[Calc Review] Help me analyze this deal
*This link comes directly from our calculators, based on information input by the member who posted.
I'm new to this and used the Rental Property Calculator to analyze a potential deal. I am having a hard time understanding where they are getting the 5 yr annualized return number from. I have Brandon's book and it seems pretty straightforward there. Take the total cash flow over the 5 years + equity (minus downpayment) and divide by the total investment to get the TOTAL Return, divide by 5 to get the annualized return.
So on this deal: cash flow is 1524, 1914, 2312, 2718, 3132 (I assume this increase is from 2% annual rent increase?) for a total of 11,600. After 5 years equity is 172k minus the 120k down for a total of 52,000. So total return is 63,600. Divided by total investment of 132,000 (120 down, 10 closing cost, 2 repairs) equals 48.2%. Divide that by 5 for 9.63% 5 year annualized return. But the Rental Property Calculator shows only 3.71%. I don't understand where I'm going wrong, or what I'm not taking into account. Any help would be appreciated. Thanks!