Real Estate Investment Returns 27% Annualized Over 17 Years

Last week, I wrote a blog about a great investment my brother Mike purchased in 1991 in Richview Park. If you did not get a chance to check it out, I would recommend you click here to read about Richview Park townhomes as the lead-in to this real estate investment analysis. He has since provided me all of his operating data since the day that he purchased his townhouse in Richview Park.

As a quick summary, we have seen property values grow in Richview Park over the past 17 years, though prices have softened in the past two years. The following graph shows all arms-length transactions in Richview Park through July 2009.

Richview Park Townhome Analysis

The following table shows information gathered by my brother over 18 years he has owned the property. In order to simplify the Richview Park analysis, we used mid-year convention on expenses allocation. Additionally, we assumed that he bought it for investment, though he lived in it the first year, thus we measured cash flows from the time he “placed it into operation” as an investment. [click to continue…]