Calculator ?

Had a look at it. I understand most of everything else but that one’s got me bugged. Sorry.

“Looking forward to the day when I can tell the boss where to go”

Hi, I’m Jaffasoft, so i might be able to explain something [biggrin].

Firstly i would suggest you buy BuyerBeware, that will explain everything you want to know about doing the calculations! I was a dumbo and that’s what I used first.

But the very last input text field in the fifth step; is the current interest rate the banks offer. That interest rate is then times by the amount of money (or total purchase costs you spent to buy the house) this is the total amount of money you payed out of your pocket (real cash money) that you use to buy a property.

Say you spent $10,000 cash in Step 2).(which is the total purchase costs) So you go 10000 x 4%(bank interest rate) = 400. This is what they call the ‘Risk Free Return’.

In other words, the last input text field in Step 5). calculates how much money you would make if you put that money in the bank and not in an investment property! That’s all that bit does.

If you want to look at it in it’s simplizity, if you imagine you have $10000 dollars sitting on your table in front of you and you are wandering what you will do with it, you think to yourself , what would happen if i left that money in the bank for a year. Mmmmmm, you would think to yourself, i would earn 400 dollars a year if i left it in the bank and the current banks interest rate was 4 percent. But on the other hand if I could get 10% by using that money and putting it into an Investment Property that’s positively geared, you could make more money a year on +CF property. So that’s what that last bit is about. Whether or not your money is better in a safe haven (in the bank!) earning ‘Risk Free Return’ or trying to make more money by investing it in Positive Cashflow with the same money.

[biggrin] I hope I haven’t confused you, i understand that it can be confusing sometimes. But i do suggest you buy BuyerBeware, it’s close on 100 bucks well worth spending!!

Jaffasoft