Tuesday, March 3, 2009

Which Financial Calculator Is Best For You?

In the world of mobile home investing, a financial calculator is one tool you will definitely need.

When you sell a mobile home on owner financing, you will need to calculate the monthly payment for the end buyer - a financial calculator will help you do this. In addition, it will also help you to figure out the amortization on the notes you create on your deals. So, how will a financial calculator help accomplish this goal?

In order to calculate the monthly payment for your end buyer, you will need to have a 4 variables:

1. Present Value (PV) - What is the sales price?
2. Interest (I/YR) - How much annual interest are you charging?
3. Number of Months (N) - How many months?
4. Future Value (FV) - Usually, this is the amount after everything has been paid off, usually "0"

Once you have all the above variables, then you can calculate the monthly payment (PMT).

If you are trying to determine a different variable above, you can always calculate to find out the 4th variable as long as you have at least 3 variables. I'll be covering exactly how to calculate these variables in a future post. I just wanted to show you how a financial calculator can help you.

Now, you know why you need a financial calculator. So, which one should you choose?

There are an array of financial calculators out there to choose from. It's all a matter of preference. However, I can point out the top two financial calculators most people use. They are the HP 10B II and the HP 12C.

Personally, I use the HP 10B II. I like the long vertical shape as opposed to the HP 12C, which is more of a horizontal shape. Plus, it's less pricey than the HP 12C. If you are just starting out and just need a basic financial calculator, the HP 10B II would be fine. Here is a picture of the HP 10B II:

However, I know of some people who do use the HP 12C who do some more involved calculations especially with commercial real estate transactions. Here's the HP 12C:

I will be posting a review in the future on the HP 10B II and the various calculations you will need to know for the mobile home investing business. In the meantime, if you would like to read more about the calculators I suggest checking out the reviews on the links above to see which one is best for you.

Happy calculating!

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