Calculating Rate of Return/High Yield Return on Investment

[Michael Terry]

When you get a brochure for an asset in Note Investing, and the displayed Rate of Return/High Yield Return on Investment is 6%, 8%, 14%, how is that calculated? I have done research and am seeing different calculations for different types of real estate. I'm just not sure how it applies to Notes specifically.

Is it just a matter of punching in values into the 10bii calculator? Or are there different values and calculations that lead to a specific final calculation and result?  

There are discussions happening amongst my investors comparing the best investment vehicles - mutual funds (7%-10% ROI historically) vs. note investing (6%-14% depending on the asset).

Thanks all! Appreciate the input.  

[Chris Seveney]

@Michael Terry

This is a question to ask the sponsor as I have seen it calculated in many different ways (with many being wrong).

When they are in a syndication it’s easy to compare because it is typically in the form of a monthly or quarterly distribution.

If it's a JV deal then cash flow is not consistent so they can calculate it based on forecasts.

If it’s a straight loan then it is straight interest but if principal is returned and you are not reinvesting the principal your return will be much lower than an investment that is interest only - but of course none of this takes into account risk (or tax consequences)