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Copy this new Scenario to your Real Estate Financial Planner™ software:
25 Pay Off Owner-Occupant if FI While Nomading™
This is the same as the Baseline Scenario:
https://refp.io/176103
Except...
- If by paying off your owner-occupant property you'd reduce your expenses enough that you'd be financially independent then do it
The Scenario you want to copy into your Real Estate Financial Planner™ software has the following:
- 2 Accounts (including
Default Cash Account ) - 1 Properties
- 3 Rules
Please register for a Forever Free Account or Login to your existing Real Estate Financial Planner™ software to copy this Scenario into your account.
Once it is in your account, you can view detailed Charts for dozens of variables and edit any of the assumptions for Accounts, Properties, and Rules to run your own what-if Scenarios.
You can change things like:
- Adjust how much money you start with in any Account
- Model variable stock, bond and real estate rates of returns
- Change how many Properties you buy and when you buy them
- Set your own personalized target monhtly income in retirement to indicate when you reach financial independence
- Model receiving social security payments when you reach a certain age
- See what happens if there is a market crash or correction for your stocks, bonds and/or your real estate
- Tweak price and rent appreciation rates for individual Properties or all your Properties
- Find out what happens if you pay off your mortgages early... with cash flow each month or only when you have enough to pay off the Property in full
- Use equity in
Properties you own to cash-out refinance and buy moreProperties or invest it elsewhere - Model buying more Properties than you need then selling off any extras to pay off the remaining Properties to achieve your own user-defined financial independence number
- Evaluate your own safe withdrawal rate and see how it impacts your investment plan
- And much, much more...
Scenario
- Modeled for 1200 months (100 years)
- 20% effective income tax rate
- 3% inflation rate
- 6.5% mortgage interest rate
- 4% yearly safe withdrawal rate (SWR)
- $14,000 minimum target monthly income in retirement (MTMIR) in today's dollars
- $21,000 ideal target monthly income in retirement (ITMIR) in today's dollars
Accounts
Summary of assumptions for the Account in this Scenario.
- Account Name: All-In-One Account Earning 7%/year
- $47,613.07 starting account balance
- 7% yearly rate of return (at start)
- Asset Type: Stocks
Properties
Summary of assumptions for the Property in this scenario (at the start of the Scenario).
Property Address/Description: Typical Boston, Massachusetts Nomad™ Property
- Boston, MA
- This
Property is a Dynamic resuable template of a property that we can buy multiple copies of usingRules . - This
Property is a Nomad™ property that you live in until you buy your next owner-occupant property. When you buy your next Nomad™ property, this one becomes a rental. - This
Property uses dynamicRules to determine when we buy/sell it in theScenario . - Account for down payment, income and expenses for this
Property : All-In-One Account Earning 7%/year - $680,187 property value and purchase price and it goes up at a rate of 3% per year.
- 5% of purchase price for down payment.
- 1% of purchase price in closing costs at time of purchase.
- No seller concessions.
- 6.5% is the mortgage interest rate with a term of 360 month mortgage term.
- Private Mortgage Insurance (PMI) at a rate of 0.85% of the initial loan balance until the loan-to-value drops below 80%.
- $5,670 per month in rent but rent increases at a rate of 3% per year.
- 3% of the monthly income is the assumed vacancy rate.
- 10% of the monthly income is the assumed maintenance rate.
- 0.662% of the value of the property each year is the assumed property taxes rate. Based on the initial value of $680,187 that's about $4,502.84 per year in property taxes at the start and it changes as the property value changes.
- 0.314% of the value of the property each year is the assumed property insurance rate. Based on the initial value of $680,187 that's about $2,135.79 per year in insurance costs at the start and it changes as the property value changes.
- This is a residential property and 15% of purchase price is considered the value of the land (when doing our depreciation calculation).
Return in Dollars Quadrant™
The following is the estimated Return in Dollars Quadrant™ for this property based on its original assumptions for the first year.
Return On Investment Quadrant™
The following are the estimated Return on Investment Quadrant™ for this property for year 1. We take the returns for each component and divide by the "Total Cost to Close" (down payment, rent ready costs, closing costs - seller concessions). This first one ignores reserves.
ROIQ+R6™
Return on Investment Quadrant™ with 6 months of reserves at 1%.
ROIQ+R12™
Return on Investment Quadrant™ with 12 months of reserves at 8%.
How to Calculate
See the steps walking you through how to calculate various metrics for this property.
Walkthrough how to calculate...
- Gross Potential Profit
- Gross Operating Income
- Operating Expenses
- Net Operating Income
- Cap Rate
- Cash Flow
Rules
These are the Rules included with this Scenario.
Buy Property When Account Has Down Payment - Buying 10 Owner-Occupant Boston, Massachusetts Properties
- This
Rule runs for the entireScenario . - This
Rule will buy another copy of the Dynamic (template property) Typical Boston, Massachusetts Nomad™ Property whenever All-In-One Account Earning 7%/year has enough for down payment and closing costs... - Plus at least 6 months of reserves for the property we're buying
- Plus at least 6 months of reserves for all personal expenses
- Plus at least 6 months of reserves for all other
Properties owned - This
Rule requires that with the purchase of the property with thisRule that Debt-To-Income ratio remains below 45%. - This
Rule will only buy 10Properties maximum. But if you sell any, it will try to buy more to replace them.
Paycheck and Personal Expenses - Paycheck From Job and Personal Expenses Saving $1,000 Per Month
- This
Rule runs for the entireScenario . - Depositing both your paycheck and pulling expenses out of the same All-In-One Account Earning 7%/year.
- Both paycheck and personal expenses will be Inflation Adjusted.
- Gross paycheck is $14,000 Inflation Adjusted.
- Assuming a tax rate of 20% on your paycheck.
- Net paycheck (after taxes) is $11,200 Inflation Adjusted per month.
- The paycheck will stop when they reach "Financial Independence" (goal of Minimum Target Monthly Income in Retirement achieved).
- Personal expenses are $10,200 Inflation Adjusted per month.
Pay Off Owner-Occupant Mortgage If FI - Pay Off Owner-Occupant Mortgage if that Achieves Financial Independence
- This
Rule runs for the entireScenario . - Pay off the owner-occupant mortgage when All-In-One Account Earning 7%/year has enough to pay off the owner-occupant mortgage balance in full and that results in being financially independent...
- Plus at least $68,018.70 Inflation Adjusted left over in the
Account - Plus at least 6 months of reserves for all personal expenses
- Plus at least 6 months of reserves for all other
Properties owned
Significant Events
These are the
- Month 69 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 86 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 112 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 131 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 145 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 161 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 173 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 185 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 197 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 209 Bought New Dynamic Property Based On Rule Buy Property When Account Has Down Payment
- Month 239 Achieved Financial Independence Goal
- Month 309 Achieved Ideal Financial Independence Goal
- Month 429 Paid Off Mortgage
- Month 446 Paid Off Mortgage
- Month 447 Achieved 2 X Ideal Financial Independence Goal
- Month 472 Paid Off Mortgage
- Month 491 Paid Off Mortgage
- Month 505 Paid Off Mortgage
- Month 521 Paid Off Mortgage
- Month 533 Paid Off Mortgage
- Month 545 Paid Off Mortgage
- Month 557 Paid Off Mortgage
- Month 569 Paid Off Mortgage