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  • Profile photo of ez-rentez-rent
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    @ez-rent
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    May 12, 2004 - 5:03 am

    Hi Susan

    My program will do analysis for you and its 100% free..

    cheers

    Paul

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    EZ-Rent. The free tax and cashflow simulator for Australian property investors. Version 2 out now!
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    May 1, 2004 - 11:57 pm

    Here is the IRR problem i faced with ez-rent.

    Your cashflow is affected by a number of factors, like interest and rent + expenses. Some of those factors (tax refunds, etc) are directly affected by other properties or investments. Ie if property 1 takes your taxable income from $65k to $55k, then property 2 takes it from $55k to $45k, your cashflows will change.

    Combine that with the fact that ez-rent lets you allocate ownership percentage on a per property basis complicated it even more.

    So as soon as I made a multi property version of ez-rent things got very difficult because it made it very difficult to make accurate cashflow predictions when a minor change on one property (like a new deprecable item) can change the IRR of everything else.

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    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    May 1, 2004 - 7:47 am

    I agree with Derek on the eastern strip but on the other side of the polly farmer freeway. Rivervale, Kewdale (and I quite like Queens park too).

    Rivervale and Kewdale are characterised by large flat blocks. Downside for the immediate future is unfriendly zoning and an anal council when it comes to development. Any further east and your into Belmont, Redcliffe and Cloverdale, and the airport frightens me off for those suburbs..

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    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    April 26, 2004 - 9:27 am

    Ok Redwing I’ll bite but I’m just echoing what you said really. Don’t have 6 though..

    1. If your all fired up about property investment as your gateway to riches and freedom, then take a cold shower and then come back. Those who are good at this game are very savvy, have educated themselves and avoid making decisions based on marketing induced emotion.

    2. Hone your RE Bullshit radar. Comes with self education and experience. We all have one – it just needs to be maintained :-) This industry has a lot of bullshit in it.

    3. Until I read the “Millionaire Next Door”, I realised that almost all people with high net worth and financial freedom were in reality, quite different to whom I thought they would be. When I realised this I was able to see just how good RE investment marketing is at pushing peoples emotive ‘buttons’ by emphasising material wealth with cars, boats, etc. This helped sharpen my RE bullshit radar.

    4. Try do your tax return yourself. Will help you understand CGT, deductions, etc. I believe that doing this is quote empowering as it shows that its not all some mystical black art.

    Jeez what a cynic I am. Guess I’m still pissed that the Eagles got hammered.

    Paul
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    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    April 12, 2004 - 11:01 am

    There are two freebies for this. ez-rent (www.ez-rent.com) and a recently written one posted a month back that I can’t remember off the top of my head right now. Check the “Heads Up” forum for more details..

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    Originally posted by Derek:

    Hi Wormit,

    Ian Somers has such a program that calculates your cashflow situation after tax deductions called PIA. It is available for ~$250 and includes some approximations for depreciation allowances too.

    It is downloadable at http://www.somersoft.com and their is a trial version (albeit fixed numbers) for you to play with to see what it can do.

    Derek
    [email protected]

    Read my comments? Think I can help you? PM or email me.

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    March 24, 2004 - 1:38 am

    Hi

    ST James I believe has had its run. I should know as I’ve been here for 8 years!

    However I’m selling soon – wanna buy? :-)

    Kewdale now reminds me of the ST James of 8 years ago.. The fact that Orong Road now connects the Graeme Farmer Freeway and is 5min into Perth helps too. In terms of distance to Perth its now no further than ST James/Bentley.

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    March 23, 2004 - 12:07 pm

    Use my software to work it out. Address in the footer.

    Depreciation is a complex area and your question is too broad.

    Here is some info from my helpfile

    All items in a property will invariably have a limited useful life. Depreciation is usually caused by wear and tear. The rate at which items depreciate each year is an allowable tax deduction. Generally an investor is able to claim such depreciation as an income tax deduction providing the item is owned.

    Depreciation is commonly calculated by one of two methods, ie. the Prime Cost or Diminishing Value methods.

    The Prime Cost method allocates an equal amount of depreciation to each full accounting period over the effective life of the asset. On the other hand, the Diminishing Value method allocates a decreasing amount of depreciation in each full accounting period over the effective life of the asset. Accordingly, higher deductions are available in the early part of the asset’s life based on the rationale that an asset delivers better services in the earlier rather than later years of its life. Depreciation rates based on the Diminishing Value method are one and a half times the rate of the Prime Cost method.

    As you can see, depreciation is dependent on the effective life of the asset. The effective life is considered to be the period of time the asset can be expected to be used for income producing purposes, assuming it is kept in good working condition.

    The Commissioner of Taxation publishes recommended effective lives of assets which taxpayers may optionally adopt as a safe harbour estimate for an item of plant. The Commissioner’s latest determinations of effective life are contained in Taxation Ruling TR2000/18. EZ-Rent provides these suggested values but also allows you to add your own fittings to the list and change the effective life of them. In addition, EZ-Rent lets you specify the purchase date of the fittings and they are calculated and apportioned based on the purchase year

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    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 20, 2004 - 7:18 am

    http://www.travismorien.com/FAQ/reading.htm

    The Millionaire Next Door – Thomas J. Stanley and William D. Danko – Fantastic book – found this at my library

    Down the bottom of the above webpage is the real estate books secion with some comment..

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    Originally posted by itsamoorey:

    Hi guys,

    Are there any books in particualr that you would recommend for young players?

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 20, 2004 - 12:38 am

    I agree. Its one of many tools.

    Interestingly though, learning about this particular technique and tools, and understanding discounting and NPV is a very useful when analysing other things like stocks or funds..

    [email protected]

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 19, 2004 - 9:18 am

    Heh, I thought that was quite clever cos it split on the “5 year past” bit..

    But that wasn’t intentional? :-)

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    March 17, 2004 - 3:31 pm

    Thats where discount cash flows come in (oh god another term!!)

    Basically we have to determine a discount rate so we can do our present value/future value/npv calculations. What should this rate be? Many people say ‘inflation’, as this is factor that erodes the value of money.

    But its not that simple. For example – if you can put your money in a cash management trust that earns 5.5% guaranteed, then your property (or share) investment needs to be able to return better than 5.5% yeah? (forget tax and other factors for a second – lets try and keep it simple)

    Therefore you should discount by the amount that you feel you need to get out of the investment. Eg if you want a 10% return, then discount by 10%. If the investment is ‘risky’, then discount it even further to account for that risk. ie ‘this is risky, I’d want a 20% return on account of the high risk’, so discount by 20%.

    When I find a good Net Present Value example I can then show how this derived discount rate can help you determine if an investment is bad or less bad :-)

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

    Profile photo of ez-rentez-rent
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    March 17, 2004 - 3:08 pm

    Before getting into IRR you need to understand present value and net present value.

    I’ll offer this example..

    If I give you $1000 now and it earns 5% interest annually, the present value (now) is $1000 and the future value in a year time is $1050.

    Now if I gave you that same $1000 in a years time, the future value is $1000. What is the present value? Well it can be looked at this way..

    Given that we managed to earn $50 in a year at 5%, we have missed that opportunity when getting the $1000 a year later. So we are now asking, what amount (x) will equal $1000 when 5% is added to it? The answer is around $952.50ish. Basically is we add 5% to this amount we come out at $1000.

    Therefore the present value of the $1000 now is $952.50

    http://www.investopedia.com/terms/p/presentvalue.asp

    This method helps to factor in the time value of money. You can use it to take into account inflation on a fixed amount.

    I once read a great one day cricket analogy. If we assume score value of 330, where the innings started slowly and then the run rate increased, once we define that increase run-rate as a percentage, so we can then use it determine the present value of the score at over 10, 20, wherever..

    Now Net Present Value (NPV – http://www.investopedia.com/terms/n/npv.asp) is harder to explain..

    I’ll try and find a good website and then post an easy example. The important thing is that IRR is determining when the NPV is close or equal to 0.

    [email protected]

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 17, 2004 - 10:21 am

    Hi Sis

    I put IRR into ez-rent 1.2 then took it out again for version 2. The reason was that multiple properties affect your income and to work out your cashflows accurately you need your deductions. Add a neg geared property to your portfolio with a lot of depreciation and suddenly you drop a tax bracket for example..Then your IRR for a single property can change because your tax gain/loss changes.

    I played with this for a while and then gave up on it as by brain started aching.. It may be that I am completely wrong on my IRR understanding – not being an accountant.

    Then a knoweledgeable friend of mine suggested that IRR is of little use for property anyhow.

    But it may be of benefit for someone to give a nice example of a 5 year IRR so that forum readers can understand its value..

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    Quote:
    Originally posted by Still in School:

    Hi Yack,

    if you got sometime, or if you already have a property program software, see if has and if it can work out the IRR instead, this instead will give a much more accurate detail, also doing it this way, you can caculate future values over longer periods much quicker.

    Cheers,
    sis

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 17, 2004 - 3:55 am

    Hi Yack..

    Isn’t this fundamental analysis? I’ve followed many heated threads on aus.invest forum on this. You are working out the future value of an by projecting growth and cashflows. Basically a valua investors method..

    I do stocks this way.. never thought of doing it with property before..

    To be TA, you would be looking at the charts and finding patterns?

    Or is my definition too rigid? :-)

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 17, 2004 - 12:15 am

    Hi Millhouse

    An excellent site to have a read of is this FAQ site. Yes its run by a financial adviser – who is a friend of mine, but the info is free and well written. I had copied most of his real estate advice in the helpfile of my ez-rent app for a long time..

    The site is

    http://www.travismorien.com/FAQ/main.htm

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    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 17, 2004 - 12:11 am

    Actually, a lot of people out there get obsessed about tax minimisation, without realising the fact that if you are making enough profit to be taxed highly, you are obviously doing something right :-)

    [email protected]

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 12, 2004 - 5:33 am

    Gday Simon

    You are correct. But I have had some feedback from people asking to put basic cashflow tracking in per property and consolidated reports so I am going to incorporate this into it..

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 12, 2004 - 4:26 am

    Shameless plug time!

    http://www.ez-rent.com. Version 2 coming to a URL near you very soon! :-)

    Post version 2, next feature is basic cashflow tracking for each property.

    [email protected]

    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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    March 10, 2004 - 2:12 am

    Having contracted for a time in a govt treasury department I can honestly say the legends are true. There are still govt departments that fit the old sterotype of lotsa cash, overstaffed and undermanaged..

    A lot of waste out there..

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    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
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    March 6, 2004 - 5:05 pm

    ROFL! Hey Derek, that did give me quite a chuckle. My darling wife is only 5 foot 2 and very petite, but sure packs a punch! :-)

    Julian, I’m not going to publicly name the agent sorry cos I don’t want to get sued :-) I worked for an ISP once, and several times we had legal threats ranging from spammers to companies who were not too amused about our users saying things they didn’t like on public forums..

    later

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    EZ-Rent. The free tax and cashflow simulator for Australian property investors.
    http://www.ez-rent.com

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