Copy this new Scenario to your Real Estate Financial Planner™ software:
SS 005 Investing $100,000 in Stocks at 8.97%/yr and Earning and Spending $5,000/mo and Buy 2 Nomad™ Properties
You have a stock market account that has $100,000 invested at the start. It is earning 8.97% per year fixed and that does not change.
You are earning $5,000 per month with an effective tax rate of 18.84% and you are spending every penny of your earnings and not saving anything at all.
You buy 2 Nomad™ properties with 5% down payments with lender-paid private mortgage insurance (PMI).
The Scenario you want to copy into your Real Estate Financial Planner™ software has the following:
- 2 Accounts (including
Default Cash Account)
- 1 Properties
- 2 Rules
Once it is in your account, you can view detailed Charts for dozens of variables and edit any of the assumptions for Accounts, Properties, and Rules to run your own what-if Scenarios.
You can change things like:
- Adjust how much money you start with in any Account
- Model variable stock, bond and real estate rates of returns
- Change how many Properties you buy and when you buy them
- Set your own personalized target monhtly income in retirement to indicate when you reach financial independence
- Model receiving social security payments when you reach a certain age
- See what happens if there is a market crash or correction for your stocks, bonds and/or your real estate
- Tweak price and rent appreciation rates for individual Properties or all your Properties
- Find out what happens if you pay off your mortgages early... with cash flow each month or only when you have enough to pay off the Property in full
- Use equity in
Propertiesyou own to cash-out refinance and buy more Propertiesor invest it elsewhere
- Model buying more Properties than you need then selling off any extras to pay off the remaining Properties to achieve your own user-defined financial independence number
- Evaluate your own safe withdrawal rate and see how it impacts your investment plan
- And much, much more...
- Modeled for 720 months (60 years)
- 18.84% effective income tax rate
- 3% inflation rate
- 4.875% mortgage interest rate
- 4% yearly safe withdrawal rate (SWR)
- $5,000 minimum target monthly income in retirement (MTMIR) in today's dollars
- $20,000 ideal target monthly income in retirement (ITMIR) in today's dollars
Summary of assumptions for the Account in this Scenario.
- Account Name: $100,000 Invested in VTSMX at 8.97%/year
- $100,000 starting account balance
- 8.97% yearly rate of return (at start)
- Asset Type: Stocks
Summary of assumptions for the Property in this scenario (at the start of the Scenario).
Property Address/Description: 4/2 SFH - 5% DP Lender-Paid PMI
Propertyis a Dynamic resuable template of a property that we can buy multiple copies of using Rules.
Propertyis a Nomad™ property that you live in until you buy your next owner-occupant property. When you buy your next Nomad™ property, this one becomes a rental.
Propertyuses dynamic Rulesto determine when we buy/sell it in the Scenario.
- Account for down payment, income and expenses for this
Property: $100,000 Invested in VTSMX at 8.97%/year
- $300,000 property value and purchase price and it goes up at a rate of 3% per year.
- 5% of purchase price for down payment.
- 1% of purchase price in closing costs at time of purchase.
- No seller concessions.
- 3.875% is the mortgage interest rate with a term of 360 month mortgage term.
- No monthly Private Mortgage Insurance (PMI). It is possible it is being included as a single up-front, lump-sum payment in the Closing Costs or as a lender-paid PMI in the interest rate.
- $1,857.05 per month in rent but rent increases at a rate of 3% per year.
- 3% of the monthly income is the assumed vacancy rate.
- 10% of the monthly income is the assumed maintenance rate.
- 10% of the monthly income is the assumed property management rate.
- $600 per year for HOA fees on the property and they increases at a rate of 3% per year.
- 0.65% of the value of the property each year is the assumed property taxes rate. Based on the initial value of $300,000 that's about $1,950 per year in property taxes at the start and it changes as the property value changes.
- 0.4% of the value of the property each year is the assumed property insurance rate. Based on the initial value of $300,000 that's about $1,200 per year in insurance costs at the start and it changes as the property value changes.
- This is a residential property and 15% of purchase price is considered the value of the land (when doing our depreciation calculation).
Return in Dollars Quadrant™
The following is the estimated Return in Dollars Quadrant™ for this property based on its original assumptions for the first year.
Return On Investment Quadrant™
The following are the estimated Return on Investment Quadrant™ for this property for year 1. We take the returns for each component and divide by the "Total Cost to Close" (down payment, rent ready costs, closing costs - seller concessions). This first one ignores reserves.
These are the Rules included with this Scenario.
Paycheck and Personal Expenses
Ruleruns for the entire Scenario.
- Depositing both your paycheck and pulling expenses out of the same $100,000 Invested in VTSMX at 8.97%/year.
- Both paycheck and personal expenses will be Inflation Adjusted.
- Gross paycheck is $5,000 Inflation Adjusted.
- Assuming a tax rate of 18.84% on your paycheck.
- Net paycheck (after taxes) is $4,058 Inflation Adjusted per month.
- The paycheck will stop when they reach "Financial Independence" (goal of Minimum Target Monthly Income in Retirement achieved).
- Personal expenses are $2,408.74 Inflation Adjusted per month.
Buy Property When Account Has Down Payment
Ruleruns for the entire Scenario.
Rulewill buy another copy of the Dynamic (template property) 4/2 SFH - 5% DP Lender-Paid PMI whenever $100,000 Invested in VTSMX at 8.97%/year has enough for down payment and closing costs.
Ruleignores Debt-To-Income ratio.
Rulewill only buy 2 Propertiesmaximum. But if you sell any, it will try to buy more to replace them.
These are the
- Month 1 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 13 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 361 Paid Off Mortgage
- Month 373 Paid Off Mortgage
- Month 401 Achieved Financial Independence Goal
- Month 715 Achieved Ideal Financial Independence Goal