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Viewing the 'net worth updates' Category

Estimating Net Worth - Real Estate

November 17th, 2006 at 02:00 pm

I have quite a lot of real estate assets - they actually make up a larger percentage of my portfolio than I'd really like (due my wife and I starting out buying a rental property while living with my parents, then later on buying our own place). As they form such a large part of my investment portfolio, I like to be able to update the relevant asset and liability values each month, so that my net worth figure is a reasonable estimate.

The land valuations available via the council rates notices or annual state government land tax calculation are not really much use, as they are based on land value only, and are also only updated on a multi-year cycle.

My method for getting a reasonable monthly figure is to use the bank mortgage statement for the outstanding loan balance at the end of each month, and a simple algorithm for estimating the current valuation of each property. The algorithm is based on the MEAN value of sales in the relevant postcode area (obtained each month from the "suburb snapshot" available by postcode area on the homepriceguide.com.au website for example,2086). I use a simple multiple of the mean price, based on the ratio that applied when I initially purchased the property. For example, my rental property cost 0.9156 x the mean price for the area, so each month I estimate the current valuation as 0.9156 x the latest mean price value.

This allows me to update both house prices and loan balances, and track my progress against what I expected for my property portfolio - paying off the loans over 20 years and property values increasing by approx. 6% per annum in the long run:
It is interesting to also track the percentage change in prices each month, as this clearly shows the "boom & bust" of the Sydney property cycle - as it applies to the specific areas where my properties are.

Net Worth

November 16th, 2006 at 02:07 pm

Much of investing performance comes down to patience and a long-term outlook. Overtrading will kill you with fees (but your broker will love you), and trying to time the market is almost guaranteed to reduce your performance. However, I still enjoy monitoring my net worth, and it lets me feel like I'm "doing something" when all my investments are in place and just need to be left alone.

I've just started recording my net worth info using www.networthiq.com. I already I track my networth daily using a spreadsheet (data from various online accounts daily). I used to use Quicken, which was great for budgeting and handling the calculations for Capital Gains Events (ie. share sales) as it handled individual lots very well. But since getting married and starting a family I didn't have the time to keep Quicken regularly updated, so I've had to manually do CGT calculations at tax time each year.

I've installed the 2006 version of Quicken (it was free with last month's Money magazine), and so far I'm keeping up to date. Entering 20 years of share transactions will be this years major project! I'm still working out how to record my property and mortgage info in Quicken, but getting it to only count half of these values in my networth report (I only want MY networth, and the property investments and mortgages are in joint names with my wife).

I also want to write some PERL scripts that will automatically login to all my online accounts and grab the relevant daily information and display in one place - this will save me logging into half a dozen accounts each day!

Anyway, although it's a bit redundant I'll update monthly data from Jan '03 to the present into NetWorthIQ over the next few weeks so it can be easily displayed for this blog. I'm not sure that it will be of any practical use to anyone, but in the Blogosphere I think having an 'Open Wallet' gives you cred. It's always nice to know where someone writing about investing is 'coming from'.


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