True Cash Flow™

Ep 5 - Andrea - Total True Cash Flow - Monte Carlo

You’ve heard of cash flow on rental properties. Basically, it is defined by taking all the income from your rentals minus all your expenses. Cash Flow = Income – Expenses But, have you heard about True Cash Flow™? True Cash Flow™ is your traditional cash flow plus Cash Flow from Depreciation™. True Cash Flow™ = Cash Flow + Cash Flow from Depreciation™ If you’re familiar with the Return Quadrants™, True Cash Flow™ is represented by the returns from these two sections: Post Depreciation Period Depreciation for a residential rental property typically lasts 27.5 years. Since True Cash Flow™ is really … Read more

Cash Flow

Ep 5 - Andrea - Total Cash Flow - Inflation Adjusted

What is cash flow for rental properties? Why is it important? How is it calculated? And cash flow reports for your investments. That’s what we’ll cover here. First, what is cash flow for rental properties? Cash flow is the money generated from your rentals after you account for all the income from the property and subtract all the expenses for the property. Income from your property might include: Rent from properties Option fees on properties Additional mid-month payments Utility bill back Income from onsite amenities like laundry or internet Appliance rent IMPORTANT NOTE: We do not typically consider Cash Flow … Read more

Cash Flow from Depreciation™

Ep 1 - Andrea - Total ROE from Cash Flow from Depreciation™

Cash Flow from Depreciation™ is your gross depreciation for a property times your estimated tax rate. It gives you approximately how much money you expect to receive from a rental property in tax benefits. Because it is a variation of cash flow, we tend to think of it in terms of a monthly amount. Although, for the Return Quadrants™ we will present it as a yearly amount. For the Return Quadrants™, we show it in this section: Over Time Gross depreciation is established when you buy the property. For residential properties, it remains the same for 27.5 years. And, unless … Read more

Rent Appreciation Rate

Rent Appreciation Rate is the rate the  Property’s rent is going up or down. It is for rent what Appreciation Rate is for home prices. Historical Rent Appreciation Rates The following is a summary of the historic Rent Appreciation Rate have been for the top 552 real estate markets in the United States based on the change in median rent from census data between 2010 and 2018. When modeling your investments using the Real Estate Financial Planner™ software, you could use the historical Rent Appreciation Rate but the past does not always mean the same will happen in the future. … Read more

Property Charts

The Real Estate Financial Planner™ software allows you to drill down and see  Charts of a variety of different measurements and views into each  Property that you’re modeling. If you want to see how the entire  Scenario is performing you can look at   Scenario Charts instead. The   Account Charts are similar to the   Account Charts except you’re able to drill down into any  Account instead of any  Property.

Account Charts

The Real Estate Financial Planner™ software allows you to drill down and see  Charts of a variety of different measurements and views into each  Account that you’re modeling. If you want to see how the entire  Scenario is performing you can look at   Scenario Charts instead. The   Property Charts are similar to these   Account Charts except you’re able to drill down into any  Property instead of any  Account.

Scenario Charts

The Real Estate Financial Planner™ software allows you to view  Charts of a variety of different measurements and views into your entire investing strategy. The   Scenario Charts show you how the entire  Scenario is performing. Each   Scenario Chart summarizes all your  Accounts and all your  Properties. If you want to see how a specific  Account check out the   Account Charts. Similarly, if you want to see how a specific  Property is performing you can check out the   Property Charts.

Months of Reserves

Chart of Months of Reserve

The   Scenario Chart for Months of Reserves shows us the total number of months we could go without running out of money based on the current Total Account Balances divided by the Total Operating Expenses plus the Total Mortgage Payments plus the Personal Expenses Excluding Real Estate from any  Rules in the  Scenario. Mathematically: Months of Reserves = Total Account Balances / (Operating Expenses + Mortgage Payments + Personal Expenses) Recommended Months of Reserves Historically, when we’ve taught real estate investor classes we’ve talked about the importance of having at least 6 months in cash reserves in your bank accounts … Read more

Total Cash Flow with Depreciation

The   Scenario Chart for Total Cash Flow with Depreciation shows us the cash flow for our rental  Properties while taking depreciation into account. Depreciation is the loss in value of a  Property over time which you can claim against your rental income each year. Additional Information About   Scenario Charts If you’re interested in learning more about the   Scenario Charts in the Real Estate Financial Planner™ check out these resources below.

Appreciation Rate

Appreciation Rate is the rate the  Property is going up or down in value. Historical Appreciation Rates We will cover how the Real Estate Financial Planner™ software calculates and uses Appreciation Rate here. However, before we get there, let’s look at what some historical appreciation rates have been for a sampling of the 552 largest cities in the US have been according to the US census data between 2010 and 2018. I’ve shown summaries of historical appreciation rates (grouped by states) below. You could use the historical Appreciation Rate for each city when analyzing properties using the The World’s Greatest … Read more