As with any investment, most of us focus on returns. Returns are how we compare one investment over the other. The rate of return is what newspapers and stock analysts tout.

Stocks and mutual funds provide similar data.  You can compare past returns between a Fidelity fund and Janus fund, and the stats are apples to apples.  Real estate books and advertisements may lead us to believe that this is a straight comparison. However, with real estate investing, a direct comparison is almost impossible.

Looking at past city data trends will most likely not lead to an accurate picture of what to expect in a single neighborhood or "micromarket".

If returns in Area 1 were 15% for a single family house, and you are looking at a duplex in Area 2, how can you extrapolate and get a fair estimate of the future rate of return? Homework of comparables and a knowledgeable real estate professional are essential.

They were looking to increase their income, but did not want to carry much debt when finding their replacement properties.

We helped sell their duplex and replaced this property with a 5-plex and 3 duplexes via a 1031 tax-free out-of-state exchange from California to Oregon. Overall, this more than doubled their income, decreased their vacancy risk, and increased their units from 2 to 11.

Our projections are that this will increase their Return on Investment by 2-3%!

Just in income alone they will get $66,000/year with their new portfolio.

Existing Property      Units        Monthly Income

Duplex in San Francisco       2                        $4400

(Sold for $1.4M)

Replacement Property          11                       $9900

(Purchased 5-plex and 3 duplexes for $1.55M)