The Property Software web site is an affiliate domain of Property Reality. While Property Reality specialises in residential property calculations and provides the property calculation tools to facilitate measuring investment return, the Property Software domain is used to provide guidance on residential property calculations.

The current global economic turmoil makes it even more important for investors to understand which investments are more likely to provide adequate investment returns over the next few years. When comparing investment returns between various asset classes, a thorough understanding of the variables that impact investment return needs to be established and then analyzed.

Accurate residential property calculations can be very complex in nature which is why we believe that a property software solution adds immeasurable value in assisting residential property investors in their decision making. Read more about some of the issues we've covered on this web site.

Key Property Indicators

Measurement	Month End	%
Prime Overdraft	February	10.50
Rebased CPI Inflation	January	6.21
PPI Inflation	January	2.72
ABSA HPI* - 1 Year	December	5.63
ABSA HPI* - 3 Year	December	4.97
ABSA HPI* - 5 Year	December	10.43
Rand / $	February	7.68

*ABSA House Price Index nominal growth rates

Features:
The need for property software
Calculating investment return
Property calculation input variables
Residential property: 10 year review
Average annual capital growth
Average inflation rate
Home loan amortization
Bond statement vs amortization table
Effective interest rate calculation
The concept of negative equity
Income Tax & Capital Gains Tax
Budget 2010 effects
Economic Data
Bond Calculators

Calculating Investment Return

The calculation of the investment return associated with residential property investments is relatively complicated due to the number of variables which have an influence on investment return. It is however of utmost importance that all these variables are taken into account when considering an investment in residential property.

We believe that only a comprehensive and flexible residential property software solution can provide the necessary functionality to facilitate accurate investment return calculations. A demo of the functionality included in the Property Reality property software is provided below - see if you agree.

View the demo. Read more on the subject or visit the Property Reality web site.

Calculation Demos

Calculating Investment Return

Average Annual Capital Growth

Negative Equity Case Study

Home Loan Amortization Analysis

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Case Study - 10 Year Investment Return

This case study reviews the estimated return on investment derived from an averagely priced South African residential property over the past 10 years. Our intention is to highlight the remarkable returns which could have been achieved from buy to let residential property investments over the past decade and to illustrate the methodology used to measure the investment return achieved.

For this purpose, we provide an Excel example of the calculations performed. You will not be able to enter your own estimates and perform your own calculations, but an unprotected version of the Excel model which is used in the case study is available upon registration as a member of the Excel Skills web site.

Read more about the Investment Return Case Study.

Return on Equity Calculation

The term equity is most commonly used in relation to residential properties in reference to the amount that the market value of a property exceeds the outstanding bond amount. Even though this terminology is generally accepted and used widely in the residential property industry, it is not entirely accurate.

The calculation of the equity amount associated with a property investment could be very complicated and the calculation of the Return on Equity ratio is therefore by no means straight forward.

Read more about residential property Return on Equity Calculations.

Effective Interest Rate Calculation

Most South African bonds contain a variable interest rate which is linked to the prime interest rate. This rate fluctuates based on the fiscal policy determined by the South African Reserve Bank and it is therefore not a simple exercise for home owners to calculate the effective interest rate associated with a bond.

This calculation consists of two main components - bond repayments which have been effected since the start of the bond repayment period and bond repayments which will have to be paid over the remaining bond period.

Read more about the Effective Interest Rate Calculation.

Investment Return Calculation Methodologies

There are various calculation methodologies which investors use in measuring investment return achieved from residential property investments. Some of the most commonly used methodologies are discussed here.

Income Tax & Capital Gains Tax

There most important factor to consider when acquiring a residential property for income tax and capital gains tax purposes is the nature of the legal entity in whose name the property will be registered.

We discuss the calculation of income tax and capital gains tax in a lot more detail and highlight specific sections of the Income Tax Act which we think you should be aware of.

Read more about Income Tax or Capital Gains Tax.