The Real Estate Financial Planner™ software allows you to model your investing strategy including:
- Savings accounts
- Social security
- Just about any income stream or asset
- And especially real estate investments like rental properties
You don’t start building a house without a complete blueprint and detailed plan.
“Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?”
— Luke 14:28
This is what the Real Estate Financial Planner™ software allows you to do: to make a detailed plan for your entire investing strategy.
A spreadsheet (like The World’s Greatest Real Estate Deal Analysis Spreadsheet™ we give away for free) allows you to analyze a deal (a single family home, a duplex, triplex or apartment building, commercial buildings)… the Real Estate Financial Planner™ software allows you to analyze buying, selling, renting, financing and refinancing an assortment of these properties and other investments and model the impact of a variety of market conditions.
By running Scenarios and specifically comparing one Scenario to another, it can help you answer questions you might have like the ones discussed below.
Real Estate Investing Questions
How do different real estate investing strategies impact my plans to achieve financial independence? The Real Estate Financial Planner™ software allows you to see the impact of changing your entire investing strategy and how that gets you to your goals faster, easier and with less risk.
The Real Estate Financial Planner™ software answers real estate investing related questions like:
- What impact does paying off mortgages off early have on my goals and plan?
- Is it better—and by how much—is it to pay off the highest rate mortgages or the lowest balances first?
- Should I sell a property? Some of my properties? Or, all my properties?
- Should I refinance a property? Some of my properties? Or, all of my properties?
- Should I do a 1031 exchange or just pay the taxes now?
- Should I only buy properties at a discount or pay a premium for quality properties that may perform better?
- What’s the impact of doing some fix and flips?
- How much should I put down when buying my next property?
- What’s the impact of short-term rentals, medium-term rentals versus long-term rentals?
- Of all the things I could do, which are the best real estate investing strategies?
- And many more…
The following is a chart showing how your Return on Investment (ROI) changes depending on how much you put down on a rental property including low-down-payment options for strategies like house hacking and Nomad™.
And, here’s the same chart excluding down payment options less than 15% primarily for non-owner-occupant loans:
Financial Independence/Financial Goal Questions
You can decide how much monthly income you’d like to receive each month to achieve financial independence. And, set a stretch goal for living your ideal lifestyle.
The Real Estate Financial Planner™ software will allow you to determine if you want this amount to be nominal dollars or if you want the software to automatically adjust the amount for inflation so you have the same spending power of that amount in future, inflated dollars.
Set complex Goals like a first level of financial independence then raise your Goal to a higher level later if you’d like using Rules.
The Real Estate Financial Planner™ software answers target monthly income in retirement questions like:
- How long will it take me to achieve my target monthly income in retirement goal (with any Scenario)?
- Will one investing strategy get me to financial independence faster than another? Which is fastest?
- Will my standard of living increase or decrease in retirement?
- Which Scenario gives me the biggest margin of safety in retirement in terms of monthly income?
- How much longer will it take for me to achieve financial independence if I raise my target income in retirement by $X?
- How important is my social security benefit in hitting my Goal of financial independence?
- Can I achieve financial independence if I sell off some of my properties and pay off the remaining ones? How will that impact my cash flow in retirement?
- Am I more likely to hit my target income in retirement with my strategy for stocks, bonds or real estate? Compare them.
- How will a stock market correction in retirement impact my monthly income in retirement? What about a bond market correction?
- How will a real estate market correction in retirement impact my monthly income in retirement?
- What if we see a market correction before my retirement? How will that impact my income in retirement?
- What impact does increasing my expenses in retirement have on my investing plans?
- And many, many more…
Mortgage Interest Rate Questions
You can change the default Mortgage Interest Rate for your entire Scenario in the Scenario settings. However, each Property has its own Mortgage Interest Rate as well.
This gives you the flexibility to change interest rates for the entire Scenario or for each Property individually.
It answers questions about mortgage interest rates like:
- How will my real estate investing strategy work if we see a steady rise in interest rates from here through my retirement?
- Is it better for me to buy now or wait for interest rates to fall?
- Should I buy down my interest rate when I buy my next rental?
- What impact does refinancing my Properties when interest rates drop have on my net worth? My time to achieve financial independence?
- How much better is cash flow if I do lower interest rate adjustable rate mortgages?
- How much additional risk do I add to my investing strategy if I opt to do adjustable rate mortgages?
- What happens if we see a significant rise in interest rates next year in my investing strategy? What happens if they go back down over time?
- How much better is buying properties as a Nomad™ with owner-occupant interest rates than buying traditional investment properties with non-owner-occupant financing?
- And much, much more…
See how changing your Effective Income Tax in the Scenario settings impacts your overall plan and your Goals. Or, use Rules to modify your Effective Income Tax at any point during your Scenarios.
- How does my Effective Income Tax impact my ability to achieve my Goal of financial independence?
- How important is optimizing my taxes to achieving my real estate investing goals?
- How devastating is depreciation recapture to me if I am in a lower Effective Income Tax?
- How does having a higher Effective Income Tax impact my overall net worth?
You can change the Inflation Rate in the Scenario settings and have it remain at a constant percentage for the entire Scenario.
Want to see what the world looks like if we don’t have any inflation? Easy; set Inflation Rate to zero and run your Scenarios.
Want to see what happens if we have hyper-inflation for the entire Scenario? No problem… use a higher than normal Inflation Rate.
What happens if you have a period of high inflation surrounding by normal inflation? Use a Rule to change Inflation Rate as you desire. You can even have Inflation Rate vary as a completely random number in a range you define or based on a normal distribution… again defined by you.
It can answer questions about inflation like:
- What if we see runaway inflation with my strategy?
- What if we see stagnant inflation or negative inflation?
- Is investing in stocks, bonds or real estate better in a variety of inflation situations?
Safe Withdrawal Rate Questions
What percentage of your non-real estate investments can you “safely” withdraw from your Accounts each year without running out of money in retirement?
That’s Safe Withdrawal Rate.
The Real Estate Financial Planner™ software allows you to easily modify what your Safe Withdrawal Rate is and run your entire investing Scenario to see how it performs.
The Real Estate Financial Planner™ software answers Safe Withdrawal Rate related questions like:
- Will I run out of money with a 4% Safe Withdrawal Rate if we see stock market declines early in my retirement? Middle of my retirement? Toward the end of my retirement?
- What is the most risky time to see a stock market correction in retirement where I might run out of money?
- What is the most risky time to see a real estate market correction where I might run out of money?
- What impact does reducing my withdrawals early in retirement have on my overall cash flow in retirement?
- Can I take out more money in retirement later? How much more?
- And many more…
Here are a few examples of analysis using the software:
- Ep 1: Andrea Buys 8 Rentals with Down Payments for 2
- Ep 2: Andrea Gets $100 Per Month More In Rent
- Ep 3: Andrea Invests in Stocks Instead of Nomading™
- Ep 4: Andrea Hires Professional Property Manager
- Ep 5: Andrea Pays Off Properties Early with Cash Flow
More posts: Andrea Episode
Norm and Norma
- Ep 6: Norm and Norma Invest in Stocks to Achieve Financial Independence
- Ep 7: Norm and Norma Consider the Impact of Buying a Home on Achieving Financial Independence
- Ep 8: Norm and Norma Buy 10 20% Down Payment Rental Properties
- Ep 9: Norm and Norma Buy 10 25% Down Payment Rental Properties
- Ep 10: Norm and Norma Buy 10 15% Down Payment Rental Properties
- Ep 11: Norm and Norma Buy Owner-Occupant Property and 10 Rentals
- Ep 12: Norm and Norma Buy 10 Short-Term Rentals
- Ep 13: Norm and Norma Buy an Owner-Occupant Property Then 10 Short-Term Rentals
- Ep 14: Norm and Norma Buy 10 Nomad™ Properties
- Ep 15: Norm and Norma Buy 10 Fixer-Upper Nomad™ Properties
More posts: Norm Episode
Model Your Own Investing Strategies
You can start from scratch and build you own Scenario or check out some of our existing real estate investing models to find one that comes close to your desired investing strategy. Then copy the Scenario to your Real Estate Financial Planner™ account and modify it to better fit your unique situation.
Need Help Including Monte Carlo Analysis
If you need help modeling your strategy in the Real Estate Financial Planner™ software, you can get help and have us run Monte Carlo Simulations on your Real Estate Investments using our Alternate Universe Modeling™.