The value we would like to track here are the value of the house IF you were selling it at the end of each quarter. Basically, you get current value of the house from www.zillow.com, and then minus the mortgage you still have on each house. The you calculate the annual growth of that value (hopefully you are not under water).
Note that we do not track the rental income you obtained here, nor we deduct the investment you put into maintain the house. For simplicity, we only want to track the value of the house. The other positive/negative cash flow are tracked at other places.
After you understand the annual growth rate of your real estate investment, there are two important decisions to make
- whether you have achieved sufficient return on any of the property, and it is time to sell the house
- whether the annual growth is sufficient, or you want to relocate your investment at somewhere else (say stock or retirement account)
Remember that, for real estate investment, you are borrowing somebody else's money to make money for yourself. So, there is a lot of leverage here.
