Problem purchasing future real estate
First Scenario: (Own Property 1, will sell in 2017-- no problem there). Will purchase Property 2 in 2017. For Property 2 under Current Market Value, I have $300,000. Under future mortage information: I put 100% under (I have that it will never be sold).
In the report, under "living standard per adult", let say I get: X
The figure seems high, so I try the following:
Second Scenario: Property 2, I put no current market value and no mortgage information. But in Special expenditures, I put in the $300,000-- the amount under current market value (and also sale value).
In the report, under living standard per adult, I get (approx) 1/2X
In a 3rd Scenario, I put current market value at 300,000, 10% down, 5.5% interest rate, and 30 year mortgage, and get close to the same thing as the first scenario. (Thus the difference doesn't seem to be whether or not I take out a loan, no?)
Why such a huge discrepancy-- and which is a more accurate approximation of living standard?
Many thanks. Charlie
Fri, 01/22/2016 - 08:18
In the first scenario where
In the first scenario where you put in the mortgage and all and model the purchase as Real Estate, there's assumption that the value of the real estate grows 0% relative to inflation (0% real which is with inflation) and there's (possibly) an assumption that the property is sold, thus returning the price and appreciated value back to your regular assets pool. That's my hunch. Look at the report and your income stream--especially regular assets--and see where the extra money is coming from.
Fri, 01/22/2016 - 14:14
Dan, when I put in just $1
Dan, when I put in just $1 in the "Current Market Value" box under General, for the 2nd property, the Living Standard amount in Annual Suggestions goes to approx 50,000. When I put $0 in that box (with no other changes), the Living Standard drops to 20,000. Which reflects the potential future?! thank you. Charlie
Fri, 01/22/2016 - 14:23
Looking at the reports, under
Looking at the reports, under Details, it looks like some figure (even $1) has to go in the Current Market Value box in order to 'activate' the existence of the property (and, in my case, activate some rental income).
Is there an economic/logical reason for this, or is this just a software glitch?
Sat, 01/23/2016 - 07:44
I believe this is what lets
I believe this is what lets the software know that you own the property.
Sat, 01/23/2016 - 15:04
It certainly prevents the
It certainly prevents the software from being useful to people who knowingly buy worthless property.