property is doing performance-wise.

    How would you all incorporate cash-out refis into this system? Call the refinance a positive cash flow, but reduce the ending balance equity on the property?

    Leave a comment:


  • dennis
    replied
    Originally posted by llmgwc View Post
    Particularly your leveraged, directly-owned properties that cash-flow some months and not others?

    I'm trying to determine the best way to track my returns. I think it is XIRR, but would love to see some examples of how exactly I should do that, especially on properties I have a down payment on. My real trouble is deciding what the "ending balance" should be on the XIRR spreadsheet. Is it the downpayment? Is it the downpayment + equity accrued through principal payments? Is it the Fair Market Value of the property minus the outstanding debt?

    Thank you in advance for your help! Any examples would be appreciated!
    To me using the Fair Market Value is always just a guess until you actually sell the property. I just use a simple method of cash flow generated that year + principal payments / down payment used to purchase to get a ROI. I don't include the replacement reserve as that isn't something you see in your pocket and will be used for maintenance expenses.

    Leave a comment:


  • ENT Doc
    replied
    It’s all cash flows. So down payment and transaction costs up front. Positive cash flows later. Assuming you have a capital reserve this is just something that will reduce the positive cash flows monthly. Agree with PoF that for sale (or assumed sale) take equity minus transaction costs for sale cash flow. For the sake of accuracy I’d do it all on an after tax basis.

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  • PhysicianOnFIRE
    replied
    I would use your best estimate of your current home equity, minus transaction costs of selling if that's your exit strategy. If you plan to hold forever and pass the asset on to heirs, just go with current home equity.

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  • llmgwc
    started a topic Do you use XIRR to track your real estate portfolio?

    Do you use XIRR to track your real estate portfolio?

    Particularly your leveraged, directly-owned properties that cash-flow some months and not others?

    I'm trying to determine the best way to track my returns. I think it is XIRR, but would love to see some examples of how exactly I should do that, especially on properties I have a down payment on. My real trouble is deciding what the "ending balance" should be on the XIRR spreadsheet. Is it the downpayment? Is it the downpayment + equity accrued through principal payments? Is it the Fair Market Value of the property minus the outstanding debt?

    Thank you in advance for your help! Any examples would be appreciated!
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