The Real Estate Financial Planner Blueprint™
D-03 100% Stocks, 30% Savings, 3 Nomads 5% DP, Gifted DP

Summary At The End of Month 15

Let's summarize what your position looks like at the end of Month 15 (our last  Significant Event). We will look at number of Properties owned, net worth, cash flow and several other important, key metrics.

Properties Owned

The chart below shows the total number of Properties that you own up to and including this month, Month 15.

Net Worth

At the end of Month 15, your overall net worth for the entire Scenario up to this point in time can be summarized by the following chart.

As you can see in the net worth summary above, your net worth for Month 15 is $72,620.55.

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 15. Our total Account balance this month is $19,070.54 This is after all the income and expenses for the month.

The following chart shows how the total Account balance of $19,070.54 for all your Accounts is distributed over your 2 Accounts in Month 15.

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 15, we have $53,550.02 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 15, 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 15, we have $9,120.35 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/

Paychecks

The following chart shows how much gross you're bringing home from paychecks based on any Rules that are for paychecks in the Scenario.

Your total gross paycheck in Month 15 is $6,038.

Once we take into account the taxes you're paying on your gross paychecks, you're left over with your net from paychecks. That is shown in the chart below. For this month, it is $4,546.01.

Not counting the cost of the Property you are living in and not collecting rent on, you have $1,285.48 in personal expenses.

If we include the cost of the Property that you are living in, your personal expenses jump up to $3,376.47 in Month 15.

The difference between your net personal income after taxes and your personal expenses not counting the cost of the Property that you're living in is the amount of money that you can save from your paychecks each month. We will show you your true savings when we include the cost of the Property you are occupying in a moment. For now, realize that in Month 15, you are able to save $3,260.53 from your paychecks after all your personal expenses (not counting the unrented Property you are living in).

Mortgages Are Paid In Arrears

I want to point out something important to you about how mortgage payments work.

When you buy a new Property, you do not have a mortgage payment due the first month that you own the Property. For example, if you bought a Property on January 1st, then your first mortgage payment on that Property would not be due until February 1st. That is because a mortgage is paid in arrears... you need to have the interest on your loan accumulate for a month so that you can make a payment of that interest amount (and any principal).

That means the first month you own a Property, you get a little boost to your savings.

This does mean though that if you decide to sell the Property you will have a mortgage payment for the month you sell it. So, to continue our example from above, if you sold the property on December 1st, you'd still need to make your December 1st payment even though you won't be living in your Property for that month. That's because the December 1st payment is really covering the interest you accrued in November.

The $3,260.53 you were able to save from your paychecks in Month 15 is not the full picture. It fails to take into account your personal housing expense. The chart below shows that you were able to save $1,169.55 in total but this time we are including the cost of your personal housing.

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 15, you will need to be earning, at a minimum, $5,956.50 per month gross (before taxes) between you and your spouse.

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

Purchased Typical Family Home - 5% DP, Gifted DP 3 Property
Bought in Month 27

We have a Rule that has you buying the Typical Family Home - 5% DP, Gifted DP 3 Property when your Account balance in the VTSMX with CAGR of 8.97% over 1871-2017 Account reaches $5,000 (which we adjust for inflation to be worth $5,330.70 in Month 27). The following is a chart showing the balance of VTSMX with CAGR of 8.97% over 1871-2017 Account from the start of the Scenario to Month 27 after we've adjusted for all the income and expenses for the entire month.

Nothing Down Financing

To purchase the Typical Family Home - 5% DP, Gifted DP 3 Property, we're assuming you're getting a nothing down loan. That means you don't need a down payment to buy this home.

As of the time of this writing (and loan programs do change from time to time), there are 3 sources of nothing down loan programs: USDA, VA and local lenders with special loan programs.

USDA

The USDA loan program is a nothing down program that allows you to buy a home, as an owner-occupant, with nothing down. The limitation is typically that you need to buy a property in a rural USDA eligible area. If you happen to live in a larger city, the chance of your home qualifying for a USDA loan is essentially zero. However, often there are cities near you that will qualify.

You can check to see if homes around you qualify for USDA by going directly to the USDA eligibility map:

USDA Eligibility Map
https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp

VA

The VA loan program is a nothing down program that allows veterans or others with VA benefits to buy a home, as an owner-occupant, with nothing down. The limitation with VA loans is less about the property (although VA loans typically require a special type of appraisal that checks for health and safety issues on the property) and more about the person getting the loan having the VA benefits.

One of the nice things about VA loans is that you can use them to buy single family homes, but you can also use them to buy duplexes, triplexes or fourplexes as long as you are owner-occupying at least one of the units.

Local Lenders with Special Programs

Beyond the USDA and VA nothing down loan programs, the only other loan programs that I am aware of that allow you to buy a home with no down payment are the special local lending programs I've seen with local lenders. The loan programs I've seen typically are used to help buyers with great credit scores and solid employment, but who earn below the median income in an area, buy a home. For example, in my local market there are two lenders that offer these special nothing down loan programs to buy single family homes: KeyBank and Compass Bank.

You'll want to talk to your real estate broker and local lenders to find these types of special lenders in your local market if they are of interest to you.

Additional Traditional Financing Resources

Beyond talking to your own lender, we have some pretty extensive additional resources for financing properties including financing owner-occupant properties, Nomad™ Property properties and investment properties. Here are some of the classes we have that go over the financing in detail.

Amazing Financing Strategies for Real Estate Investors Class Recording
https://RealEstateFinancialPlanner.com/amazing-financing-strategies-for-real-estate-investors/

Financing Classes
https://RealEstateFinancialPlanner.com/financing-classes/

Creative Financing Resources

Of course, this discussion of nothing down loan programs specifically ignores an entire discourse on buying Properties with creative financing like getting owner financing and buying subject to the existing financing. For more information on buying Properties creatively, you can access the following additional resources.

Creative Financing 101 Class Recording
https://RealEstateFinancialPlanner.com/creative-financing-101-2016-edition/

Owner Financing Class Recording
https://RealEstateFinancialPlanner.com/owner-financing/

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

Since this is a Nomad™ Property, you are buying it, moving in and living there for at least a year before renting it.

You are moving into this property, so you are not collecting any rent on this property yet.

Return in Dollars + Reserves

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 $4,083.33 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™.

Copy Scenario into my Real Estate Financial Planner™ Software Account

Blueprint™ Menu of Sections

• Introduction
• Accounts
• Properties
• Rules
• Significant Events
• Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
• Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
• Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
• Achieved Financial Independence Goal
• Paid Off Mortgage
• Paid Off Mortgage
• Paid Off Mortgage
• Achieved Ideal Financial Independence Goal
• Final Month Summary

Reports

• Risk
• Cash Flow
• Property Income And Expenses
• Insurance