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Real Estate Question on Yields

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MHP368

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I have a question on yield

How did he get the yield 23.09%?

This is from Lonnie Scruggs' book, Deals on Wheels
Im at work so I cant poke into that right now but John Fedro is pretty well versed and very welcome to questions (google his name)

IMO post dodd frank lonnie deals are dead unless you dont mind skirting the law , not a low barrier (money wise) real estate entry point

You can however find a 10 to 20 unit park that might onpy require 20k down , but owning the parks is a different beast
 

levijean

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What is the concept behind it?
What do you mean the concept? The concept of the deal or the concept of yield?
 

MHP368

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maybe, "time value of money" formulas

or "yield to maturity" ?
 

JScott

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What is the concept behind it?
In this case, what is being calculated is the yield (or more accurately, the "yield to maturity"). In basic terms, this is similar to a compounded rate of return, assuming that all cash flow (payments) are reinvested at the same compounded rate of return.

If you're familiar with the idea of Internal Rate of Return (IRR), you can assume that's the same thing...though it's actually Modified Internal Rate of Return (MIRR), since the payments are assumed to be reinvested.
 
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