How to track private real estate investment?

mikek753b

hello,

How to make it to show in Investment Assets Allocation and Investment performance correctly?

I setup:

1. manual Investment account - Fund_A

2. transfer cash to that account - $100

3. boughtX new security RE_A - 100 shares at $1.00 each

4. recorded loss as negative Income - Interest -$20; 20% loss as unrealized gains

The account has $80.00 "market" value, with -$20.00 cash balance

In the Investment this Security RE_A is shows as $100.00, which isn't correct, I expect it to be $80.00 market value

As well in the Allocation the $100.00 is used instead of expected $80.00, as well in the performance it's 0% instead of 20% loss.

This is 5-7 years term private investment, where initial 2-4 years are losses that are expenses for a renovations, later will be a rent income and a sale that will generate unrealized income and realized income .

I have a few gain or losses transactions each quoter.

Thanks

NotACPA

Rather than that "negative interest", I'd just record a change in the value of the unit …. down to $79.80 ($100 - $20.20). You can change that value by clicking on the security, in the security list.

mikek753b

yes, I though about your proposal, however I'll loose ability to track gains and losses, that I need for tax planning and estimate payments.

I might not explain it well, my bad.

In reality this is Partnership for private fund that has single private security RE_A that I got in exchange for my cash, while owner fund Fund_A spends cash for many projects as fund losses and gets projects income as fund income / gains. The security value remains the same as $1.00 for a while, there is no reinvestments of anything.

I'd like that Quicken to track the fund Fund_A performance instead of inner security, while fund value is calculated as security value and fund transactions.

thanks

NotACPA

For a (any) security. Unrealized Gains and Losses are tracked by the change in the value of each unit. HOW ELSE would you expect to track them???

And your investment in the security, as you've described it, IS $100. You're confusing "Market Value" with Cost Basis.

q_lurker

What I have done for some private partnership setups. Maybe it will help you figure out something that fits your needs.

I do get monthly valuation statements for the whole partnership. I know I own x% of that. I value my 'shares' accordingly by setting the share price of the security monthly.

When I know my share of partnership expenses and income, I enter appropriate transaction in the account holding the 'shares'. For me, that typically ties to K-1 forms produced at end of year. Perhaps you have greater insight during the year.

Those expense and income transactions put cash into the account that is not really there. To balance that out, I use a RtrnCap transaction to adjust my 'basis' in the partnership thereby (usually) increasing my basis. I see that net total as money I have paid taxes on (if applicable) and thus would not be considered capital gains in the future.

Another possibility in your case might be to use MiscIncX and MiscExpX transactions for those aspects. Showing those transactions with a "Transfer Account" that is the same as the account getting the transaction is a way to record that event (income or expense) without the cash showing anywhere.

Recording the interest as a negative does not generate a like amount of unrealized gains. If the real estate partnership has accrued interest expenses, I would think you would want to record an expense transaction against the category of Interest Expense.

mikek753b

https://community.quicken.com/discussion/comment/20445982#Comment_20445982

thank you for your reply

I might be confusing many things, while I need to track private Fund, so far I don't know how to do it in a better way

I started as it was recommended from dedicated investment account and private security, but I hit mismatch in Investment reports, so my questions for a help.

If there is another way to track private fund I'm open to learn, please.

The account shows correct "Total Market Value" - $80.00 in my example, but Investment reports takes the "Security Value" of $100.00, I want Investment reports to get $80.00 instead of $100.00.

Maybe extra cash account will address this as I will manually lower the Security value to get it correctly in the Investment reports?

But, I foresee another issue as result - the Net Worth will be incorrect as result of extra cash account with negative total, so Net Worth will get double "loss" from this private Fund. As the same if I just adjust lower the Security from $1.00 to $0.80 in the current Investment account.

thanks

mikek753b

https://community.quicken.com/discussion/comment/20445987#Comment_20445987

No, the RtrnCap didn't help me, even I added new Security lower price to adjust Total Market Value.

I might not configured it correctly, I tried multiple combinations.

The RtrnCap was set with positive $20.00 to set account cash balance to $0.00, that I can't add new Security history price to $0.80 - > this set Total Market Value to correct as before value. But, it didn't fix Investment reports. Now I see that $20.00 as a gain for new adjusted Cost Basis of $80.00 with incorrect Security Balance as $100.00

From my private fund statements I get both unrealized income and realized income as negative values, current losses. Those I add as IntInc with negative.

What else I can try?

thanks

mikek753b

I found this

https://help.quicken.com/display/WIN/Investment%2BPartnerships%2Bin%2BQuicken

I'll try to use it and see if it will address my requirements.

mikek753b

While Investment Partnership account type is easier to use it doesn't address my issue, where I need that Security Value to be the same as the Total Market Value for this Partnership account.

I can't make both report type calculators to work correctly - Investment (performance, value, allocation) and Net Worth. I can make to work correctly only one of those required two.

I need that this account to be used as a security for Investment reports and calculators.

mikek753b

I'm asking to use Total Market Value for Partnership account type for Investment tracking / reporting, and ignore Partnership inner Security for everything, but the account Total Market Value calculation.

mshiggins

For the testing I describe below (attempting to duplicate what you reported); 

I entered a Buy transaction for 100 shares of RE_A for a cost of $100.00.

Then I entered a Miscellaneous Expense transaction for the -$20.00 and categorized it to _UnrlzdGain (though I believe that categorization is incorrect, and it did not appear to play any part in the results).

" ... in the Allocation the $100.00 is used instead of expected $80.00 ...."

In my test using your numbers:

- Investing > Portfolio > Asset Allocation by Security correctly showed $100, and 

- Investing > Portfolio > Asset Allocation by Account correctly showed $80.

" ... in the performance it's 0% instead of 20% loss."

In my test using your numbers:

- Investing > Portfolio > Performance showed $80.00 for the Account

- Reports > Investing > Investment Performance correctly (I believe) showed Investments = $100 and Returns = $80.00 for the Account.

Finally:

Reports > Net Worth & Balance > Net worth correctly showed $80.00 for the Account

Unless I'm missing something, it appears that if you consistently use account-level features, you should be able to get the results you want. You can't compare account-level results and security-level results and expect consistent results.

-JP

mikek753b

@mshiggins thank you for the test and reply.

I think you also confirmed that Investment by Security all reports are incorrect for this case, as all would show $100.00 value and 0% performance, as well as incorrect allocation % .

I need proper allocation by security calculations, this is normal way to analyze allocation, especially by type. The Real Estate type in this case.

Using reports by account doesn't help.

mikek753b

I finally was able to make correct Investment and Net Worth working correctly, both Security Value and Total Market Value for this Partnership account are the same.

I'll need to check on Tax side now to make sure the cash balance adjustment I went with will be appropriately tracked, but will NOT impact Taxes