Ep 10 Advanced: Norm and Norma Buy 10 15% Down Payment Rental Properties with Private Mortgage Insurance

Advanced Real Estate Financial Planner™ Podcast

Welcome to the Advanced Real Estate Financial Planner™ Podcast. I am your host, James Orr. This is the advanced analysis of Episode 10.

In Episode 8, Norm and Norma bought ten rental properties with 20% down payments.

In Episode 9, Norm and Norma bought ten rental properties with 25% down payments.

In this episode, Episode 10, Norm and Norma bought ten rental properties with 15% down payments with private mortgage insurance.

Variable Returns

In the simple analysis we used fixed assumptions for property price appreciation, rent appreciation, stock market rate of return, inflation rate and mortgage interest rates.

For the advanced analysis we’re using the same random rates of return that we’ve used in previous advanced analysis:

• Property Price Appreciation Rate: Set the new property price appreciation to be -10% to +16% with a standard deviation of 3 and a .1 step value. Average about 3% per year.

• Property Rent Appreciation Rate: Set the new property rent appreciation to be -10% to +16% with a standard deviation of 3 and a .1 step value. Average about 3% per year.

• Mortgage Interest Rate: Starts at the rates we discussed in the main podcast in month 1, but add/subtract to it from -.5% to +.5% with a standard deviation of .125 and a .125 step value. Hard minimum of 2.5% and a hard maximum of 18%.

• Stock Market Yearly Rate of Return: Set the new yearly rate of return to be -16% to +32% with a standard deviation of 8 and a .1 step value. Average about 8% per year.

• Inflation Rate: Set the new inflation rate to be -3% to +9% with a standard deviation of 2 and a .1 step value. Average about 3% per year.

How will these variable rates of return impact their plan to buy ten 15% down payment properties?

Number of Properties Owned