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PropCalc: The investment property calculator for all investors

BMT team — Tue, 22 Nov 2022 05:11:31 +0000

The first step towards owning an investment property is making sure you’re in the financial position to do so. The costs associated with purchasing and maintaining an investment property aren’t always clear nor is the potential cash flow outcome. BMT Tax Depreciation’s investment property calculator PropCalc was developed to eliminate the guesswork from property investment. PropCalc estimates the likely costs of owning any investment property and models your cash flow, even before a purchase is made. In this article we will explore: What PropCalc does How PropCalc How investors can benefit from PropCalc What PropCalc does PropCalc can help both prospective and existing residential property investors estimate the cash flow position of any investment property. The calculator estimates the after-tax holding costs and property’s gearing level based on the investor’s financial scenario. PropCalc takes property related tax deductions into consideration and allows investors to compare multiple properties side-by-side to see which would be best suited for their financial situation. Users can access PropCalc through MyBMT, a portal for property management featuring schedules and policies, record keeping, PropCalc and a research and insights portal which displays planning applications and census data, providing a better indication of future capital growth and vacancy rates. How PropCalc works PropCalc uses property-specific data to give a realistic impression of cash flow by calculating the difference between rental income and expenses, including tax deductions available for expenses. Simply enter the address of the property and PropCalc will pre-fill with reliable estimated data which can then be adjusted for various scenarios. The calculator will include deposit, mortgage insurance, stamp duty, legal fees, interest, body corporate fees, insurance, council rates, water rates, property management fees, repairs and maintenance estimates and depreciation. Once the information is filled out a report will be displayed with property images and estimated figures including holding costs, gearing level and rental yield. You can also see the holding costs in a weekly, fortnightly, monthly or yearly period. Once the report is complete you can go back and change any figures if the scenario changes. PropCalc generates property reports, allowing you to save and compare multiple properties online and through the app. How can investors benefit from PropCalc? PropCalc gives users the advantage of knowing their likely out of pocket cash flow position prior to purchase. This information can help them explore property buying options and make informed decisions on whether a property is suitable without any costs or commitment. PropCalc is available as an app so that properties can be compared on-the-go at property inspections. After inspecting the property, users can add images and enter in notes to have them included in the report. Or the report can be downloaded as a PDF and taken when inspecting the property. Over 40,000 people are already enjoying the benefits of PropCalc. Join them by adding this to your investment property tool kit. Download the app on Google Play, or the App Store or visit bmtqs.com.au/propcalc today.

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How to calculate property investment return

BMT team — Sun, 05 Apr 2020 23:57:06 +0000

All forms of investment rely on calculated risk-taking and the ability to manage and organise finances. It wouldn’t be feasible to make an investment without having some idea of the potential return. Of all investment options, this is especially true for property. Property is a tangible investment that creates wealth through rental income, tax incentives and capital growth, so it’s important to know how to calculate the true property investment return. In order to do so, you must first understand the key elements involved in property investing such as net yield, capital gain, holding costs and cash flow. Contents Net yield Capital gain Holding costs Cash flow How to calculate your property investment return Boost your cash flow with depreciation How to calculate your property investment return with PropCalc Net yield Also referred to as the rate of return, net yield is the return on your investment after expenses and outgoings are deducted. It considers the property’s price or market value, expenses and rental income and is expressed as a percentage. Net yield can be difficult to calculate as some expense and outgoings will vary. Capital gain Capital gain is the profit made from the sale of an investment property. This profit is referred to as a capital gain and is the difference between what you paid for the property (your cost base) and what you sold it for. Capital gains tax (CGT) is included in your assessable income and taxed at your marginal rate. Find out when you pay capital gains tax on an investment property and further information on CGT . Holding costs Holding costs are the ongoing expenses involved in owning an investment property. This can include costs such as property management fees, strata fees, insurances, repairs, maintenance, mortgage repayments and council rates. While many people consider the cost to purchase an asset, some don’t fully consider all of the associated holding costs and this can be detrimental to an investment strategy. Cash flow Cash flow refers to a stream of finances going into and out of an investment property. Positive cash flow indicates that your investment is providing you with more money than it’s costing you to own. Negative cash flow means that your holding costs outweigh your profits. How to calculate your property investment return Now you understand the key principles involved in property investing, you can start calculating your property investment return. The return on investment indicates the percentage of money returned to you after holding costs are deducted. The first step is to calculate or estimate the property’s annual rental income. For example, if you own a ten-year-old investment property purchased for $400,000 and earn a rental income of $490 per week, your annual rental income will total $25,480. Next, calculate or estimate your holding costs. To help you get started, here is a list of expenses to consider: Property management fees Insurance policies Council rates Land and water rates Interest on mortgage repayments Repairs and maintenance A typical property with this purchase price would have total expenses of around $33,400. If you take away the holding costs from the rental income, this will provide you with your return. $25,480 – $33,400 = -$7,920 As you can see, your return is negative, meaning the property is negatively geared. Fortunately, you’re entitled to claim your loss on tax at the end of every financial year. You can also claim depreciation deductions to reduce your taxable income and therefore boost your cash flow. Boost your cash flow with depreciation Depreciation is the natural wear and tear that occurs to a property and its assets over time. The Australian Taxation Office allows owners of income-producing property to claim this wear and tear as a deduction each financial year for up to forty years. As your investment property is ten years old in this example, you won’t be eligible to claim any previously used plant and equipment assets as per 2017 legislation. Find out more about the 2017 depreciation legislation here. The following scenario shows your cash flow with and without depreciation:As you can see, you’re entitled to $5,450 in depreciation deductions in the first financial year alone. Without depreciation, you were paying an outlay of $96 per week. By claiming depreciation, you’re able to reduce this outlay to $57 per week, saving $39 per week. How to calculate your property investment return with PropCalc If you are looking to buy an investment property, use PropCalc to calculate your property investment return before making a purchase. PropCalc uses key market analysis and customisable data to show exactly how a purchase will affect your cash flow. More than just a mortgage calculator, PropCalc allows you to personalise data such as purchase costs, property income, annual expenses and cash flow, producing results for specific scenarios customised by you. The free calculator also considers the stamp duty, variable deposits, interest rates and finance fees. The tool can determine whether a property is likely to be negatively or positively geared based on your financial situation and estimates the likely depreciation deductions available to be claimed. PropCalc is free of charge and available in MyBMT, a comprehensive portal designed to help investors access and manage their depreciation and property needs. The interactive platform gives you on-the-go access to depreciation information, insurance quotes, valuable market analysis and helpful property tools. Register for MyBMT here. PropCalc is also available as a downloadable app. Find the convenient tool at the App Store or Google Play today.

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PropCalc: the secret to avoiding mortgage stress

BMT team — Tue, 17 Mar 2020 22:58:47 +0000

Interest rates are dropping, so it would be fair to presume that mortgage stress rates are too, right? In reality, mortgage stress continues to rise among Australian homeowners. All homeowners, both owner-occupiers and investors, can reduce mortgage stress by understanding the full picture before making the purchase. In this article we will explore: What is mortgage stress? The scale of mortgage stress in Australia PropCalc: The secret to avoiding mortgage stress What is mortgage stress? Mortgage stress doesn’t have a concrete definition, but it’s commonly described as paying more than 30 per cent of a household’s income in mortgage-related costs. Unfortunately, it often causes a ripple effect to other areas of a homeowner’s life such as struggling to pay utilities on time, credit card repayments and other everyday essentials. A mortgage often lasts over 20 years. Interest rates and a homeowner’s personal circumstances will go through many changes over this length of time, which can contribute to increasing mortgage stress. The scale of mortgage stress in Australia A recent study from Digital Finance Analytics (DFA) reported that mortgage stress has pushed even higher in 2020. The results revealed that mortgage stress is a very real issue in Australia with one in three households, or 1.1 million, currently feeling the pressure. While personal circumstances can change suddenly, one of the key reasons for mortgage stress is present at the very beginning. Not having a full picture of the type of costs of owning the property is a common misstep that can creep up on homeowners. There are so many costs involved with buying a property and if they aren’t totally understood, the homeowner can find themselves in a stressful situation. PropCalc: The secret to avoiding mortgage stress Research is key to setting yourself up for a stress-free property purchase. Helping many householders reduce the risk of future mortgage stress, PropCalc shows the real costs of owning the property, before you even make an offer. Forgetting to factor in all the costs involved with owning a property can result in mortgage stress down the track. PropCalc helps you grasp a realistic breakdown of the costs of owning the property and how it will impact your cash flow. PropCalc accounts for a range of expenses beyond the initial purchase including interest, stamp duty, insurances, council rates and maintenance costs. If you’re a property investor, PropCalc can be your go-to tool to ensure you get the best property for your portfolio. The tool includes many features to help you understand what type of cashflow you can expect, from the rental income to any depreciation claims available. PropCalc is your essential property research tool that does so much more than a mortgage calculator. To help you find the perfect property for your budget, PropCalc generates property reports to allow you to save and compare multiple properties online and through the app. Start using PropCalc today PropCalc is a free tool that is available through the BMT website. The platform gives you access to depreciation information, insurance, market analysis and property tools at your fingertips. To join more than 120,000 people enjoying the benefits of PropCalc, visit bmtqs.com.au/propcalc today.

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