Confusion!

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From: David Buch


Hi
I am playing with a demo version of the PIA software and must say I am a bit confused with things. - perhaps I am just not reading things correctly! :)
It seems that in order for me to get a positively geared property showing in the Application , I need to enter ridiculous figures in the rentals , otherwise is is constantly negative. I am looking at the the line which says "Your income cost per week". This always sees to be negative or extremely low - I assume () means negative??
Also the after tax cash flow - If this is after tax, then why is the income so low in comparison,? What else comes into play here?
Sorry if I'm sounding dense, but this is all new to me!!!

Lastly, It seems as if the Jan Somers, in her explanations and help and examples is actually encouraging a negativeley geared property over a positive one? I find this hard to fathom- One can not make money if you are giving it out, and you can only have so many properties negatively geared before you cannot buy more!!

look forward to your answers...!

David
 
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Confusion!-example

Reply: 1
From: David Buch


Just a simple example to clarify :
Basically entered a property of 205 000 and weekly rent of 375 and with this came to a weekly income of $3 ONLY ??????
 
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Confusion!-example

Reply: 1.1
From: T I


David,

Start up a new property file and make sure you input as much as possible in the data entry check list. I tried your purchase and rent figures and yes it does come up as $3 if you don't put in any other figures. I'm sure if you play around with the interest rate, taxable income,and outlays (as a minimum)etc. you'll see that the figures start to change. Try to put in as many realistic figures that apply to you and you might be surprised!
 
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Confusion!-example

Reply: 1.1.1
From: Sim' Hampel


The bottom line actually reads "Your cost/(income) per week".

If the amount is in brackets, then it indicates the amount of cashflow you will recieve from the property each week - ie. as income.

If the amount is NOT in brackets then this is how much you will have to pay out of your own pocket each week to hold the property - ie. the cost.

 
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Confusion!-example

Reply: 1.1.1.1
From: David Buch


Hi

Thanks

Ok I will give it a try...

by the way - its possible to change the bottom line to read either income/(cost) or
cost/(Income).. see settings preferences! :)

Cheers

David
 
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Confusion!-example

Reply: 1.1.1.1.1
From: .watto .


Hi David,

I also am having fun with PIA. Remember to look at the Deprec-Building and Fittings figures as these can add to the bottom line..

Cheers
Watto
Melb Freestyler
 
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Reply: 2
From: Webmaster (Somersoft)


Firstly, the "demo" version of the software is designed to show you all of the features of the software but does not provide full functionality. It is not a time-limited "trial" version. The default example may very well be a negatively geared example, but one of the beauties of the software is that you can learn for yourself what variables are most important to your investment returns, what parameter values will make an investment positively geared, etc. But of course you will need a fully functional version of the software to perform such analyses.

Secondly, to my knowledge, Jan does not advocate negatively geared properties over positively geared properties, not does she advocate the reverse. Do your own sums over the right time frame (between now and retirement) and decide for yourself. If you think you cannot make money out of negatively-geared property, you still have much to learn. In my experience, I have found positively geared properties to have generally lower capital growth while those with higher capital growth tend to have lower rental yields. The PIA software can be pretty handy at helping to understand the relative importance of these and other variables, including the importance of non-cash deductions such as depreciation allowances.
 
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