Previously, in our series of Real Estate Investor Stories, we met Peter from Denver, Colorado. Previously, we has focused on buying ten 20% down payment rentals to achieve financial independence.
Today, Peter is going to go consider saving up 25% instead of 20%.
Why? Because the interest rate for 20% down payment loans is about 3.625% right (as I write this) and 25% down payments are 3.25%.
Peter is wondering:
Just a gentle reminder about Peter and some of our assumptions for this 
Scenario
- Peter is starting with $25,000 in savings
- He has a good job making about $72,000 per year
- Lives in Denver, CO but would consider living in or around the Denver area
- Currently rents a property for $2,200 per month and is not house hacking
- He is saving about $1,000 per month with the intention of buying rental properties (like the property he is currently renting)
- And, unlike the previous
What will happen to Peter?
- How long does it take him to buy his first 25% down payment rental? How much long than buying a 20% down payment rental?
- When does he get to 10 rentals? How much slower is this than buying 20% down payment rentals? Does the extra cash flow from putting 25% down (borrowing less and better interest rates) help him save for down payments faster for the later purchases?
- How much better does the 25% down payment properties cash flow get?
- How long does it take him to be able to replace the $5,000 per month he is living on (he is earning $6,000 but saving $1,000 per month)? In other words, how long does it take him to achieve financial independence?
- What does his rental property income (lifestyle) look like in retirement? Is this better than putting 20% down payment down?
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Peter Buys 10 25% Down Payment Rentals with 2 
Accounts, 1 
Property, and 3 
Rules.
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Future Episodes With Peter
In future Scenarios
- What happens if interest rates go up while he’s acquiring properties?
- What happens if he opts to buy a 5% down payment property to live in?
- What happens if he house hacks?
- What happens if he buys 5% down payment properties and Nomads™ for all 10 properties?
- What happens if he buys 5% down payment properties and Nomads™ for 1 property? For 2 properties? 3?
- What happens if rents don’t always go up 2% per year?
- What happens if property values don’t always go up 2% per year?
- What happens if the money he is investing in the stock market doesn’t always go up 8% per year?
- What happens if we see rents go up, then down, then up, then down (form an “M” shape)?
- What happens if we see rents go down, go up, then down, then up, (form a “W” shape)?
- What happens if we see property values go up, then down, then up, then down (form an “M” shape)?
- What happens if we see property values go down, go up, then down, then up, (form a “W” shape)?
- What happens if we see a significant market correction?
- What happens if tries to buy more properties to sell off some to pay off the remaining properties?
- What happens if tries to pay off the lowest mortgage balance with cash flow each month?
- What happens if tries to pay off the lowest mortgage balance, but only after he has enough to pay the entire balance in full?
- What happens if rents are 10% higher at the start? 10% less at the start?
- What happens if property values are 10% higher? 10 less at the start?
- What happens if he stops working after 5, 10, 15, 20, 25 years regardless of whether he’s achieved financial independence or not?
- What happens if he sees a random, significant market correction in stocks? In real estate? In both stocks and real estate, but independently? Both at the same time?
- What happens if he gets married, has more income but also more more expenses?
