ProAPOD real estate investment software released a new update for two of its real estate investing software solutions today. ProAPOD Basic 6.0 corrected a problem with the amortization table not becoming visible on the loan calculator, and ProAPOD CFA 7.0 (in addition to the same correction made for it’s amortization table) modified its Return on Equity Report with several labels that makes it easier for a casual reader to comprehend. Both downloads are available free to real estate agents and investors currently using ProAPOD.

Real estate investment specialists toss around the phrase APOD as frequently as family members making toasts at a wedding. So if you’re a realtor that has worked with multifamily income property, or are someone buying income properties, chances are good that you’ve heard the term or eventually will. It’s also true that if you’re a residential real estate agent evaluating apartment buildings for the first time or a beginner at real estate investing you had no idea what an APOD is.

Of course residential agents who never work with residential income property aren’t expected to know (or even care) what an APOD means. So when Suzie Superlister says an APOD is something to set a camera on, no dignity lost. We chuckle with her not at her. But when Suzie ventures into the world of multifamily property, where APODs bred like mushrooms in silt, it’s no holds barred. Take it from me. Suzie better know what an APOD is or she will be looked upon by colleagues and investors as (shall we say?) less than professional. So for all the Suzie Superlisters out there it, if you want to work with residential income property, this one’s for you.

What An APOD Is

An APOD is an acronym for Annual Property Operating Data and serves as the real estate equivalent of an annual income and expense statement. In other words, it’s a concise one-page document that reveals a rental property’s income and expenses projected for one year. Consider it a snapshot of a property’s annual (not monthly) income and expenses if it helps plant the idea.

Here’s a sample APOD report provided in PDF format from ProAPOD Real Estate Investment Software so you can see what one should look like.

Trying to calculate internal rate of return (IRR) manually is not very practical for income property investors (or anyone else for that matter) because the internal rate of return calculation involves tedious mathematical solutions that take a lot time. Even the most skilled investment real estate specialist probably wouldn’t know the internal rate of return formula and instead would use a time value calculator or real estate software program to compute it.

So I’ll ignore the actual formula (it can be found in other places on the web) and instead resort to a simple example. Let’s suppose you have $100,000 to invest in a rental income property and plan to hold it for five years. Moreover, during the period of those years you plan on receiving five annual cash flows and then an amount of additional money from the sale of the property. When you find the unique rate that discounts the sum of these future cash flows until it equals the initial investment, you will have the IRR.