The Real Estate Financial Planner Blueprint™
SS 019 Investing $100,000 in 20% DP Rentals and Stocks at Approx 8.97%/yr

Summary At The End of Month 1

Let's summarize what your position looks like at the end of Month 1 (our last  Significant Event). We will look at number of Properties owned, net worth, cash flow and several other important, key metrics.

Properties Owned

Since this is the first month, here is a very simple chart showing the number of Properties we own.

Yes, I did just show you a chart showing that you own a single Property at this point.

Net Worth

At the end of Month 1, your overall net worth for the entire Scenario up to this point in time can be summarized by the following chart.

Account Balances

If we sum up the Account balances for all the Accounts each month we can see the total balance for each month up through this month, Month 1. Our total Account balance this month is $38,127.92 This is after all the income and expenses for the month.

The following chart shows how the total Account balance of $38,127.92 for all your Accounts is distributed over your 2 Accounts in Month 1.

Total Equity

We can look at equity in one of three ways:

  1. Total Equity
  2. Cash Out Refinance Equity
  3. Sell With Real Estate Agent Equity

With total equity we are just looking at the difference between the Property value and the mortgage balance. In Month 1, we have $60,739.88 in total equity. The following is a chart showing the total equity of Properties in this Scenario.

With cash out refinance equity, we are assuming that your equity is defined as the amount of equity you could access if you did cash out refinances on all your Properties and were limited to being able to cash out refinance up to 75% loan-to-value. In Month 1, we have $0 in accessible total cash out refinance equity. For any Properties where we do not have enough equity to a do a cash out refinance and receive cash from the refi, we just won't refinance.

With sell-with-agent equity, we are assuming that you can access your equity by selling the property with a real estate agent. Furthermore, we assume that there is a cost to accessing this equity since you'll likely need to pay the real estate agent that represents you and the real estate agent that brings the buyer a commission. In addition to commissions, we also assume that you are paying 1% of the sale price in fees to sell with a real estate agent. That means that between the real estate commission (which we have estimated to be 6% between the two real estate agents) and the 1% in closing costs, that you really only net 93% of the sale price minus whatever your loan balance is. In Month 1, we have $39,688.09 in total accessible sell with real estate agent equity. If you owe more than 93% of the sale price on a Property, we are not considering that Property for a sale with a real estate agent.

Learn more about equity and return on equity and return on investment by watching this special class on different ways to calculate returns below.

Return on Investment and Return on Equity Class Recording
https://RealEstateFinancialPlanner.com/return-on-investment-and-return-on-equity/

Cash Flow

Your total cash flow for all Properties combined (excluding any Properties you are currently living in and not collecting rent on) is $1,243.83 per month in Month 1. This does include an estimate of cash flow from the tax benefit of depreciation. You can see a summary chart of this below.

Minimum Gross Income Required

The Real Estate Financial Planner™ software does calculations to determine what it believes you would need to be earning in gross income from all sources between you and your spouse (if you're buying together on the loan) to be able to qualify for the loans on Properties.

The software assumes you have no other debt besides your mortgages. If you have car debt, student loan debt, credit card debt or any other debts at all, it will increase this number. While it is not 100% accurate, a rule of thumb to estimate how much more you'll need to earn if you have additional debts is to double the monthly payment. For example, if your car payment is $300 per month, you'd need to add about $600 more per month in income to still be able to qualify carrying that additional debt.

Of course, this calculation is really an estimate and you should discuss the actual requirement with your lender for your specific situation.

The following chart shows you the estimated minimum gross monthly income required to be able to qualify for the current loans you have in the Scenario. For Month 1, you will need to be earning, at a minimum, $0 per month gross (before taxes) between you and your spouse.

Your income from your rental Properties can count toward this as well.

Purchased 4/2 SFH - 20% DP 2 Property
Bought in Month 84

We have a Rule that has you buying the 4/2 SFH - 20% DP 2 Property when your Account balance in the $100,000 Invested in VTSMX at 8.97%/year Account reaches $10,000 (which we adjust for inflation to be worth $12,268.48 in Month 84). The following is a chart showing the balance of $100,000 Invested in VTSMX at 8.97%/year Account from the start of the Scenario to Month 84 after we've adjusted for all the income and expenses for the entire month.

To purchase the 4/2 SFH - 20% DP 2 Property, we're assuming you're getting a 20% down payment loan. With a $368,054.44 purchase price that means you need to have $73,610.89 for down payment.

The total cost to close must also include the rent ready costs ($0) and closing costs ($3,680.54) minus any seller concessions ($0).

Description Amount
Down Payment $73,610.89
Rent Ready Costs $0
Closing Costs $3,680.54
Seller Concessions $0
Total Cost To Close: $77,291.43

The monthly rent on this Property is $2,278.32 per month.

Return in Dollars + Reserves

Property Appreciation Cash Flow Debt Paydown Cash Flow from Deprec.™ +12 Mos Reserves @ 8% RID+R12™ Total
4/2 SFH - 20% DP 1 $12,591 $3,225 $5,479 $1,391 $1,939 $24,626
4/2 SFH - 20% DP 2 $10,326 $523 $4,157 $1,707 $2,165 $18,878
Totals: $22,917 $3,749 $9,636 $3,098 $4,104 $43,503

Asset Allocation

How are assets allocated? Let's first look at this month.

And how have they looked over time up to this month?

Phases of Financial Independence™

With a Minimum Target Monthly Income in Retirement™ of $5,000 and a Ideal Target Monthly Income in Retirement™ of $20,000 at the time of achieving your  Goal of financial independence, let's look at the Phases of Financial Independence™.

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