Quote:
Originally Posted by kcantor
if you know the initial construction costs "were paid off 50 years ago" and not a penny more invested in the 50 years since in appliances and flooring and roofs and furnaces and kitchens and plumbing fixtures, you are certainly party to more information than i am.
but putting that aside, it might be $1 million dollars a year today but it certainly wasn't doing that when rents for those units were $250 instead of $800 and it certainly wasn't $1 million dollars a year when occupancy rates in edmonton were a lot less than 100%.
but lets say that it is returning $1 million dollars a year today - or even for the last 10 years - and lets say those 450 units only have a book cost of $25,000 each, that still means there is $11.25 million invested that is earning less than 9% a year.
yes, that's a reasonable return - at least in today's market - but it's still a return on the capital, not a return of that capital which remains invested even if just in the underlying raw land value today (which at $500,000 an acre is still approx. $12 million of invested capital).
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Simpler terms for me, a fully paid for asset that has appreciated 10x or more in value that returns a million dollars a year (net!) with little to no risk and all those 50 years of returns after payoff (maybe its only 40...)could be reinvested again into a massive up zoning of condos for a huge final payout of they want the risk, or sell the land for at least 12 million dollars by doing nothing. I'll take it, that's a good enough money factory for me.
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