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UrbanTurf Reader Asks: What Are the Best Investment Potential Calculators?

by UrbanTurf Staff

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In this week’s installment of UrbanTurf Reader Asks, a couple who is entertaining the idea of selling their Cleveland Park condo and moving to Chevy Chase or Silver Spring wonders if there are any resources or calculators out there that will help them make the best investment decision.

My husband and I own a one-bedroom condo almost on top of the Metro in Cleveland Park, but are looking to buy a house. We can either keep the condo, rent it and buy in Silver Spring or sell the condo and buy in DC around Chevy Chase or Tenleytown. A good school district is one of our requirements.

To figure out the best investment strategy, we’ve done some calculations with spreadsheets, but there are many x factors, starting with how home prices are projected to grow in Chevy Chase vs. Silver Spring vs Cleveland Park, how these differ for single homes vs. condos, etc.

Are there any resources and/or calculators that could help us make the most educated decision possible?

Post your thoughts in the comments section. If you would like to submit a question for UrbanTurf Reader Asks, send an email to .(JavaScript must be enabled to view this email address).

 

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This article originally published at https://dc.urbanturf.com/articles/blog/urbanturf_reader_asks_what_are_the_best_investment_potential_calculators/1924

4 Comments

  1. Beverly said at 1:17 pm on Monday March 29, 2010:

    MRIS is the only place I can think of that would provide zip code housing price stats from past years for comparison purposes. I don’t know of any investment calculators.

  1. Rent said at 2:01 pm on Monday March 29, 2010:

    I’d rent the condo, but I wouldn’t count on appreciation as the sole means of getting a return on your investment.

    Figure out how much money you have sunk into the condo—original closing costs and mortgage expense up until this point. Then, figure out how much your principle grows each year. This divided by sunk costs to date will give you your initial annual ROI, which will grow over time as your interest payments go down.

    The rental income is effectively shielded from taxes because of the deductions you get from owning an investment property, so you get more bang for your buck. You can sell the condo in 20 years to pay lil’ Johnny’s student loans, or consider holding the property post retirement. With no mortgage, the condo could bring in enough money for the two of you to spend a month in the Bahamas each year as retirees.

    Keep in mind, selling the property will cost you over 6% of your sales price. That loss could be a huge number relative to the money you’ve actually invested in the property.

  1. Janson said at 3:51 pm on Monday March 29, 2010:

    You are exactly right that there are many variables that you need to plug into a calculator to figure out your best option. Unfortunately, those variables, many of which describe the future, can’t be known with much precision. So, while I’m pretty sure that you can get an “expert” to fill in these variables for you using “educated” guesses, there will still be a tremendous amount of variation in possible outcomes. Keeping those variables in front of you is more important to keeping the real risk of homeownership in perspective.

    Because of that unknowability, I suggest that you only buy when you have an extraordinary margin of error over the alternative - maybe as high as a 100% margin of error. Future interest rates, future inflation, future income and property tax load, future mortgage lending requirements, and the local unemployment level all have to be included in your calculation, in my opinion, because they are the foundation for things like price appreciation.

  1. MaryTodd said at 9:02 am on Tuesday March 30, 2010:

    I would be curious to know what factors you are putting into your spreadsheet and comparing for my own purposes going forward. If you are open to sharing.

Comments are closed.

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