The Real Estate Financial Planner Blueprint™
02 Nomad™ Earn 10% Less Income from Job

Final Month Summary

By the time we get to the very end of this Scenario, our net worth over time is shown below. Net worth takes into account all the Account balances as well as the equity in all the Properties.

After the final month, Month 1200, the total net worth is $39,518,728.85.

Realize though that we've had 100 years of inflation. A dollar in month 1200 is worth approximately $19.17 in today's dollars. So, your net worth in Month 1200 is more like having the spending power of $2,061,343.01 in today's dollars. The following is an inflation adjusted chart of net worth over time.

Number of Properties

In the final month of this Scenario, you end up with 1 Properties total. The chart below shows you how many you owned and what month you acquired them.

Equity

Let's look at your equity now.

If you recall, there are really three ways to measure equity: total equity as the difference between the value of the property and the balance of any loans, total equity available via a cash out refinance and, finally, the equity available if you were to sell the property with a real estate agent (after your expenses). First, let's look at the total equity as the difference between the Property value minus any loan balances you have remaining on the Property.

In Month 1200, you have $7,312,651.03 in total equity. If we adjust for inflation, that looks like you have $381,436.41 in total equity in today's dollars.

What about equity we could access via cash out refinances? Well, if we assume that you can only borrow 75% of the property value, then you have $5,484,488.27 in Month 1200. That is like having $286,077.31 in cash out refinance equity in today's dollars after we adjust for inflation. If ever you needed a cash infusion to do something or pay for something, you could do a cash out refinance and access some or all of that money. It would reduce your cash flow (since you'd have an increase in monthly payment for the cash out refinance).

Then there is the third way to think about equity: the equity you'd have if you sold the Property with your favorite real estate agent. If your real estate agent charges 3% for their brokerage service and they agree to pay the real estate agent that brings the buyer an additional 3% then you're agreeing to 6% in total real estate commission. If we also assume that your share of the closing costs is an additional 1%, then there is a total cost of sale of 7% of the sale price of the Property. We can look at the amount of equity you have by taking 93% of the sale price minus your current loan balance to determine what your equity is if you were to sell your Properties with a real estate agent. In Month 1200, you'd have $6,800,765.46 in total equity from all Properties. That is about $354,735.86 in today's dollars if we adjust for inflation.

Asset Allocation

How are assets allocated? Let's look at the final month.

And how have they looked over time up to this month?

Goals Toward Target Monthly Income in Retirement

Both Monthly Cash Flow and Total Account Balance times Safe Withdrawal Rate would contribute toward achieving these goals.

What percentage of the user Minimum Target Monthly Income in Retirement (MTMIR) goal of $9,000 per month achieved over time. This is the minimum needed to achieve financial independence.

What percentage of the Ideal Target Monthly Income in Retirement (ITMIR) goal of $14,000 per month achieved over time. This is the goal of living your ideal lifestyle in retirement.

What percentage of 2 X Ideal Target Monthly Income in Retirement (2 X ITMIR) goal of $14,000 per month achieved over time. This is the goal of having a significant margin of safety for your ideal lifestyle in retirement.

Phases of Financial Independence™

So, how did we fare with our journey toward financial independence? With a Minimum Target Monthly Income in Retirement™ of $9,000 and a Ideal Target Monthly Income in Retirement™ of $14,000 let's look at the Phases of Financial Independence™.

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