New Features for Lion and iOS 5
2012 will also be a great year for analyzing your potential deals with Property Evaluator on your iPhone, iPad, and Mac! Here’s a quick summary of the latest new features, and a sneak peak at what’s next.
New Features
In July of 2011, Apple released OS X 10.7 Lion for the Mac, and in October they released iOS 5 for the iPhone and iPad. These are the most significant updates in recent years, and they add many new features for users and developers.
Version 3.9 of Property Evaluator was just released, and it now requires OS X 10.7 Lion or iOS 5 as the minimum operating system. If you’re still running iOS 4 on your iPhone or iPad, you can still run version 3.8, but iOS 5 is a free update, and it’s compatible with the iPhone 3GS, iPhone 4, iPhone 4S, and any iPad, so you really should update when you get a chance.
The main reason for requiring iOS 5 and Lion is that iCloud requires them (more on iCloud and syncing later). The other reason is that Apple added a new compiler technology called ARC that makes apps run faster, and it makes them much more resistant to crashes and memory bugs. All of the Real Estate Tools apps are now fully converted to ARC.
One of the new features in version 3.9 is the ability to print the PDF reports directly from your iPhone or iPad. Note that this requires an AirPrint-compatible printer. You can also install some utilities on your Mac to enable AirPrint from any of your printers. My favorite is Printopia.
I also spent quite a bit of time optimizing the PDF reports to reduce the file size. In many of my tests, especially with properties that had lots of photos, the PDF file size was about 80% smaller than before. This will make it faster and easier to email your real estate projections to your clients, lenders, and investment partners.
Another new feature is that now you can choose whether you want to copy the photos when you duplicate a property. This is really helpful when you want to create projections for several similar properties, where the main differences are the street address and the photos.
You might have noticed that the Property Reports now include some colorful new graphs of Cash Flow, Equity, and Internal Rate of Return. These are the most important financial metrics in real estate investing, and it’s really helpful to see a visual representation 30 years into the future.
What’s Next?
The most popular feature request over the last year has been to add the ability to sync data between the iPhone, iPad, and Mac versions of Property Evaluator. Syncing data across multiple devices is a very challenging technical problem, but fortunately, Apple introduced a new service called iCloud in Lion and iOS 5 that makes syncing much easier to implement. The ability to sync the data in Property Evaluator is under development, and it should be available within the next couple of months.
Another popular feature request has been to make it faster and easier to estimate your improvement costs. The next major release will feature a completely new approach to estimating your improvement costs. More on this in a future blog post…
Real Estate Investment Portfolio Analysis
You can download a sample Portfolio Analysis Report to see what it looks like.
Here’s a quick summary of what you can do:
• Create multiple property portfolios.
• Add up to 26 properties to each portfolio.
• A property can belong to multiple portfolios.
• The Portfolio Analysis shows you a comparison of the main financial metrics for each property in the portfolio.
• You can also see the combined performance of all properties in the portfolio.
• View a map showing all of the properties in the portfolio.
• Email a portfolio report to your clients, lenders, or investment partners as a PDF file.
• You can also sort properties alphabetically, by date added, or by key financial metrics.
I’m already getting some great feedback from customers who are using the portfolio analysis. Investors are using it to filter out the best deals from a large number of properties that they’re thinking about buying. Real estate agents are using it to put together portfolio reports for their clients who are interested in buying several properties at once. Other real estate agents are creating a portfolio for each one of their investor clients, and customizing each portfolio to each client’s needs.
Please take a look at the portfolio analysis in version 3.7 and let me know what you think!
Version 3.6 Adds Several New Features
- Now you can add your company logo to the Cover Page and header of the PDF Report
- There's a new Overview page in the PDF report, which includes a financial summary, property photo, and a map of the property location
- Now you can add Initial Improvements, which are included in the Initial Cash Invested. This is intended for the initial rehab and capital improvements that are done when you first purchase the property.
- Itemized Buying Costs and Selling Costs are now shown in the PDF report
- The mortgage info is not displayed in the PDF report when the loan amounts are zero. This simplifies the report for an all-cash purchase.
- Added Rent per Square Foot and the Operating Expense Ratio to the Purchase Summary
- The Property Description and Notes fields are now included in all versions of the app
What is the Internal Rate of Return?
The charts below attempt to explain IRR in a simple, visual way.
The first chart shows the results of investing $10,000 in a savings account with a 20% interest rate, compounding annually. The purple bar represents the balance carried over from the previous year, and the blue bar represents the interest that accumulated in the given year. The blue bar also represents the annual cash flow for the given year.
The next chart shows the performance of the same savings account in a different way. In this chart, only the annual cash flows are shown. In the first year, the cash flow is negative $10,000, since you paid $10,000 out-of-pocket to fund the savings account. In each year, you get a progressively larger cash flow in return. In the last year, you get your initial investment back in addition to the interest that accumulated during the final year. This is shown by the shaded bar in Year 10.
The next chart shows the annual cash flows for a real estate investment. The cash flow is negative for the first couple of years, and it becomes positive in Year 3. When you sell the property in Year 10, the proceeds from the sale are much larger than the bar in the savings account example above. Which investment do you think has the best Internal Rate of Return?
The answer is that the Internal Rate of Return (IRR) is exactly the same if both of these investments are held for 10 years. How can this be true?
Take a look at the chart below. It compares the annual cash flows for the savings account and the real estate investment. The real estate investment has some negative cash flows in the first year, but at first glance they look pretty small relative to the big difference in the proceeds from the sale in Year 10. The reason for the optical illusion is the time value of money. A dollar that is earned or spent in Year 1 is worth much more than a dollar that is earned or spent in Year 10. In this example, a dollar in Year 1 is worth about 6 dollars in Year 10. In more technical terms, 6 dollars in Year 10 has the same Net Present Value as one dollar in Year 1 at a discount rate of 20%. In simple terms, there was a pretty big opportunity cost of the negative cash flow in Year 1. The great thing about the Internal Rate of Return is that now you can compare the performance of your real estate investments to a CD, bond, mutual fund, or a risky loan to your brother-in-law!
The Mac Version of Property Evaluator is Now Available!
When the iPad version was launched in August, many customers were pleased with how the larger screen size of the iPad made the app easier to use relative to the iPhone version. Instead of navigating through multiple screens in the iPhone version, the iPad version lets you change any of the property input values from a single screen. This makes data entry easier, and it lets real estate agents give a more professional presentation of the financial analysis to their investor clients right on the iPad.
You can download a free 2-week trial of the Mac version at RealEstateTools.com. Please download the app today and give it a try. I’m always eager to hear customer feedback, and I prioritize my to-do list accordingly.
If you’re an investor, I guarantee that Property Evaluator will increase your profits by filtering out the best deals. If you’re a real estate agent, Property Evaluator will help you make more sales to your investor clients by creating professional financial projections that can be quickly emailed as PDF files.