Rates Of Return HELP..
Hello
I have some older software from RealData that id like to use to analyze properties with but I’m a bit confused about what kind of numbers to use with the following:
% Safe rate for modified Internal Rate of Return 4.00%
% Reinvest rate for modified Internal Rate of Return 7.00%
% Discount Rate for present Value Calculations 5.00%
RealData has already entered the amounts I have listed. Are these numbers ok…or should I change them?
Id appreciate any input and also how does realdata rate in the comm. real estate world.? Thanks again.
Ray...
8-) 
Your IRR is too low, My clients get atleast an IRR of 15% the first year and it continues to climb steadily past 20 percent. 4% is not good. I use my own excel sheet, i'm not sure about Real Data, anyways IRR stands for internal rate of return,
jripeastwest...
Being new to the business.. Im trying to learn fast. Thanks for your help. Its trully appreciated.
Personally, I'd forget about IRR all together. It doesn't help you a bit. It's a speculative number (it can only truly be calculated after you SELL the property down the road).
You can have properties that LOOK like they have a great IRR, but they're still negative cash flow properties.
Realtors use this to sell investors or make a deal look better than it really is. That's the last number I'd look at.
In my opionion, IRR is good if you have $2M and you're considering 3 deals: One is a 150 Unit apartment building, one is a 7 store franchise package dea, and the other is bonds that are being sold prematurly. IRR is the best way to compare those head to head, however if you already have apples to compare with each other, then use cap rate.
Hibby
I appreciate your straight forward approach and information. It helps. Thanks again.