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

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.

Total Cash Flow

The Total Cash Flow Scenario Chart shows us the cash flow for the rental Properties. Cash Flow =Net Operating Income – Mortgage Payment 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.

Total Cap Rate if Sold

Total Cap Rate if Sold

The Total Cap Rate if Sold Scenario Chart allows us to see what the Cap Rate would be if someone purchased the Property from us. Capitalization Rate If Sold =Current Net Operating Income ÷ Current Property Value This allows us to determine the Cap Rate if we had sold the Property to someone else or the Cap Rate if they had to buy that Property again today for full retail value. 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.

Total Accessible “Sell With Agent” Equity

Total Accessible Sell With Agent Equity

The Total Accessible “Sell With Agent” Equity Scenario Chart only includes the positive equity you could access by selling Properties. This chart does not show any negative values because it assumes you would not sell a Property if you lacked sufficient equity in it to break even or make money. 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.

Total Accessible “Cash Out Refi” Equity

Total Accessible Cash Out Refi Equity

The Total Accessible “Cash Out Refi” Equity Scenario Chart only includes the equity for Properties which would yield a positive result if you decided to do a cash out refi. 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.

Total Cap Rate

Total Cap Rate

For the Total Cap Rate Scenario Chart we take the NOI (Net Operating Income) divided by the purchase price for each property, and add them all together. Net Operating Income equals all revenue from the property minus the operating expenses. It is a pre-tax figure that does not include principal and interest payments on loans, capital expenditures, depreciation, or amortization. To calculate this value you will first need to determine the operating expenses. Here is an example based on the inputs we use in the Real Estate Financial Planner™. Property Taxes + Property Insurance + HOA + Utilities + Other … Read more

Total Account Balances

Total Account Balances

The Total Account Balances shows the total amount of money in all Accounts in a  Scenario. It does not display how much of the overall total comes from which Account so, if you’d like to see that go to the Account Charts, select Account Balance, and click the “Stacking” option below the Chart. It can be used to compare one  Scenario to another. For example, here is an example of Andrea comparing Ep 1: Andrea Buys 8 Rentals with Down Payments for 2 to Ep 5: Andrea Pays Off Properties Early with Cash Flow. You can easily compare how the … Read more