PInC = Property Investment Calculator --------------------------------------- PInC NOTES Version 0.16 --------------------------------------- PLATFORM -------- 15 December 2004 Runs ok on MS Office 2003 16 June 2004 IMPORTANT - DO NOT RUN ON EXCEL VERSIONS OLDER THAN EXCEL 2000, THAT IS RUN ON EXCEL 2000 AND ABOVE. WITH OLDER VERSIONS YOU WILL BE CAUGHT IN A LOOP YOU CAN'T GET OUT OF! THAT IS BECAUSE SOME OF THE MACRO FUNCTIONS ARE NOT AVAILABLE IN OLDER VERSIONS - YOU HAVE BEEN WARNED. 19 Feb 2004 This application has been built using Excel 2000 (9.0.6926 SP-3) on Windows 2000 only. It should work ok on similar and recent versions, however, it has not been tested on other and older versions. These are likely to give rise to problems. Please let this author know of any problems you encounter, include as much info as possible so that we can recreate the problem, e.g. version numbers etc. This application is best viewed on a screen with a resolution of 1024x768. INSTALLATION ------------ Two files are zipped up together in the downloadable zip file, extract them to the same directory. TO RUN THE APPLICATION ---------------------- Launch the Excel spreadsheet to run the application. With Macros enabled most of the toolbars should disappear (see macros). MACROS ------ You will need to enable macros either when prompted when you open the file or manually. If security is set too high then you won't even be asked if you want to enable the macros, they will not be enabled by default. Or you may have all macros enabled by default (not the safest when it comes to viruses and malicious code). Menu: Tools - Macro - Security DISCLAIMERS ----------- Property investment for the residential rental market is recommended for the long term investment, at least 10 years in my humble opinion. And other blurb which I have not worked out yet. AIMS ---- To be able to input a few items of criteria like purchase price and expected rental in order to see very quickly whether or not a particular property is worth purchasing for investment purposes. This small application concentrates on cash flow and not capital growth. DESCRIPTION ----------- This application known as PInC (Property Investment Calculator) shows that You can spread your basket of eggs over a range of properties and still have a good positive cash flow. The examples have been chosen on the basis that here in central London I want to pay approximately 200K per flat. Enter your own values for your chosen area and see how you will be doing on cash flow. The one and two bed flats are likely to be better capital investments (less bedrooms and period property) that are fairly assured to appreciate the maximum over a ten year period, however, there is potential negative cash flow, especially if interest rates go up! The three and four bed flats which are more likely to be ex-local authority flats will give very good cash flow. Although the capital growth might not be as good as period property, there is not a lot to suggest that it won't appreciate to a level just behind period property - perhaps the same differential as when you bought it. As you can see from the example properties, that are entered when you download and open the application for the first time, there is good cash flow from the ten properties even though the one and two bed properties have small yields. It is interesting to note that none produce a negative cash flow, however, the first four properties do not reach an income of loan times 130% - this is a requirement of most lenders. In these cases more deposit would be required. SOME HEADER ITEMS EXPLAINED --------------------------- Interest rate - should be a general rate that you know can currently be obtained in the market place. As a portfolio is built it might be helpful to have individual rates per property, however, the aim of this application is to provide an overall calculator for decision making before purchases have been made. A version to track the portfolio and possibly have capital appreciation projections included is a good candidate for the 'to do' list on future versions. Preferred percentage of deposit - most investors want to put the minimum down (more tax efficient, but there is a lot else to take into account here), however, you can enter your preferred percentage down here and this will of course have quite an effect on your cash flow. Down below you will then see the difference between your percentage and the minimum, which usefully shows how much you might have left over for further purchases were you to put the minimum down. SOME COLUMNS EXPLAINED ---------------------- Purchase Price - enter in thousands, for 200,000 (200k) simply enter 200, for 202,575 enter 202.575. Service Charge - these days service charge can be a fairly high cost, this is the only cost I feel is helpful in the decision making process, enter an amount per annum. Number of beds and rent per room per week - I have found it helpful to assess potential income on the basis of what sharers are like to want to pay per room in your chosen area. Total Required Down - is a combination of deposit, stamp duty, and amount of 2,500 for solicitor costs, a lick of paint and a few bits of furniture. If your particular property needs more than this then you will have to factor that in. For example, major building works before you are able to rent out - but then this would perhaps be first and foremost a development project. So enter the purchase price as pp plus works - then you should get it revalued when works are completed and almost certainly be able to borrow 85% of the revaluation. Gross Profit - is a loss when the figure is negative. Indicated by being coloured red and by the brackets either side (standard accounting format). SOME OF THE CONCLUDING SUB TOTALS --------------------------------- Self explanatory really, reproducing some of the column totals, except for difference in percentage down, which is explained above. THE QUICK ACCESS BUTTONS ------------------------ Email - you can email this sheet directly to someone. You will however need to configure your default mail application under control_panel/internet_options. Outlook Express is the simplest to use and configure. When you send the sheet like this these README notes don't currently get attached at the same time - to do. THIS FILE --------- file name: PInC.README.txt CONTACT DETAILS --------------- This application, written in excel and VBA, has been developed by Nick Atkins. My contact details are as follows, please feel free to email suggestions for enhancements or request information on newer versions. email: pinc@northtrack.net TODO ---- BUGS FIXED - UPDATES - OR NEW FEATURES -------------------------------------- 0.13 ---- Gross Profit column format was changed to indicate a loss more easily by using the accounting standard of showing negative figures in brackets and colouring the figures in red. 0.15 ---- Added a further two pages to enable quick and easy comparison by flicking between all three pages. The idea being that you can place asking prices and conservative rents on page one and then update the purchase price and rents on pages two and three to what you want to pay (a sensible price not necessarily close to the asking) and an optimistic rent.