Calculating Yield - Posted by Kevin

import · July 17, 2001, 7:10am

Posted by Kevin on July 19, 2001 at 18:31:42:

Figure the monthly payment, then

enter n (number of months)

enter your cash out by pressing CHS PV (money you have ing the property)

then enter the payment (you have already calculated this based on the loan amount, payoff perior, and interest rate)

then press i (this will give you your monthly yield)

Multiply this by 12 to get annual yield.

I was never good at technical writing, pleas ask again if you don’t understand.

Kevin GA

import · July 17, 2001, 7:10am

Calculating Yield - Posted by Kevin

Posted by Kevin on July 17, 2001 at 07:10:41:

I have noticed in Lonnie’s Book and on this board that the yield is calculated over the life of the investment. When I calculate the annual yield, it is much more down to earth, say 25% as an example. Even though that is still very good, I am wondering what you all might think is “Good Enough” on an annual basis considering the risk? Or, am I looking at this the wrong way?

Thanks in advance for any comments.

import · July 17, 2001, 4:01pm

Re: Calculating Yield - Posted by Karl (Oh)

Posted by Karl (Oh) on July 17, 2001 at 16:01:17:

The yield we calculate IS on an annual basis. Notice that the annual yield decreases the longer the loan, even when the total principle profit is the same. Conversely, the total yield for the same deal will increase the longer the loan. When I calculate yield with excel, I get a monthly yield answer, then multiply by 12 to annualize my number. I get the same answer Lonnie got in his examples in his book. Or I can multiply by the total number of months of the loan to get the total yield.

An example. Say I buy a home for $4000, sell for $8000, nothing down, 10% interest, 36 months, payment of $258 per month. Monthly yield is 5.5%, annual is 66%, total yield is 199%. Now, if I’ve been doing this wrong for a year and a half, someone please straighten me out. I’d hate to think that I’m making more money doing mobile home deals than I really am!

I shoot for deals that are anywhere between 80% and infinity, using my method above.

Down to earth is okay, but its more fun to stand on the shoulders of giants!

Karl Kleiner

import · July 19, 2001, 8:22am

Re: Calculating Yield - Posted by Kevin

Posted by Kevin on July 19, 2001 at 08:22:55:

Thanks Karl,

Pretty straight and simple to me. I thought I was a HP12c Guru, but I always get stumped on the simple stuff. I wasn’t accounting for the payment including interest and principle over the period.

Well, I’ve got it now!

import · July 19, 2001, 11:56am

Re: Calculating Yield - Posted by Steve-DC

Posted by Steve-DC on July 19, 2001 at 11:56:51:

Kevin,

I’m certainly NOT a Hp12C guru…but I’d like to be! Can you explain to me how Lonnie calculates his deals, using the 12c?

Thanks in advance,

Steve