I am currently setting up my investment dashboard to track my portfolio’s performance (buy-and-hold) but am also looking into better understanding the underlying dynamics between the various return metrics. My question has two components:
Part One: Which metrics to include in the executive output:
The current shortlist/ratio’s that will make it on my “executive output” are:
Capitalization ratio Cash-on-Cash ratio Return on equity (incl. loan paydown, cashflow and appreciation) Debt servicing ratio
Is there any metric I am forgetting here to get a first good impression of the property? Any suggestions?
Part Two: Underlying dynamics:
I am trying to better understand the various effects between our “selection”. For example: a high cash-on-cash ratio is usually good news. However, it could also be that the property is “underlevered” and therefore has a lower overall return on equity (+ the opportunity cost of only being able to acquire one property). Another example could be a high debt servicing ratio (e.g. close to 100%) which could mean that your rental income is too low OR you have a short-term loan (which then again affects your return on equity from loan paydown and risk profile).
Do you have any further points or ideas? I would love to hear about it!
Warm regards from Switzerland,