Help Needed: Calculating expenses to maintain IP

Hi folks,

I have been an avid fan of this forum and has finally joined today. :)

I've read somewhere that there are some tools/spreadsheet template which can help calculate the actual costs to hold an IP.

I need help in locating this link in the forum. For some reason I could not find it. I tried using the Search button but it directs me to threads.

Thanks in advance!

:)
 
It can be too unpredictable sometimes especially during the first few years of owning a property so I like to keep things simple. I just pick a rough number, like 30%. So 30% of all rent will be needed for rates, vacancy, agent fees, other expenses etc. I may go with 25-35% based on a rough calculation of the yield. Then I adjust this up and down over the following years until it's roughly about right.

So weekly rent x 52 x 0.7

If you're needing to go all the way down to the exact dollars then it kind of sounds like you're in a precarious position.
 
Thanks Jerrybee! That seems fair enough. This does not include interest rate fluctuations, right?

Nope. As I said I don't like to complicate it too much. If it's too much trouble to maintain I'll get lazy over time. In this case rather something than nothing.
 
Hi folks,

I have been an avid fan of this forum and has finally joined today. :)

I've read somewhere that there are some tools/spreadsheet template which can help calculate the actual costs to hold an IP.

I need help in locating this link in the forum. For some reason I could not find it. I tried using the Search button but it directs me to threads.

Thanks in advance!

:)

I think I read once from Michael Yardney, a simplistic version similar to what is implied above.
If you are a tax paying employee, then a 1/3 will be paid by a tenant, a 1/3 will be paid by ATO, and a 1/3 by you (Assuming 80% borrowing).
So assuming no changes to anything (interest rates, rents, etc...), if you buy $500K IP, it would cost you around $15K to maintain it per year. Assuming no changes would mean the IP would cost you $150K for 10 years.
Now assume $500K IP is bought in well located area for CG so in 10 years it doubles in value, so $500K is now worth $1million, it costed you $150K but you had generated extra $350K in equity (just by holding the IP for 10 years and paying IO). Now imagine duplicating this and holding more IPs, basically increasing your asset base?
Basically this is a very generalised high level concept, but I suppose it really makes sense how to view RE as a wealth tool!
Obviously, no growth, rates, rents, maintenance, etc..., nothing is consistent and static, but it is a good example, and easy to understand for the newbies!
So good luck to you!
 
I DO go down to the dollar, and I am in no way anywhere near a precarious situation. I just like properties that I don't put my money into.:D

I just do up a spreadsheet with all the known expenses. Rates, Water, Strata (if it's a unit), PM fees, Insurance, Land Tax, Interest and an allowance of around $1000 per property for maintenance. Of course, sometimes that blows out, but other times it's less as well. I've also got the rental income there as well, which gives an overall window into the cashflow of the portfolio.

Nothing sexy about it, and I've got all my properties entered in there.
 
Hi folks,

I have been an avid fan of this forum and has finally joined today. :)

I've read somewhere that there are some tools/spreadsheet template which can help calculate the actual costs to hold an IP.

I need help in locating this link in the forum. For some reason I could not find it. I tried using the Search button but it directs me to threads.

Thanks in advance!

:)

Experience will assist. Each property is different. Some info can be found in the contract ie rates, water, land tax, strata....Others you can ballpark ie REA at X %. Repairs based upon age and condition of property and assets.
 
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