The Real Estate Financial Planner Blueprint™
Nomad with Lease-Option Exit Starting with $3K

Accounts

This Scenario is made up of 2 Accounts. Let's look at each one in more detail.

Account

By the way, we assume that all dates in our Scenarios are for the first of the month. This significantly simplifies the math and does not significantly impact the results of the modeling.

The Special Account

The Account is a special type of Account for us for a couple of reasons.

First, it is the only Account that is required to be present in every Scenario. We require it because it is the special Account we go to when there is not enough money in another Account to withdraw money.

For example, if the Scenario ends up having negative cash flow on a Property and there is not enough money in the Account that we would normally be depositing and withdrawing the income and expenses of that Property to, where do we get the money from to handle that negative cash? In that case, we'd take as much as we could from the Account that was supposed to be handling the income and expenses of the Property and then any deficit would be taken from this special Account.

Because the Account is the go-to Account when we have a shortage of money, it is also the only Account that can have a negative balance.

You can think of it as a way of keeping track of how much extra money from outside the model that you would need to add to the Scenario and when.

Cash flow is important to the success of your investing endeavors and we have several classes to help you maximize it on every property you own.

Cash Flow Explosion Class Recording
https://RealEstateFinancialPlanner.com/cash-flow-explosion-2016-edition/

Buying Down Interest Rates Class Recording
https://RealEstateFinancialPlanner.com/buying-down-interest-rates-2020-edition/

Another interesting fact about the special Account is that it does not earn any interest. The return on it is always 0% because it is intended to be looked at as a special Account that only stores cash.

Some folks may choose to just use the default Account when running their own Scenarios to simplify their modeling and see how much money they'll need to implement a specific strategy. However, if you want your excess cash to be earning a return like you would in a typical savings or investment Account, you would want to use an Account other than the Account since the Account can never earn a return on money in that Account.

Savings Account Account

We start tracking the Account we call the Savings Account Account at the very start of the Scenario, which we assume to be Dec 2023. We assume that it had an initial balance of $10,000.

Sell Rental Properties After Owning Them For Specific Period of Time

We will explain the Rules in more detail in a moment, however, I would like to show you which Rules do apply to this Account and give you some very basic information about what each Rule does.

This Rule for this Account runs for the entire Scenario.

Buy Property When Account Has Down Payment

This Rule for this Account runs for the entire Scenario.

With the Buy Property When Account Has Down Payment, we buy a version of the Nothing Down Property when the Savings Account Account has enough to cover the total cost to close (which includes any down payment and closing costs) required to make the purchase of the Property.

Since the Nothing Down Property is really a template of a Property (what we call a Dynamic Property) we could buy multiple copies of it. We do limit the number that we can buy using this Rule to 1 total.

Paycheck and Personal Expenses

This Rule for this Account runs for the entire Scenario.

With the Paycheck and Personal Expenses, we collect a paycheck and pay our personal living expenses out of the Savings Account Account each month. We start out collecting $5,000 Inflation Adjusted from our paycheck and paying out $1,687.66 Inflation Adjusted in personal expenses each month. Both our paycheck and personal expenses increase with inflation over time. We do pay taxes on the amount we collect from our paycheck at a rate of 23.11%.

Buy Property When Account Has Down Payment

This Rule for this Account runs for the entire Scenario.

With the Buy Property When Account Has Down Payment, we buy a version of the 5% Down From Tenant-Buyer Property when the Savings Account Account has enough to cover the total cost to close (which includes any down payment and closing costs) required to make the purchase of the Property.

Since the 5% Down From Tenant-Buyer Property is really a template of a Property (what we call a Dynamic Property) we could buy multiple copies of it. We do limit the number that we can buy using this Rule to 10 total.

Buy Property When Account Has Down Payment

This Rule for this Account runs for the entire Scenario.

With the Buy Property When Account Has Down Payment, we buy a version of the 20% Down Property when the Savings Account Account has at least $10,000 Inflation Adjusted plus the total cost to close required to make the purchase of the Property.

Since the 20% Down Property is really a template of a Property (what we call a Dynamic Property) we could buy multiple copies of it. We do limit the number that we can buy using this Rule to 10 total.

Summary of Accounts

These are the Accounts that we have in this Scenario.

Account Date Opened Opening Balance
Default Cash Account Dec 2023 $0
Savings Account Dec 2023 $10,000
Total for Scenario: $10,000

Based on the Accounts that we have when we start this Scenario, it looks like we have a total starting balance in all the Accounts of $10,000.

Next, let's take a look at the Properties that we have in this Scenario.

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