The Real Estate Financial Planner Blueprint™
Ep 23 Norm and Norma - $25K Fix and Flips Every 6 Months - Buy 20% Down Payment Rentals

Risk Report

The Risk Report shows a variety of risk measures for your  Scenario. Use it as a quick way to evaluate the risk profile of your entire strategy.

Reserves

Inflation Adjusted

Total Debt To Net Worth

The  Total Debt To Net Worth shows the sum of all your mortgages divided by the total Net Worth for that month.

Be aware that not all Net Worth is easily accessible and some of it could be consumed in the costs of accessing it. For that reason, you may like the  Total Debt to Account Balances as a more liquid measure of your risk (mortgage balances) to your liquidity (account balances).

The  Total Debt To Net Worth consists of the  Total Debt and the  Net Worth. Both are shown, separately, below so you can see what is happening with each.

Sometimes folks improve their  Total Debt To Net Worth by reducing their debt (mortgage balances). Sometimes they  Total Debt To Net Worth by increasing their Net Worth. Often times, it is a combination of both.

While there are exceptions to just about every rule in life, in general, typically you'd want to see your risk (in this case measured as  Total Debt To Net Worth) go down as you get closer to retirement.

Inflation Adjusted

Sometimes it is difficult to think about future dollar amounts as inflated values. It may be easier to think of them in what they're worth in today's, inflation adjusted dollars. That's what these versions of the same  Charts are.

Total Debt To Account Balance

The  Total Debt To Account Balance shows the sum of all your mortgages divided by the total Account Balances for that month. It specifically ignores any Equity you may have.

The  Total Debt To Account Balance consists of the  Total Debt and the  Account Balance. Both are shown, separately, below so you can see what is happening with each.

Inflation Adjusted

The charts above show future, inflated dollars. Here are the inflation adjusted versions of the same charts.

Since you have 2  Accounts, here is also a chart showing the  Account Balance for each.

Inflation Adjusted

And, here is the inflation adjusted version of the same chart. Dollars are today's dollars below.

Total Rent Resiliency™ Percent

Rent Resiliency™ is another measure of risk. It tells us how resilient the rent you're collecting is to maintain positive cash flow.

Some folks may have a large number of properties with a small amount of cash flow. But if rents dropped even $100 per month, a large percentage of their cash flow could be eliminated. This would be an example of having very poor (low) Rent Resiliency™.

Alternatively, some folks may have free and clear properties with no mortgage. If rent drops $100, it will reduce their cash flow, but a much smaller percentage of their overall cash flow. This would be an examplke of excellent (high) Rent Resiliency™. The more your rent can decline and still have positive cash flow, the more resilient you are to rent reduction shocks and therefore the less risky your portfolio is.

The following  Total Rent Resiliency™ Percent shows how resilient your entire portfolio is to rent shocks. Higher is typically lower risk.

If you'd like to see how resilient each  Property is to rent shocks, check out the  Rent Resiliency™ Percent for each  Property.

What typically improves Rent Resiliency™?

  • Cash out refinancing  Properties
  • Higher expenses including taxes, insurance, maintenance, property management
  • Below market rents

What typically hurts Rent Resiliency™?

  • Rate and term refinances that lower your monthly payments on  Properties
  • Paying off  Properties
  • Well managed properties with optimized taxes, insurance, maintenance, property management
  • Higher rents

Cash Flow

In general,  Scenarios with strong Cash Flow are less risky.

If you'd like to see which  Properties contribute to reducing risk by providing strong Cash Flow, you can see each  Property separately in the chart below.