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

Summary At The End of Month 169

Let's summarize what your position looks like at the end of Month 169 (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 169.

Net Worth

At the end of Month 169, 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 169 is $2,395,049.49.

Rent and Cash Flow

By the end of Month 169 the total monthly rent you are now collecting from all the Properties for this Scenario is $38,971.95 per month. The following chart shows the total monthly cash flow from all the Properties up to this month.

And, if you'd like to see how each individual Property is contributing to the total monthly rent, the following chart shows each of the 10 Properties owned up through this month. Properties without rent (like the one you're living in) are obviously excluded.

Here is how much each of the Properties you are collecting rent on is contributing in net cash flow after expenses (but not including cash flow from depreciation).

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 169. Our total Account balance this month is $314,152.17 This is after all the income and expenses for the month.

The following chart shows how the total Account balance of $314,152.17 for all your Accounts is distributed over your 2 Accounts in Month 169.

Total Equity

At this point, you have over a million dollars in equity that you can access in the Properties. In fact, in Month 169 you have $2,080,897.32 in equity.

The following is a chart showing your total equity as it has built up over time up through and including Month 169.

Cash Flow

Your total cash flow for all Properties combined (excluding any Properties you are currently living in and not collecting rent on) is $8,969.09 per month in Month 169. This does include an estimate of cash flow from the tax benefit of depreciation. You can see a summary chart of this below.

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.

Paychecks Adjusted For Inflation

While it may look like your gross paycheck is increasing rapidly over the last 10 years, if we adjust for inflation, you see a very different picture. The chart below shows us the gross monthly paycheck after we adjust it back to today's dollars and remove inflation.

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 $37,053.15.

Not counting the cost of the Property you are living in and not collecting rent on, you have $5,944.48 in personal expenses.

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 169, you are able to save $31,108.68 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.

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 169, you will need to be earning, at a minimum, $3,093.10 per month gross (before taxes) between you and your spouse.

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

Achieved Financial Independence
First achieved in Month 195

The following  Goal chart shows our progress toward achieving this goal of financial independence.

Financial independence is typically a combination of the Safe Withdrawl Rate for the  Scenario from the  Account and the cash flow from  Properties.

We typically think of hitting our Target Monthly Income in Retirement of $5,000 in today's inflation-adjusted dollars, let's look at the Total True Cash Flow and Account Balances in inflation-adjusted values.

The following chart shows the total of all Account Balances for the  Scenario.

The following charts show Total True Cash Flow™ all rental properties. Let's start with the sum.

Next, let's look at the Total True Cash Flow™ for each rental properties (graphically summed/stacked).

And, here's the Total True Cash Flow™ for each rental properties individually just for the month when we first achieve financial independence, Month 169.

Return in Dollars + Reserves

Here's the return in dollars + reserves for the  Properties owned.

Property Appreciation Cash Flow Debt Paydown Cash Flow from Deprec.™ +12 Mos Reserves @ 8% RID+R12™ Total
Typical 20% Down-Payment Rental Property 1 $18,187 $13,483 $8,809 $2,196 $2,913 $45,588
Typical 20% Down-Payment Rental Property 2 $18,187 $11,716 $8,339 $2,295 $2,996 $43,534
Typical 20% Down-Payment Rental Property 3 $18,187 $10,075 $7,799 $2,423 $3,108 $41,592
Typical 20% Down-Payment Rental Property 4 $18,187 $9,507 $7,383 $2,533 $3,212 $40,823
Typical 20% Down-Payment Rental Property 5 $18,187 $7,537 $7,011 $2,642 $3,302 $38,678
Typical 20% Down-Payment Rental Property 6 $18,187 $6,755 $6,699 $2,741 $3,393 $37,775
Typical 20% Down-Payment Rental Property 7 $18,187 $5,839 $6,458 $2,823 $3,466 $36,774
Typical 20% Down-Payment Rental Property 8 $18,187 $5,073 $6,114 $2,951 $3,586 $35,911
Typical 20% Down-Payment Rental Property 9 $18,187 $4,087 $5,895 $3,040 $3,665 $34,874
Typical 20% Down-Payment Rental Property 10 $18,187 $3,071 $5,684 $3,131 $3,746 $33,819
Totals: $181,869 $77,144 $70,192 $26,775 $33,388 $389,368

Return on Equity + Reserves

Here's the return on equity + reserves for the  Properties owned that have rent. We are specifically excluding owner-occupied property here.

Property Appreciation Cash Flow Debt Paydown Cash Flow from Deprec.™ +12 Mos Reserves @ 8% ROE+R12™ Total
Typical 20% Down-Payment Rental Property 1 4.38% 3.25% 2.12% 0.53% 0.70% 10.97%
Typical 20% Down-Payment Rental Property 2 4.63% 2.98% 2.12% 0.58% 0.76% 11.09%
Typical 20% Down-Payment Rental Property 3 4.99% 2.76% 2.14% 0.67% 0.85% 11.41%
Typical 20% Down-Payment Rental Property 4 5.33% 2.79% 2.17% 0.74% 0.94% 11.97%
Typical 20% Down-Payment Rental Property 5 5.72% 2.37% 2.20% 0.83% 1.04% 12.16%
Typical 20% Down-Payment Rental Property 6 6.11% 2.27% 2.25% 0.92% 1.14% 12.68%
Typical 20% Down-Payment Rental Property 7 6.47% 2.08% 2.30% 1% 1.23% 13.07%
Typical 20% Down-Payment Rental Property 8 7.10% 1.98% 2.39% 1.15% 1.40% 14.02%
Typical 20% Down-Payment Rental Property 9 7.61% 1.71% 2.47% 1.27% 1.53% 14.60%
Typical 20% Down-Payment Rental Property 10 8.22% 1.39% 2.57% 1.41% 1.69% 15.28%
Totals: 5.82% 2.47% 2.24% 0.86% 1.07% 12.45%

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 $10,000 at the time of achieving your  Goal of financial independence, let's look at the Phases of Financial Independence™.

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