Investment Test Formula

From: Simon and Julie M


Hi All

Here is a formula that I use to show whether my investment stands the test of time and helps me to understand whether the same deal is good on current market trends.Although it is a simple formula I have broken it up into sections.
Have fun!
1. Land Value at time of Purchase divided by Purchase price times 100 = %
example 100K/230K*100 = 43.47%
2. Current land value divided by the above result
Example 115K/43.47 = 2645.50
3. *100 should give a result that shows the current market value of the same deal done today.
example 2645.50*100 = 264.55K
4.I then ask myself if it is possible to better that deal on today's market.
Kind regards
Simon
 
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Reply: 1
From: A C


Thanks Simon,

How do you assess the land values on your properties. I personally don't believe council rate valuations are accurate.

Regards
AC
 
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Reply: 1.1
From: Simon and Julie M


Hi AC
In the ACT the UCV comes with the rate notice and past values for the ACT can be found on the web www.allhomes.com.au.
When we bought in QLD we rang the council to find out. In Sydney I believe it is on your rate notice.
My formula is based on council values. It serves as a good reference point to work from. Accurate or not that is what the property's unimproved land value is according to the council.
Simon
 
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