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Nomad 10 Rentals Earning $3K/mo $0 Cash Flow $100K Properties At Start Aggressive Mortgage Payoff
A 40 year plan to buy 10 rental properties while earning just $3,000 per month using the Nomad strategy of buying a house, living there for at least a year until you save up your next down payment then converting that property to a rental and buying your next owner-occupant property. While saving your down payments, you're able to invest in the stock market and earn 8% per year. The properties you buy are based on properties that have break-even cash flow when we started the scenario. You start with $3,000 in savings and you continue saving about $100 per month from your income after you buy your first home with nothing down. Your income, expenses and the amount you save are going up at a rate of 3% per year with inflation. The market has a slow steady growth of 3% per year for both appreciation and rent appreciation. Aggressively pay off your mortgages once you've acquired all your properties and saved a $40,000 inflation adjusted cash reserve. Mortgage payoff will be the lowest balance mortgage first.
The Scenario you want to copy into your Real Estate Financial Planner™ software has the following:
- 2 Accounts (including
Default Cash Account ) - 3 Properties
- 5 Rules
Please register for a Forever Free Account or Login to your existing Real Estate Financial Planner™ software to copy this Scenario into your account.
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
Properties you own to cash-out refinance and buy moreProperties or 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...
Scenario
- Modeled for 480 months (40 years)
- 15% effective income tax rate
- 3% inflation rate
- 4.875% mortgage interest rate
- 4% yearly safe withdrawal rate (SWR)
- $10,000 minimum target monthly income in retirement (MTMIR) in today's dollars
- $20,000 ideal target monthly income in retirement (ITMIR) in today's dollars
Accounts
Summary of assumptions for the Account in this Scenario.
- Account Name: Stock Market - Start with $3,000 and Earns 8% Per Year
- $3,000 starting account balance
- 8% yearly rate of return (at start)
- Asset Type: Cash
Properties
Summary of assumptions for Properties in this Scenario (at the start of the Scenario).
Property Address/Description: 0% Down $100K Nomad: $0 CF
- This
Property is a Dynamic resuable template of a property that we can buy multiple copies of usingRules . - This
Property is 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. - This
Property uses dynamicRules to determine when we buy/sell it in theScenario . - Account for down payment, income and expenses for this
Property : Stock Market - Start with $3,000 and Earns 8% Per Year - $100,000 property value and purchase price and it goes up at a rate of 3% per year.
- 0% of purchase price for down payment.
- 1% of purchase price in closing costs at time of purchase.
- 1% of purchase price in seller concessions to help with closing costs at time of purchase.
- 4.675% 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.
- $711.69 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.
- 0.75% of the value of the property each year is the assumed property taxes rate. Based on the initial value of $100,000 that's about $750 per year in property taxes at the start and it changes as the property value changes.
- 0.5% of the value of the property each year is the assumed property insurance rate. Based on the initial value of $100,000 that's about $500 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.
ROIQ+R6™
Return on Investment Quadrant™ with 6 months of reserves at 1%.
ROIQ+R12™
Return on Investment Quadrant™ with 12 months of reserves at 8%.
How to Calculate
See the steps walking you through how to calculate various metrics for this property.
Walkthrough how to calculate...
- Gross Potential Profit
- Gross Operating Income
- Operating Expenses
- Net Operating Income
- Cap Rate
- Cash Flow
Property Address/Description: 3% Down $100K Nomad: $0 CF
- This
Property is a Dynamic resuable template of a property that we can buy multiple copies of usingRules . - This
Property is 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. - This
Property uses dynamicRules to determine when we buy/sell it in theScenario . - Account for down payment, income and expenses for this
Property : Stock Market - Start with $3,000 and Earns 8% Per Year - $100,000 property value and purchase price and it goes up at a rate of 3% per year.
- 3% of purchase price for down payment.
- 1% of purchase price in closing costs at time of purchase.
- 1% of purchase price in seller concessions to help with closing costs at time of purchase.
- 4.675% 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.
- $693.91 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.
- 0.75% of the value of the property each year is the assumed property taxes rate. Based on the initial value of $100,000 that's about $750 per year in property taxes at the start and it changes as the property value changes.
- 0.5% of the value of the property each year is the assumed property insurance rate. Based on the initial value of $100,000 that's about $500 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.
ROIQ+R6™
Return on Investment Quadrant™ with 6 months of reserves at 1%.
ROIQ+R12™
Return on Investment Quadrant™ with 12 months of reserves at 8%.
How to Calculate
See the steps walking you through how to calculate various metrics for this property.
Walkthrough how to calculate...
- Gross Potential Profit
- Gross Operating Income
- Operating Expenses
- Net Operating Income
- Cap Rate
- Cash Flow
Property Address/Description: 5% Down $100K Nomad: $0 CF
- This
Property is a Dynamic resuable template of a property that we can buy multiple copies of usingRules . - This
Property is 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. - This
Property uses dynamicRules to determine when we buy/sell it in theScenario . - Account for down payment, income and expenses for this
Property : Stock Market - Start with $3,000 and Earns 8% Per Year - $100,000 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.
- 1% of purchase price in seller concessions to help with closing costs at time of purchase.
- 4.675% 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.
- $682.07 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.
- 0.75% of the value of the property each year is the assumed property taxes rate. Based on the initial value of $100,000 that's about $750 per year in property taxes at the start and it changes as the property value changes.
- 0.5% of the value of the property each year is the assumed property insurance rate. Based on the initial value of $100,000 that's about $500 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.
ROIQ+R6™
Return on Investment Quadrant™ with 6 months of reserves at 1%.
ROIQ+R12™
Return on Investment Quadrant™ with 12 months of reserves at 8%.
How to Calculate
See the steps walking you through how to calculate various metrics for this property.
Walkthrough how to calculate...
- Gross Potential Profit
- Gross Operating Income
- Operating Expenses
- Net Operating Income
- Cap Rate
- Cash Flow
Rules
These are the Rules included with this Scenario.
Paycheck and Personal Expenses
- This
Rule runs for the entireScenario . - Depositing both your paycheck and pulling expenses out of the same Stock Market - Start with $3,000 and Earns 8% Per Year.
- Both paycheck and personal expenses will be Inflation Adjusted.
- Gross paycheck is $3,000 Inflation Adjusted.
- Assuming a tax rate of 13.7% on your paycheck.
- Net paycheck (after taxes) is $2,589 Inflation Adjusted per month.
- This paycheck will not stop at retirement.
- Personal expenses are $1,869.47 Inflation Adjusted per month.
Buy Property When Account Has Down Payment
- This
Rule runs for the entireScenario . - This
Rule will buy another copy of the Dynamic (template property) 0% Down $100K Nomad: $0 CF whenever Stock Market - Start with $3,000 and Earns 8% Per Year has enough for down payment and closing costs. - This
Rule ignores Debt-To-Income ratio. - This
Rule will only buy 1Properties maximum. But if you sell any, it will try to buy more to replace them.
Buy Property When Account Has Down Payment
- This
Rule runs for the entireScenario . - This
Rule will buy another copy of the Dynamic (template property) 3% Down $100K Nomad: $0 CF whenever Stock Market - Start with $3,000 and Earns 8% Per Year has enough for down payment and closing costs... - Plus at least $3,000 Inflation Adjusted left over in the
Account - This
Rule ignores Debt-To-Income ratio. - This
Rule will only buy 2Properties maximum. But if you sell any, it will try to buy more to replace them.
Buy Property When Account Has Down Payment
- This
Rule runs for the entireScenario . - This
Rule will buy another copy of the Dynamic (template property) 5% Down $100K Nomad: $0 CF whenever Stock Market - Start with $3,000 and Earns 8% Per Year has enough for down payment and closing costs... - Plus at least $5,000 Inflation Adjusted left over in the
Account - This
Rule ignores Debt-To-Income ratio. - This
Rule will only buy 8Properties maximum. But if you sell any, it will try to buy more to replace them.
Pay Down Loans with Cash Flow
- This
Rule runs for the entireScenario . - When Stock Market - Start with $3,000 and Earns 8% Per Year has extra money, use the extra money to pay off mortgages.
- Only pay off properties when money in
Account is in excess of:- At least $40,000 Inflation Adjusted
- Pay down the lowest balance loan first.
Significant Events
These are the
- Month 1 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 20 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 35 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 57 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 69 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 81 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 93 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 105 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 117 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 129 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 141 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 172 Paid Off Mortgage
- Month 192 Paid Off Mortgage
- Month 208 Paid Off Mortgage
- Month 223 Paid Off Mortgage
- Month 236 Paid Off Mortgage
- Month 247 Paid Off Mortgage
- Month 258 Paid Off Mortgage
- Month 267 Paid Off Mortgage
- Month 277 Paid Off Mortgage
- Month 286 Paid Off Mortgage
- Month 294 Paid Off Mortgage
- Month 467 Achieved Financial Independence Goal