Ep 5 Advanced: Andrea Pays Off Properties Early with Cash Flow
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 5.
In Episode 5, Andrea opted to acquire 8 rentals and a property to live in over 8 years using the Nomad™ real estate investing strategy then, in year 10... she decided to take any money over $50,000.... adjusted for inflation... and use it to pay down mortgages on her properties as quickly as possible. She chose to pay off the lowest balance mortgage first.
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 for property price and rent appreciation, mortgage interest rates, inflation rate and stock market rate of return... that we’ve used in the previous advanced modeling.
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: Start at 3.125%, 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.
Number of Properties Owned
In the basic modeling, Andrea buys all 9 properties in 8 years. However, with the advanced modeling, there are times when Andrea has NOT purchased all 9 properties in exactly 8 years.
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