Real Estate Economics and Budgeting August 28, 2008
Posted by radley77 in Calgary real estate, valuation models.Tags: budget, Calgary real estate, economics, investing
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I think having a budget that you are comfortable with is critical to any investment strategy. By laying out the cash flows, and expected asset values you can get a feel for various economic parameters such as:
- Net present value comparison of various strategies
- Rate of return
- Sensitivity to various economic parameters such as interest rates and inflation
- Affordability or liquidity risks
I put together a budget of various shelter scenarios:
- Renting
- Renting and Investing the Difference
- Buying
- Investing
I hope you find this budget useful as I believe having a well laid out plan is extremely important. Having a solid budget in place will create long term value for investors and create a successful financial environment for your family.
I strongly encourage people to come up with their own budgets, and perform due diligence before making any investment decision.
The budget excel spreadsheets that I came up with are here:
You might want to [...]
– Radley77
Thanks for the tip.
Love the idea of the spreadsheets. Lots of sites have rent vs. buy calculators, but there are 2 features that I have always wanted and never seen:
1) The ability to divide the house appreciation rate into more than 1 time period. For example, I’d like to be able to input a rate of -3% for the next 5 years, followed by +3% for the remaining period. Having 3 possible periods would be perfect.
2) The ability to include rental income from a basement suite into the calculation. To be really useful, I suppose you would also need to be able to input an initial capital cost for basement suite renovations.
Great blog!
Good one and informative.
Great idea posting the spreadsheet, but you may wish to share it in a different way so people can interact with it online. May I suggest uploading it to Google Docs.