Apples to Oranges really.

There are private money lenders out there that will add the IO payments to the balance of the loan. 

I'm sure every market has different labor and material costs so this won't be comparing apples to apples, but would greatly appreciate any feedback.

So wouldn't it make more sense to include loan paydown as part of your ROI calculations so it'd be an apples to apples comparison to the stock market?

Bad underwriting is the primary failure point for most IRR comparisons, and it makes it tough to make apples-to-apples comparisons across various sponsors/brokers/investors because some underwrite very reasonably, or even conservatively, others underwrite aggressively, and yet others underwrite as if they live on another planet.Another consideration is that what is desirable to you in an investment dictates which performance indicator to focus on most. 

Was just thinking that maybe the contractor was not talking apples to apples.

This year, I started to look at Austin, especially Milwood area near Apple campus.

I'm trying to find a great property manager to handle a 7-unit apartment in Apple Valley, California.  

He's requiring an additional 1.875% penalty fee ADDED to the balance of the loan (essentially increasing the IO payment every month, which means it's more like a 3% increase). 

So that will be more expensive then conventional but the io helps offset that a bit in terms of monthly cash flow.This can make sense when speed helps or dti/rental history, seasoning of funds etc makes conventional hard to get.