Trying to figure out how the Annualized return is calculated
Quote from @Todd Barnes:
How do you come up with the Annualized return? What is the calculation, and what are the #'s used?
I believe that's IRR
- Conner Olsen with The Moorhead Team
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Quote from @Todd Barnes:
How do you come up with the Annualized return? What is the calculation, and what are the #'s used?
The annualized return of a property is a metric to show your projected equity in a property over different points in ownership, in proportion to your down payment and other acquisition costs. The graph is particularly helpful in showing visually how your equity grows exponentially due to compound growth.
The metrics are typically loan amount (decreases over time), property value (increases over time), cashflow (increases over time), and selling costs. Tax implications of passive income, depreciation, capital gains, etc are not regarded in this process.
The formula is complex and a calculator should realistically be used. Investopedia will give you the formula needed if you so desire.