Do you use IRR for NPN's?

[Andy Mirza]

What are folks using to provide numbers to show historical data on their NPN returns? I've been using ROI and Annualized ROI when communicating with current and potential investors but I've always felt that IRR (Internalized Rate of Return) should be the most accurate. I recently found a calculator that can make the IRR calculation using monthly cash flows and I ran the calculations for some of my last NPN returns. (Using monthly cashflows seems to me to be the most useful for the amount of time needed to do the calculations versus bi-weekly, weekly, or daily cashflows.) Annualized ROI was pretty close to the IRR calculation for most. Where it differed was with the NPN's we took back as REOs, since we had to put additional capital into the deal.

Thoughts??

[Chris Seveney]

Andreas Mirza
Yes I use internal rate of return. If your using it in excel DO NOT use the IRR function as you are much better using XIRR OR IRR in a formula to get it based on monthly cash flows.

I would be happy to talk offline more about it