Your Name Here Your Firm Name Here
David Michonski 476 S. Frontage Road, Vail, CO
Type
Description
Year
Value
1995
$ 195,000
Improvements
Complete Renovation2005
$ 225,000
Improvements
New Flooring
2006
$ 15,000
Improvements
Replace windows
2008
$ 35,000
2010
$ 950,000
Purchase
Sales
Rate of Return: 7.39 %
While the Home Appreciator gives an accurate indication of the annual rate a home has appreciated or depreciated accounting for major improvements, it does not provide a precise definition. For instance, it asks just to input the year of purchase, improvements and sale rather than an exact date for each. Given the time value of money, not doing so will alter the calculation slightly. To create a more precise rate of return one would have to enter the exact day, month and cost of purchase, improvements and sale. Additionally, the Home Appreciator does not take into account capital gains taxes, the cost of upkeep, taxes, assessments, maintenance and other variables that would change the calculation. Finally, it does not take into account leverage. If for instance, it calculates that a home has appreciated 3% a year, but was leveraged with an 80% mortgage and 20% equity, then the return on the equity invested would be approximately 15% a year, not 3%. In such an instance, the Home Appreciator errs on the side of under-estimating the return and hence the value of a home investment. Nonetheless, having calculated the rate here, a homeowner can then adjust such rate for their individual leverage and structure. The Home Appreciator should not be used for such precise calculations and the provider of the above rates of appreciation and Power Marketing.pro, Inc specifically disclaim any liability for the Home Appreciators imprecision. Power Marketing.pro, Inc is not responsible for errors of information inputted by the user that results in inaccurate returns. Anyone desirous of more precise and accurate calculations should consults a financial advisor, accountant or financial analyst skilled at calculating internal rates of return on investments.