Hi all, I am new to this software but I really like the flexibility so far. I am looking into the CSV import for now to import * a lot * of transactions as I’d like to backdate my trades to get a good overview and test the software more.
I really like that it seems I could really get a full picture of my entire net worth, including everything that could be considered an investment.
I have one question about tracking a real estate (a house) with this. I’m not sure I understand how that can be done yet, given the mortgage debt associated, interests paid, etc. Anybody doing that? how would you approach it?
I’m not related to real estate but my first reaction would be to treat the RE just as a stock.
Create a new Stock called „Realestate X“. Now you can start tracking its value, fees and income.
Put in what the house/condo/appartment was valued (underling’s asset value like stock price), add what you payed (well what you paid for it), add fees (interest + repayment, since I don’t see a way to split it up with Portfolio Performance) and if you rent it out you can add all the rent as dividend payed.
Of course if you have any idea of how the underling asset is developing you can add new data, too.
I think what you are looking to do can be done fairly simply as shown above.
Your property would be a new Security. Name it whatever you want. Create a cash account and deposit the cash you will use to pay for it. Enter a „Buy“ with the price you pay and for „1“ share.
Then you can enter the change in valuation manually in the historical quotes tab. Having anything automated I don’t think exist, not as far as I know. In the US, there could be something like Zillow but not sure if it is worth developing anything special as this is not something that would need to be updated too often.
If you make improvement with new cash, make a new deposit in cash account and then mark that as a „fee“ for that security. Then enter the new valuation for that date as well.
It becomes a bit more difficult if you buy with a mortgage. I am trying to figure out the best way to do this so that I can reflect the regular principal and interests paid. Should I reflect only the equity or make a series of buy of some fractional number of shares every time I pay so that after the length of the mortgage I „own“ the entire 1 share? Or buy 1 shares at the beginning with a negative cash account and adding deposits to that cash account as a pay off? Not sure if this would throw off PP having a negative balance.
Not too sure of the best way yet. Trying things out.
Enter loan payments in cash and buy portions of shares (including fees in each Buy to reflect the interests paid). This will increase the asset by the amount of principal paid. After the entire length of the mortgage I get the whole „1“ share worth of asset. The cash account balance is always zero after each transactions. Theoretically, looking at assets only it works however something doesn’t work. Adding some historical quotes, this does not seem to work quite properly because a reduction in the price would reduce the value of the asset only by a certain percentage, not reflecting properly the real reduction in currency taking into account the debt that is still there.
The second way is to buy the whole „1“ share at the starting quote without a cash deposit in the cash account. Let the cash account go negative and pay back the loan by creating deposits for the entire loan payment duration. This allow for the security (the RE property) „plus“ the cash account to swing up and down with the quotes, going positive and negative if needed. I don’t think it works quite right when looking at the return calculations or maybe it does. Not sure yet how to interpret the numbers (and for some reason the security account + cash account does not show in the Return/Volatility plot but shows in the Chart, because it went negative?).
Playing a bit more with this I tried a different way. I created that equity representing the real estate property. I bought 1 share of it and keep track of the value through the historical quotes. Then I create a Fee when I pay the loan each month that represents the interests. Doing an IRR calculations manually and looking at the IRR of the security account, they seem to match so I believe this should work.
The cash account itself shows a negative balance increasing towards zero as I repay. It shows an IRR of zero throughout. Not sure if that is the expected behavior but that seems fine.
When I look at the combined Cash + Security account return, it calculate a higher IRR, so not sure if that’s correct or not.
Not sure how an income for a rental would come into play but probably using either Dividend or Fee Refund would probably work.
Would love to hear your thoughts on this. I attach the csv file I used to test.
Thank you @Perig - I’ve been playing around with your suggestions and found a nice approach to keep track of real estate. Summarizing what I did:
Added custom security (equity) which represents the real estate, i.e. „Apartment 1“
Added value changes through the historical quotes (really miss the save & new feature here ;-))
Created a Deposit Account, in my case representing a mortgage, „Mortgage“
Into the mortgage deposit account I register yearly deposits, basically the payments to the bank
Created a Securities Account, „Real Estate“
Bought one share of „Apartment 1“ and registered the transaction between „Real Estate“ and „Mortgage“
In reporting everything looks as expected. Sometimes I do have to create a custom view without real estate, to be able to differentiate between stock market and real estate. Few notes on that:
Statement of Assets shows a nice overview of the total net worth, including the mortgage as debt.
Holdings I use a filter to only focus on the stock market accounts, as the debt throws the chart off.
It looks like we ended up doing the same thing so it seems to be working OK. As you point out, I also have a custom view without the real estate and also without the debt in some of the charting.
(First post, I did not find an intro thread, Wolby from Spain here, amazing product)
Just did it following Melvin’s steps and works smooth! Two additions.
In the “Mortgage deposit account”, you can add all the payments till the end of the mortgage, and the app only shows you the net balance to date. So unless you do changes in your mortgage (I have it fix), you do it once and forget. Easier to do it in Excel and then upload
I added two types of movements, the monthly payment and the interest, so I distinguish between expenses and increase in networth.
Thanks for sharing your approaches for tracking Real Estate.
I find the concept of having 1 share of the property interesting. I have tried out with 1 share representing each 1$ spent either as initual purchase or improvements (simply buying extra shares at price 1$). New valuations are also tracked with historical quotes. But this approach would make the historical prices fluctuate in both directions, e.g. an improvement may not immediately increase the valuation, or take time to repay itself. Currently looking at a better way organizing the numbers.
Can you share more details about the Mortgage account? Is this account with negative balance going to zero as Perig suggested, or? A screenshot of all accounts with some sample transaction or a CSV to import would help me understand the concept better of your RE tracking methods.
@Melvin, how did you end up tracking the improvements expences?
This topic has helped me a lot to set up the basic structure for adding my limited real estate portfolio.
It makes it possible to easily compare performance of different asset classes. Thanks @Perig and @Melvin
Now I would like to go a step further but I don’t know if Portfolio Performance is capable of this.
Is there anyone who found a good way to
-Track loan to value (LTV) over time?
-map debts in the charts?
-How to place various mortgages in the “Asset classes” taxonomy so that the pie charts make sense?
Hello, just started experimenting with Portfolio Performance as an alternative to my current way of working in keeping track of a real estate.
I went with the “1” share idea and adjusted the house security conversion to account for both a mortgage (80%) and cash payment (20%).
For anyone interested I’ve attached some screenshots on the process throughtout the construction and then conversion to the actual mortage after completion.
Mortgage Account History:
Comments:
The oldest deposit it “erection/construction credit” form the bank. (I dont know the correct term since english is not my native language).
The credit is being utilized throught the year up until completion on the 1st oct 2015. Here the conversion of 80% happens.
There are two recent deposits illustrating lump dept payments at the top, they’ve been payed monthly.
Hello,
plan to add my real estate beginning of 2024
I’d like to follow your method ideally, and doing import as well to do it just once (I have a fixed rate too)
can you please detail how you did the split between the monthly payment & the interest?
Did you use ‘investment plan’ section ? I can’t see how to put interest there
If csv import, I would love a template!
cheers
You extract the amount of interest paid from your cumulative costs. This means you receive an amount for costs (monthly payments) and interest. You can book this exactly the same way in PP.
