Ep 1: Andrea Buys 8 Rentals with Down Payments for 2

 Andrea is a 40 year old recently divorced accountant to a small manufacturing company.

She walked away from the divorce with her share of the proceeds of the sale of the family home and some money from the shared retirement money (not in any type of special account). Her share was $100,000.

She has two young sons, age 2 and 4.

She has no debt.

Her primary  Fear and focus is to provide enough for her kids.

She also has a lesser fear of not saving enough money for retirement.

She is also a little anxious about staging her comeback after the divorce (a minor fear). She is not sure if she has the skills to manage rental properties herself, and simultaneously she has some concerns about giving up full control to a property manager. So, she's considering both professional property management (episode 4) and self-managing (all the other episodes for Andrea).

Her fear of property management makes her wonder if she'll end up under-renting the properties. In episode 2 she considers what her plan would look like if she got an extra $100 per month in rent.

Her plan is to spend 100% of the income from her accounting job to support her kids. She wants to make sure they have the best childhood. But that means she really needs to invest the $100K from her divorce wisely.

Reasonable properties where she lives can be purchased for $250,000. So, with $100,000 she has… in theory… enough for two 20% down payments ($50K in down payment for each) if she bought rental properties.

Instead, she decides to buy a home to live in with 5% down (about $12,500 plus closing costs) and keep the remaining money in the stock market earning about 8% per year.

At the end of the first year, she converts the property she was living in to a rental and buys another home for 5% down to live in. She repeats this until she has 9 properties total: 8 rentals and 1 that she is living in. By doing it this way (with 5% down payments as a Nomad™), she is able to buy 8 rentals with the same down payment that would have allowed her to buy just 2 with 20% down.

Let's look at Andrea's baseline story with some additional detail then look at a few variations.

Number of Properties

Personal Expenses

The inflation adjusted version of the  Personal Expenses chart.

Total Saved

The inflation adjusted version of the  Total Saved chart.

Net Worth

The  Net Worth chart but adjusted for inflation.

The  Net Worth chart through when  Minimum Target Monthly Income in Retirement (MTMIR) goal first achieved.

The same  Net Worth chart through when  Minimum Target Monthly Income in Retirement (MTMIR) goal first achieved but this one is adjusted for inflation.

Account Balances

The  Total Account Balance chart through the end of the  Scenario.

The inflation adjusted  Total Account Balance chart.

The  Total Account Balance chart through when  Minimum Target Monthly Income in Retirement (MTMIR) goal first achieved.

The inflation adjusted version.

Goals

The  % of Minimum Target Monthly Income in Retirement (MTMIR) Goal Achieved chart through when  Minimum Target Monthly Income in Retirement (MTMIR) goal first achieved plus a few extra months.

The Phases of Financial Independence chart is shown below.

Private Mortgage Insurance (PMI)

Cash Flow

The  Total Cash Flow chart of all  Properties.

The inflation adjusted version of the  Total Cash Flow chart.

The  Monthly Cash Flow chart is showing the first  Property.

Here's the  Cash Flow chart for the month when  Minimum Target Monthly Income in Retirement (MTMIR) goal was first achieved.

The  Monthly Cash Flow chart is showing the first  Property but now adjusted for inflation.

Here's the  Cash Flow chart for the month when  Minimum Target Monthly Income in Retirement (MTMIR) goal was first achieved.

True Cash Flow™

The  Total True Cash Flow™ chart of all  Properties.

The inflation adjusted version of the  Total True Cash Flow™ chart.

Return on Equity

Here's the  Return on Equity chart.