Kit includes: 1) Tamrac Adventure 10 Backpack
2) Precision Design Deluxe Camera Tripod with Carrying Case
3) Precision Design Deluxe 6-Piece Lens & Digital SLR Camera Cleaning Kit
The Adventure 10 is a modern backpack designed for the SLR photographer with a pro digital or film SLR with a grip and 8" lens attached, numerous additional lenses, a flash, accessories and a 17" screen laptop. The completely foam-padded lower compartment protects photo equipment, while the extra-large top compartment holds a light jacket, lunch or other necessary items. A separate, completely foam-padded compartment provides quick access to a laptop without disturbing photo gear. Double zipper pulls provide quick access to photo gear while a weather flap and quick-release buckle provide security and weather protection. Inside the main compartment, foam pillars support the camera with lens attached while adjustable, foam-padded dividers protect other equipment. Tamrac's patented Memory & Battery Management System uses red flags to identify available memory cards and batteries from ones that are used up. A Windowpane-Mesh pocket organizes filters, cables and other accessories. The comfortable, foam-padded backpack harness with sternum strap is contoured to distribute the weight of the camera gear across the shoulders and features a padded waist belt to help distribute the weight of the pack.
Get maximum image quality and avoid camera shake with this lightweight and sturdy 57-inch tripod, supplied with a fitted carrying case and strap.
This 6-piece cleaning kit contains everything you'll ever need to properly clean your lenses, including a Hurricane Air Blower, Lens Cleaning Tissues, Lens Cloth, Lens Cleaning Liquid, Brush and Cotton Swabs.
Read my other article: How to Determine Value for more elementary and detailed explanation of terms.
Which investment scenario below is best?
Which investment would you want?
Which investment will make you the most money?
Investment A: Cap Rate 10% 1 year holding period $1,000,000 purchase price $100,000 NOI $1,000,000 sales price End of Year 1
Investment B: Cap Rate 5% 1 year holding period $1,000,000 purchase price $50,000 NOI $1,050,000 sales price End of Year 1
Investment C: Cap Rate 15% 1 year holding period $1,000,000 purchase price $150,000 NOI $950,000 sales price End of Year 1 And no, this is not a trick question. This represents a real life scenario you will have to consider when determining which investment is best based on total return.
The answer is: "They are all the same." If you look solely at Cap Rate then "C" is the best investment as it indicates a 15% return. But Cap Rate only takes into account first year NOI in relation to purchase price. It does not consider the eventual sales price. When you consider the eventual sales price in the equation (and it absolutely needs to be considered) you must look at different investment rule of thumb called yield or Internal Rate of Return (IRR). IRR may be defined as the rate of return earned on each dollar each year it remains invested in the investment.
Using IRR as the measure of performance on the investment, each of the three investment choices generates a 10% annual yield in that in each choice for a $1,000,000 purchase the investor receives $100,000 on their investment and the return of their $1,000,000 original investment.
In Investment A the investor pays $1,000,000 and sells the property for $1,000,000 which accounts for the return of the investment. The $100,000 of NOI represents the return on the investment which is 10% for that one year. The investor invested $1,000,000 and received $1,100,000.
In Investment B the investor pays $1,000,000 and sells the property for $1,050,000 which accounts for the return of the investment and $50,000 of return on the investment through appreciation. The $50,000 of NOI also represents a return on the investment. Combining the $50,000 of appreciation with the $50,000 of NOI, the investor has invested $1,000,000 and has received $1,100,000 during the year, which is a 10% IRR.
In Investment C the investor pays $1,000,000 and sells the property for $950,000 which accounts for only a partial return of the investment. The $150,000 of NOI also represents a $100,000 return on the investment and a $50,000 return of the investment. In total, the investor has invested $1,000,000 and has received $1,100,000 during the year, which is a 10% IRR.
In addition to accounting for the eventual disposition of the property, the internal rate of return can account for multiple year holding periods, different cash flows during those years and the eventual sales price upon disposition of the property. Suppose you hold the property for more than 1 year. Is that a plausible scenario? Of course it is! Most CRE investors hold their investments for longer than 1 year and each year's NOI needs to be considered in the equation not just the first year. Suppose also that tenants moved in and out throughout the holding period and that vacancy rates were different in different years creating different NOIs throughout the years. Is that possible? Of course it is!
Consider that you increased the rents over the years resulting in greater NOIs. Assume that you also decreased the operating expenses which also increased NOI. You will want a measure to account for all of those changes in cash flow (NOI) and take into consideration the net sales price inclusive of costs of sale, etc. and measure the yield or your IRR. In this case study, involving a holding period of only one year, each investment yields a 10% return, but each has a different Cap Rate!
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Karen Hanover is well known as a Certified Commercial Real Estate Advisor, President of the National Apartment Investors Association, Chairman of the National Commercial Real Estate Advisory Board and Senior Instructor for both the Self Storage Education Institute and the Apartments Education Institute.
As a CCIM Candidate, a highly prestigious designation, often called the "Ph.D. of commercial real estate" Karen works as a busy commercial real estate agent with Marcus & Millichap one of the nation's largest and most highly regarded commercial brokerage firms.
Sought by industry insiders for their toughest deals, Karen has helped thousands to create wealth in commercial real estate with less risk even in today's uncertain economy.
Karen founded the Commercial Investment Education Institute which provides educational instruction for investors on multiple subjects including apartments, self storage, office buildings, retail centers, mobile home parks and more. Her courses are taught in a friendly and easy to understand manner.
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