Solutions Real Estate
David Gudmundsen
(480) 830-2552 Work
(602) 369-5005 Text
(480) 503-8154 Fax
azbroker@cox.net
David Gudmundsen
(480) 830-2552 Work
(602) 369-5005 Text
(480) 503-8154 Fax
azbroker@cox.net
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Arizona real estate investments, invest in AZ apartments for sale, Mesa 4 plexes for sale, Invest in Phoenix apartment buildings
| For buyers & Investors |
All information herein is provide is for information purposes only and subject to change, sale or withdraw at any time.
David Gudmundsen, Solutions Real Estate, Inc and its agent make no representation to its accuracy.
David Gudmundsen, Solutions Real Estate, Inc and its agent make no representation to its accuracy.
This section is especially for beginning to intermediate investors.
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| Investors Terms: 1) GRM(Gross Rent Multiplier) Sales Price divided by/ Annual Gross Rents 2) Cap (Capitalization Rate). Return based on a cash purchase. Net Income/Sales Price 3) ROI or C/C: Return on Investment or Cash-on-Cash return. Net Income (after paying all expenses including mortgage) divided by Initial Investment (Down payment + closing costs). 4) IRR: (Internal Rate of Return). Overall return on Investment over the period of ownership. Figures out the overall profit, including all annual cashflow (positive or negative) and after sales profits. This method is the best way to figure your return, but it is the most difficult to calculate because you must plug in many assumption which after extremely hard to predict, if not impossible. |
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| 1) Appreciation: Properties typically do up in value. 2) Cash Flow: The money left over after all the expenses are paid. 3) Equity Build-up: Loan principal reduces over term of loan. 4) Tax Advantages: Properties can be depreciated (write offs). |
| When rates are low are purchasing power increases and when rates increase purchasing power decreases. Ex. If rates increased from 6% to 7% one would lose almost $25,000.00 worth the purchasing power, based on a 30 year $250,000.00 loan. What this means is that, for the same payment you buy $25,000.00 less when interest rates go up one percent. |
FYI For Your Information (the power of compounding interest)
Here are some interesting questions pertaining to
time-value of month and the power of compounding
interest.
#1) If you invested $500 per month, at 12% return, in 30
yrs what would it be worth? Answer
#2) What if you invested $20,000 (lump sum), and
received 15% (annually, but compounded monthly),
what would it be worth in 30 years (360 months)?
This question pertains to the above example: Entitled:
Understanding the advantages of low interest rates.
#3) What is the difference in purchasing power in
#4) getting a 7% interest rate vs. a 6%?
#5) What about an 8% interest rate?
For the answers, see figure 1.1
time-value of month and the power of compounding
interest.
#1) If you invested $500 per month, at 12% return, in 30
yrs what would it be worth? Answer
#2) What if you invested $20,000 (lump sum), and
received 15% (annually, but compounded monthly),
what would it be worth in 30 years (360 months)?
This question pertains to the above example: Entitled:
Understanding the advantages of low interest rates.
#3) What is the difference in purchasing power in
#4) getting a 7% interest rate vs. a 6%?
#5) What about an 8% interest rate?
For the answers, see figure 1.1
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Figure 1.1
© Copyright 2004 David Gudmundsen
