My NW rose about 0.5% during June, reaching a new 'all time high', which is quite pleasing during the middle of a pandemic (although anyone highly invested in tech stocks or a tech index fund during the past 6 months will have made about 35% gain!). Our reallocation of SMSF investments from bond index fund into growth index fund helped boost the performance of my estimated SMSF account balance during June. And my stock portfolio* also showed a small gain for the month. Our estimated house valuation hasn't changed even though new average monthly sales price data was available - apparently the average sale price for houses in our postcode has been constant for the past four months. My share of our home mortgage continued to slowly reduce, as we move past the 2/3 mark of our 25-year mortgage.
The 'other real estate' value remains constant (i.e. left at the cost price) for the off-the-plan $1m investment unit I bought last year and the lake house I 'inherited' a few years ago. And the 'other mortgage' value is being left as the notional cost price of the investment unit (I borrowed the money for the 10% deposit and stamp duty using part of my portfolio loan line of credit, and the remaining $900K is the amount I'll need to borrow to settle when the unit is completed in 2023). For fun I've been tracking one-bedroom unit sales data for the postcode area of my investment unit, and the calculated approximate monthly valuation has been in a modest up trend since I paid the deposit last year. But I won't start tracking the estimated value of the investment unit for my NW calculation until after it is completed and I get a proper valuation done.
But if the current trend in unit prices is accurate and continues until construction is completed in 2023, the unit *may* be worth around $1.5m by that time. Which should make it easy to get a $900K mortgage, and would also mean that my $140K investment (deposit and stamp duty) will have grown to around $600K equity in the property. After deducting the loan for the deposit and stamp duty, and the capitalised interest on the loan, that would result in a net profit of around $412K (subject to CGT). Can't really calculate a ROI for that as the investment was 100% funded using borrowed funds. Of course there is no guarantee that the unit will be worth more than I paid for it, so I could end up losing money.
* the 'Stocks' amount is net value of my geared stock/fund investments outside of super, minus the various margin loan balances and also the balance of my 'portfolio loan' that wasn't used for the unit deposit and stamp duty payment. As the 'portfolio loan' balance is increasing each month by both the capitalised interest, and the transfer of $1,500/mo to fund my financial planning business fixed costs, the 'Stocks' figure isn't really an accurate guide to how my stock/fund investments are performing.
Subscribe to Enough Wealth. Copyright 2006-2020