The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Sulame66 on March 16, 2017, 10:20:21 AM
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Below is my amortization and random scribblings on an investment property
200k property, 40k down, 4.25% interest, 30 years fixed, 160k mortgage, all in expenses a month including mortgage, insurance, taxes, etc. is 1,400, rent is 1,600. This is not factoring in random fixes and what not because I don't see how that impacts the calculation. It's in another bucket of expenses but separate from this cash flow.
I then (probably screwed up here) assumed that those liabilities go up 2% a year, while rent goes up 4%. I initially thought the only thing that mattered was the differential of 2%, but that's not accurate. If we instead did 4 and 6, the #s would be almost 50% higher. Probably just a simple formula of 4/2 = 2 and 6/4 = 1.5 so an inverse gain of 50%, I don't know and I'm too tired to figure it out.
Point is, it doesn't make sense. There is NO WAY that in 30 years an initial investment of 40k is now putting out $2,740 a month, and then the very next month the mortgage is eliminated and it shoots up to $3,500 a month FOREVER.
..... right?
EDIT: Also realized that I have the mortgage included as an expense in that category, so it's growing at the 2%, but the mortgage is static. That means the growth is even more alarming
month balance interest payment new balance Total payments Total Rent Gain
1 160,000 567 787.11 159,780 1400 1600 200
2 159,780 566 787.11 159,558 1402.33 1605.333333 203
3 159,558 565 787.11 159,336 1404.67 1610.684444 206.0138889
4 159,336 564 787.11 159,114 1407.01 1616.053393 209.0417194
5 159,114 564 787.11 158,890 1409.36 1621.440237 212.0835446
6 158,890 563 787.11 158,666 1411.71 1626.845038 215.1394176
7 158,666 562 787.11 158,440 1414.06 1632.267855 218.2093917
8 158,440 561 787.11 158,214 1416.42 1637.708748 221.2935204
9 158,214 560 787.11 157,988 1418.78 1643.167777 224.3918576
10 157,988 560 787.11 157,760 1421.14 1648.645003 227.5044569
11 157,760 559 787.11 157,532 1423.51 1654.140486 230.6313727
12 157,532 558 787.11 157,303 1425.88 1659.654288 233.7726591
13 157,303 557 787.11 157,073 1428.26 1665.186469 236.9283707
14 157,073 556 787.11 156,842 1430.64 1670.73709 240.0985621
15 156,842 555 787.11 156,610 1433.02 1676.306214 243.2832882
16 156,610 555 787.11 156,378 1435.41 1681.893901 246.482604
17 156,378 554 787.11 156,144 1437.80 1687.500214 249.6965649
18 156,144 553 787.11 155,910 1440.20 1693.125215 252.9252262
19 155,910 552 787.11 155,675 1442.60 1698.768966 256.1686436
20 155,675 551 787.11 155,440 1445.00 1704.431529 259.4268729
21 155,440 551 787.11 155,203 1447.41 1710.112967 262.6999703
22 155,203 550 787.11 154,966 1449.83 1715.813344 265.9879918
23 154,966 549 787.11 154,727 1452.24 1721.532722 269.2909941
24 154,727 548 787.11 154,488 1454.66 1727.271164 272.6090336
25 154,488 547 787.11 154,248 1457.09 1733.028735 275.9421672
26 154,248 546 787.11 154,007 1459.52 1738.805497 279.2904521
27 154,007 545 787.11 153,766 1461.95 1744.601515 282.6539453
28 153,766 545 787.11 153,523 1464.38 1750.416854 286.0327044
29 153,523 544 787.11 153,280 1466.82 1756.251577 289.426787
30 153,280 543 787.11 153,036 1469.27 1762.105749 292.836251
31 153,036 542 787.11 152,790 1471.72 1767.979434 296.2611543
32 152,790 541 787.11 152,544 1474.17 1773.872699 299.7015553
33 152,544 540 787.11 152,298 1476.63 1779.785608 303.1575124
34 152,298 539 787.11 152,050 1479.09 1785.718227 306.6290842
35 152,050 539 787.11 151,801 1481.55 1791.670621 310.1163298
36 151,801 538 787.11 151,552 1484.02 1797.642856 313.619308
37 151,552 537 787.11 151,301 1486.50 1803.634999 317.1380783
38 151,301 536 787.11 151,050 1488.97 1809.647116 320.6727001
39 151,050 535 787.11 150,798 1491.46 1815.679273 324.2232331
40 150,798 534 787.11 150,545 1493.94 1821.731537 327.7897373
41 150,545 533 787.11 150,291 1496.43 1827.803976 331.3722727
42 150,291 532 787.11 150,036 1498.93 1833.896656 334.9708998
43 150,036 531 787.11 149,781 1501.42 1840.009644 338.5856791
44 149,781 530 787.11 149,524 1503.93 1846.14301 342.2166713
45 149,524 530 787.11 149,266 1506.43 1852.29682 345.8639374
46 149,266 529 787.11 149,008 1508.94 1858.471143 349.5275387
47 149,008 528 787.11 148,749 1511.46 1864.666046 353.2075365
48 148,749 527 787.11 148,488 1513.98 1870.8816 356.9039925
49 148,488 526 787.11 148,227 1516.50 1877.117872 360.6169684
50 148,227 525 787.11 147,965 1519.03 1883.374932 364.3465265
51 147,965 524 787.11 147,702 1521.56 1889.652848 368.0927289
52 147,702 523 787.11 147,438 1524.10 1895.951691 371.8556382
53 147,438 522 787.11 147,173 1526.64 1902.27153 375.6353171
54 147,173 521 787.11 146,907 1529.18 1908.612435 379.4318285
55 146,907 520 787.11 146,640 1531.73 1914.974476 383.2452356
56 146,640 519 787.11 146,372 1534.28 1921.357725 387.0756018
57 146,372 518 787.11 146,104 1536.84 1927.76225 390.9229907
58 146,104 517 787.11 145,834 1539.40 1934.188124 394.7874661
59 145,834 516 787.11 145,563 1541.97 1940.635418 398.6690921
60 145,563 516 787.11 145,292 1544.54 1947.104203 402.5679329
61 145,292 515 787.11 145,019 1547.11 1953.59455 406.4840532
62 145,019 514 787.11 144,746 1549.69 1960.106532 410.4175175
63 144,746 513 787.11 144,471 1552.27 1966.640221 414.3683909
64 144,471 512 787.11 144,196 1554.86 1973.195688 418.3367386
65 144,196 511 787.11 143,920 1557.45 1979.773007 422.322626
66 143,920 510 787.11 143,642 1560.05 1986.37225 426.3261187
67 143,642 509 787.11 143,364 1562.65 1992.993491 430.3472827
68 143,364 508 787.11 143,084 1565.25 1999.636803 434.3861839
69 143,084 507 787.11 142,804 1567.86 2006.302259 438.4428889
70 142,804 506 787.11 142,523 1570.47 2012.989933 442.5174642
71 142,523 505 787.11 142,240 1573.09 2019.699899 446.6099765
72 142,240 504 787.11 141,957 1575.71 2026.432232 450.720493
73 141,957 503 787.11 141,673 1578.34 2033.187007 454.8490808
74 141,673 502 787.11 141,387 1580.97 2039.964297 458.9958076
75 141,387 501 787.11 141,101 1583.60 2046.764178 463.1607411
76 141,101 500 787.11 140,814 1586.24 2053.586725 467.3439493
77 140,814 499 787.11 140,525 1588.89 2060.432014 471.5455005
78 140,525 498 787.11 140,236 1591.53 2067.300121 475.765463
79 140,236 497 787.11 139,945 1594.19 2074.191121 480.0039056
80 139,945 496 787.11 139,654 1596.84 2081.105091 484.2608973
81 139,654 495 787.11 139,361 1599.51 2088.042108 488.5365073
82 139,361 494 787.11 139,068 1602.17 2095.002249 492.830805
83 139,068 493 787.11 138,773 1604.84 2101.98559 497.1438601
84 138,773 491 787.11 138,478 1607.52 2108.992208 501.4757425
85 138,478 490 787.11 138,181 1610.20 2116.022182 505.8265224
86 138,181 489 787.11 137,883 1612.88 2123.075589 510.1962703
87 137,883 488 787.11 137,584 1615.57 2130.152508 514.5850567
88 137,584 487 787.11 137,285 1618.26 2137.253016 518.9929527
89 137,285 486 787.11 136,984 1620.96 2144.377193 523.4200293
90 136,984 485 787.11 136,682 1623.66 2151.525117 527.866358
91 136,682 484 787.11 136,379 1626.36 2158.696868 532.3320104
92 136,379 483 787.11 136,075 1629.08 2165.892524 536.8170586
93 136,075 482 787.11 135,769 1631.79 2173.112166 541.3215745
94 135,769 481 787.11 135,463 1634.51 2180.355873 545.8456308
95 135,463 480 787.11 135,156 1637.23 2187.623726 550.3892999
96 135,156 479 787.11 134,847 1639.96 2194.915805 554.952655
97 134,847 478 787.11 134,538 1642.70 2202.232191 559.5357691
98 134,538 476 787.11 134,227 1645.43 2209.572965 564.1387157
99 134,227 475 787.11 133,916 1648.18 2216.938208 568.7615685
100 133,916 474 787.11 133,603 1650.92 2224.328002 573.4044014
101 133,603 473 787.11 133,289 1653.68 2231.742429 578.0672888
102 133,289 472 787.11 132,974 1656.43 2239.18157 582.750305
103 132,974 471 787.11 132,658 1659.19 2246.645509 587.4535248
104 132,658 470 787.11 132,340 1661.96 2254.134327 592.1770232
105 132,340 469 787.11 132,022 1664.73 2261.648108 596.9208754
106 132,022 468 787.11 131,702 1667.50 2269.186935 601.6851571
107 131,702 466 787.11 131,382 1670.28 2276.750892 606.4699439
108 131,382 465 787.11 131,060 1673.06 2284.340061 611.2753119
109 131,060 464 787.11 130,737 1675.85 2291.954528 616.1013376
110 130,737 463 787.11 130,413 1678.65 2299.594377 620.9480973
111 130,413 462 787.11 130,088 1681.44 2307.259691 625.8156681
112 130,088 461 787.11 129,761 1684.25 2314.950557 630.7041271
113 129,761 460 787.11 129,434 1687.05 2322.667059 635.6135515
114 129,434 458 787.11 129,105 1689.87 2330.409282 640.5440192
115 129,105 457 787.11 128,775 1692.68 2338.177313 645.495608
116 128,775 456 787.11 128,444 1695.50 2345.971237 650.4683962
117 128,444 455 787.11 128,112 1698.33 2353.791142 655.4624623
118 128,112 454 787.11 127,779 1701.16 2361.637112 660.477885
119 127,779 453 787.11 127,444 1703.99 2369.509236 665.5147433
120 127,444 451 787.11 127,108 1706.83 2377.4076 670.5731166
121 127,108 450 787.11 126,771 1709.68 2385.332292 675.6530845
122 126,771 449 787.11 126,433 1712.53 2393.2834 680.7547268
123 126,433 448 787.11 126,094 1715.38 2401.261011 685.8781236
124 126,094 447 787.11 125,753 1718.24 2409.265214 691.0233555
125 125,753 445 787.11 125,412 1721.11 2417.296098 696.1905031
126 125,412 444 787.11 125,069 1723.97 2425.353752 701.3796475
127 125,069 443 787.11 124,725 1726.85 2433.438264 706.5908698
128 124,725 442 787.11 124,379 1729.73 2441.549725 711.8242517
129 124,379 441 787.11 124,033 1732.61 2449.688224 717.079875
130 124,033 439 787.11 123,685 1735.50 2457.853852 722.3578218
131 123,685 438 787.11 123,336 1738.39 2466.046698 727.6581746
132 123,336 437 787.11 122,985 1741.29 2474.266854 732.9810161
133 122,985 436 787.11 122,634 1744.19 2482.51441 738.3264292
134 122,634 434 787.11 122,281 1747.09 2490.789458 743.6944973
135 122,281 433 787.11 121,927 1750.01 2499.092089 749.0853038
136 121,927 432 787.11 121,572 1752.92 2507.422396 754.4989328
137 121,572 431 787.11 121,215 1755.85 2515.780471 759.9354684
138 121,215 429 787.11 120,857 1758.77 2524.166406 765.3949949
139 120,857 428 787.11 120,498 1761.70 2532.580294 770.8775973
140 120,498 427 787.11 120,138 1764.64 2541.022228 776.3833604
141 120,138 425 787.11 119,776 1767.58 2549.492302 781.9123697
142 119,776 424 787.11 119,413 1770.53 2557.99061 787.4647109
143 119,413 423 787.11 119,049 1773.48 2566.517245 793.0404697
144 119,049 422 787.11 118,684 1776.43 2575.072303 798.6397326
145 118,684 420 787.11 118,317 1779.39 2583.655877 804.262586
146 118,317 419 787.11 117,949 1782.36 2592.268063 809.9091168
147 117,949 418 787.11 117,580 1785.33 2600.908957 815.5794121
148 117,580 416 787.11 117,209 1788.31 2609.578654 821.2735593
149 117,209 415 787.11 116,837 1791.29 2618.277249 826.9916464
150 116,837 414 787.11 116,464 1794.27 2627.00484 832.7337612
151 116,464 412 787.11 116,089 1797.26 2635.761523 838.4999922
152 116,089 411 787.11 115,713 1800.26 2644.547394 844.290428
153 115,713 410 787.11 115,336 1803.26 2653.362552 850.1051578
154 115,336 408 787.11 114,957 1806.26 2662.207094 855.9442706
155 114,957 407 787.11 114,577 1809.27 2671.081118 861.8078562
156 114,577 406 787.11 114,196 1812.29 2679.984722 867.6960045
157 114,196 404 787.11 113,813 1815.31 2688.918004 873.6088057
158 113,813 403 787.11 113,429 1818.33 2697.881064 879.5463504
159 113,429 402 787.11 113,044 1821.37 2706.874001 885.5087294
160 113,044 400 787.11 112,657 1824.40 2715.896914 891.496034
161 112,657 399 787.11 112,269 1827.44 2724.949904 897.5083555
162 112,269 398 787.11 111,879 1830.49 2734.03307 903.545786
163 111,879 396 787.11 111,488 1833.54 2743.146514 909.6084174
164 111,488 395 787.11 111,096 1836.59 2752.290336 915.6963423
165 111,096 393 787.11 110,703 1839.65 2761.464637 921.8096534
166 110,703 392 787.11 110,307 1842.72 2770.669519 927.9484439
167 110,307 391 787.11 109,911 1845.79 2779.905084 934.1128072
168 109,911 389 787.11 109,513 1848.87 2789.171434 940.302837
169 109,513 388 787.11 109,114 1851.95 2798.468672 946.5186274
170 109,114 386 787.11 108,713 1855.04 2807.796901 952.7602729
171 108,713 385 787.11 108,311 1858.13 2817.156224 959.0278682
172 108,311 384 787.11 107,908 1861.23 2826.546745 965.3215084
173 107,908 382 787.11 107,503 1864.33 2835.968567 971.6412888
174 107,503 381 787.11 107,096 1867.43 2845.421796 977.9873052
175 107,096 379 787.11 106,689 1870.55 2854.906535 984.3596537
176 106,689 378 787.11 106,279 1873.66 2864.42289 990.7584307
177 106,279 376 787.11 105,869 1876.79 2873.970967 997.1837329
178 105,869 375 787.11 105,456 1879.92 2883.55087 1003.635657
179 105,456 373 787.11 105,043 1883.05 2893.162706 1010.114302
180 105,043 372 787.11 104,628 1886.19 2902.806582 1016.619763
181 104,628 371 787.11 104,211 1889.33 2912.482604 1023.152141
182 104,211 369 787.11 103,793 1892.48 2922.190879 1029.711532
183 103,793 368 787.11 103,374 1895.63 2931.931515 1036.298036
184 103,374 366 787.11 102,953 1898.79 2941.70462 1042.911752
185 102,953 365 787.11 102,530 1901.96 2951.510303 1049.552779
186 102,530 363 787.11 102,106 1905.13 2961.34867 1056.221217
187 102,106 362 787.11 101,681 1908.30 2971.219832 1062.917167
188 101,681 360 787.11 101,254 1911.48 2981.123899 1069.640729
189 101,254 359 787.11 100,825 1914.67 2991.060978 1076.392003
190 100,825 357 787.11 100,395 1917.86 3001.031181 1083.171092
191 100,395 356 787.11 99,964 1921.06 3011.034619 1089.978095
192 99,964 354 787.11 99,531 1924.26 3021.071401 1096.813117
193 99,531 353 787.11 99,096 1927.47 3031.141639 1103.676257
194 99,096 351 787.11 98,660 1930.68 3041.245444 1110.567621
195 98,660 349 787.11 98,222 1933.90 3051.382929 1117.487309
196 98,222 348 787.11 97,783 1937.12 3061.554206 1124.435426
197 97,783 346 787.11 97,342 1940.35 3071.759386 1131.412076
198 97,342 345 787.11 96,900 1943.58 3081.998584 1138.417361
199 96,900 343 787.11 96,456 1946.82 3092.271913 1145.451388
200 96,456 342 787.11 96,010 1950.07 3102.579486 1152.51426
201 96,010 340 787.11 95,563 1953.32 3112.921417 1159.606083
202 95,563 338 787.11 95,115 1956.57 3123.297822 1166.726962
203 95,115 337 787.11 94,664 1959.83 3133.708815 1173.877003
204 94,664 335 787.11 94,213 1963.10 3144.154511 1181.056313
205 94,213 334 787.11 93,759 1966.37 3154.635026 1188.264998
206 93,759 332 787.11 93,304 1969.65 3165.150476 1195.503165
207 93,304 330 787.11 92,847 1972.93 3175.700978 1202.770921
208 92,847 329 787.11 92,389 1976.22 3186.286648 1210.068374
209 92,389 327 787.11 91,929 1979.51 3196.907603 1217.395632
210 91,929 326 787.11 91,468 1982.81 3207.563962 1224.752804
211 91,468 324 787.11 91,005 1986.12 3218.255842 1232.139999
212 91,005 322 787.11 90,540 1989.43 3228.983361 1239.557325
213 90,540 321 787.11 90,073 1992.74 3239.746639 1247.004893
214 90,073 319 787.11 89,605 1996.06 3250.545794 1254.482812
215 89,605 317 787.11 89,135 1999.39 3261.380947 1261.991193
216 89,135 316 787.11 88,664 2002.72 3272.252217 1269.530147
217 88,664 314 787.11 88,191 2006.06 3283.159724 1277.099784
218 88,191 312 787.11 87,716 2009.40 3294.10359 1284.700217
219 87,716 311 787.11 87,240 2012.75 3305.083935 1292.331556
220 87,240 309 787.11 86,762 2016.11 3316.100882 1299.993915
221 86,762 307 787.11 86,282 2019.47 3327.154551 1307.687407
222 86,282 306 787.11 85,800 2022.83 3338.245067 1315.412143
223 85,800 304 787.11 85,317 2026.20 3349.37255 1323.168239
224 85,317 302 787.11 84,832 2029.58 3360.537125 1330.955807
225 84,832 300 787.11 84,345 2032.96 3371.738916 1338.774962
226 84,345 299 787.11 83,857 2036.35 3382.978045 1346.625818
227 83,857 297 787.11 83,367 2039.75 3394.254639 1354.508491
228 83,367 295 787.11 82,875 2043.15 3405.568821 1362.423096
229 82,875 294 787.11 82,381 2046.55 3416.920717 1370.36975
230 82,381 292 787.11 81,886 2049.96 3428.310453 1378.348567
231 81,886 290 787.11 81,389 2053.38 3439.738154 1386.359665
232 81,389 288 787.11 80,890 2056.80 3451.203948 1394.403162
233 80,890 286 787.11 80,389 2060.23 3462.707961 1402.479174
234 80,389 285 787.11 79,887 2063.66 3474.250321 1410.587819
235 79,887 283 787.11 79,383 2067.10 3485.831156 1418.729216
236 79,383 281 787.11 78,877 2070.55 3497.450593 1426.903483
237 78,877 279 787.11 78,369 2074.00 3509.108761 1435.11074
238 78,369 278 787.11 77,860 2077.45 3520.805791 1443.351106
239 77,860 276 787.11 77,348 2080.92 3532.54181 1451.6247
240 77,348 274 787.11 76,835 2084.39 3544.316949 1459.931645
241 76,835 272 787.11 76,320 2087.86 3556.131339 1468.272059
242 76,320 270 787.11 75,803 2091.34 3567.98511 1476.646065
243 75,803 268 787.11 75,285 2094.82 3579.878394 1485.053783
244 75,285 267 787.11 74,764 2098.32 3591.811322 1493.495337
245 74,764 265 787.11 74,242 2101.81 3603.784026 1501.970848
246 74,242 263 787.11 73,718 2105.32 3615.79664 1510.480439
247 73,718 261 787.11 73,192 2108.83 3627.849295 1519.024235
248 73,192 259 787.11 72,664 2112.34 3639.942126 1527.602357
249 72,664 257 787.11 72,134 2115.86 3652.075267 1536.214931
250 72,134 255 787.11 71,602 2119.39 3664.248851 1544.862082
251 71,602 254 787.11 71,069 2122.92 3676.463014 1553.543933
252 71,069 252 787.11 70,533 2126.46 3688.71789 1562.260611
253 70,533 250 787.11 69,996 2130.00 3701.013617 1571.012242
254 69,996 248 787.11 69,457 2133.55 3713.350329 1579.798952
255 69,457 246 787.11 68,916 2137.11 3725.728163 1588.620867
256 68,916 244 787.11 68,373 2140.67 3738.147257 1597.478116
257 68,373 242 787.11 67,828 2144.24 3750.607748 1606.370825
258 67,828 240 787.11 67,281 2147.81 3763.109774 1615.299122
259 67,281 238 787.11 66,732 2151.39 3775.653473 1624.263137
260 66,732 236 787.11 66,181 2154.98 3788.238985 1633.262998
261 66,181 234 787.11 65,629 2158.57 3800.866448 1642.298835
262 65,629 232 787.11 65,074 2162.17 3813.536003 1651.370777
263 65,074 230 787.11 64,517 2165.77 3826.247789 1660.478955
264 64,517 228 787.11 63,959 2169.38 3839.001949 1669.6235
265 63,959 227 787.11 63,398 2172.99 3851.798622 1678.804542
266 63,398 225 787.11 62,836 2176.62 3864.637951 1688.022214
267 62,836 223 787.11 62,271 2180.24 3877.520077 1697.276648
268 62,271 221 787.11 61,704 2183.88 3890.445144 1706.567975
269 61,704 219 787.11 61,136 2187.52 3903.413294 1715.896331
270 61,136 217 787.11 60,565 2191.16 3916.424672 1725.261847
271 60,565 215 787.11 59,993 2194.81 3929.479421 1734.664658
272 59,993 212 787.11 59,418 2198.47 3942.577686 1744.104898
273 59,418 210 787.11 58,841 2202.14 3955.719611 1753.582702
274 58,841 208 787.11 58,263 2205.81 3968.905343 1763.098206
275 58,263 206 787.11 57,682 2209.48 3982.135028 1772.651545
276 57,682 204 787.11 57,099 2213.17 3995.408811 1782.242856
277 57,099 202 787.11 56,514 2216.85 4008.726841 1791.872275
278 56,514 200 787.11 55,927 2220.55 4022.089264 1801.539941
279 55,927 198 787.11 55,338 2224.25 4035.496228 1811.245989
280 55,338 196 787.11 54,747 2227.96 4048.947882 1820.99056
281 54,747 194 787.11 54,154 2231.67 4062.444375 1830.77379
282 54,154 192 787.11 53,559 2235.39 4075.985856 1840.595821
283 53,559 190 787.11 52,961 2239.12 4089.572476 1850.45679
284 52,961 188 787.11 52,362 2242.85 4103.204384 1860.356839
285 52,362 185 787.11 51,760 2246.59 4116.881732 1870.296108
286 51,760 183 787.11 51,156 2250.33 4130.604671 1880.274737
287 51,156 181 787.11 50,550 2254.08 4144.373353 1890.29287
288 50,550 179 787.11 49,942 2257.84 4158.187931 1900.350647
289 49,942 177 787.11 49,332 2261.60 4172.048557 1910.448211
290 49,332 175 787.11 48,719 2265.37 4185.955386 1920.585706
291 48,719 173 787.11 48,105 2269.15 4199.90857 1930.763274
292 48,105 170 787.11 47,488 2272.93 4213.908266 1940.981061
293 47,488 168 787.11 46,869 2276.72 4227.954627 1951.239209
294 46,869 166 787.11 46,248 2280.51 4242.047809 1961.537866
295 46,248 164 787.11 45,625 2284.31 4256.187968 1971.877175
296 45,625 162 787.11 44,999 2288.12 4270.375261 1982.257284
297 44,999 159 787.11 44,372 2291.93 4284.609845 1992.678338
298 44,372 157 787.11 43,742 2295.75 4298.891878 2003.140485
299 43,742 155 787.11 43,109 2299.58 4313.221518 2013.643872
300 43,109 153 787.11 42,475 2303.41 4327.598923 2024.188648
301 42,475 150 787.11 41,838 2307.25 4342.024253 2034.774961
302 41,838 148 787.11 41,199 2311.09 4356.497667 2045.402959
303 41,199 146 787.11 40,558 2314.95 4371.019326 2056.072794
304 40,558 144 787.11 39,915 2318.80 4385.58939 2066.784614
305 39,915 141 787.11 39,269 2322.67 4400.208021 2077.538571
306 39,269 139 787.11 38,621 2326.54 4414.875382 2088.334815
307 38,621 137 787.11 37,971 2330.42 4429.591633 2099.173499
308 37,971 134 787.11 37,318 2334.30 4444.356938 2110.054774
309 37,318 132 787.11 36,663 2338.19 4459.171461 2120.978793
310 36,663 130 787.11 36,006 2342.09 4474.035366 2131.94571
311 36,006 128 787.11 35,346 2345.99 4488.948817 2142.955679
312 35,346 125 787.11 34,684 2349.90 4503.91198 2154.008853
313 34,684 123 787.11 34,020 2353.82 4518.92502 2165.105388
314 34,020 120 787.11 33,353 2357.74 4533.988104 2176.245438
315 33,353 118 787.11 32,684 2361.67 4549.101397 2187.429161
316 32,684 116 787.11 32,013 2365.61 4564.265069 2198.656712
317 32,013 113 787.11 31,339 2369.55 4579.479285 2209.928248
318 31,339 111 787.11 30,663 2373.50 4594.744216 2221.243927
319 30,663 109 787.11 29,985 2377.46 4610.06003 2232.603908
320 29,985 106 787.11 29,304 2381.42 4625.426897 2244.008348
321 29,304 104 787.11 28,620 2385.39 4640.844987 2255.457406
322 28,620 101 787.11 27,935 2389.36 4656.31447 2266.951244
323 27,935 99 787.11 27,247 2393.35 4671.835518 2278.49002
324 27,247 96 787.11 26,556 2397.33 4687.408303 2290.073896
325 26,556 94 787.11 25,863 2401.33 4703.032998 2301.703033
326 25,863 92 787.11 25,167 2405.33 4718.709774 2313.377593
327 25,167 89 787.11 24,469 2409.34 4734.438807 2325.097738
328 24,469 87 787.11 23,769 2413.36 4750.22027 2336.863633
329 23,769 84 787.11 23,066 2417.38 4766.054337 2348.675439
330 23,066 82 787.11 22,361 2421.41 4781.941185 2360.533322
331 22,361 79 787.11 21,653 2425.44 4797.880989 2372.437446
332 21,653 77 787.11 20,942 2429.49 4813.873926 2384.387977
333 20,942 74 787.11 20,229 2433.54 4829.920172 2396.38508
334 20,229 72 787.11 19,514 2437.59 4846.019906 2408.428922
335 19,514 69 787.11 18,796 2441.65 4862.173306 2420.51967
336 18,796 67 787.11 18,075 2445.72 4878.38055 2432.657492
337 18,075 64 787.11 17,352 2449.80 4894.641819 2444.842555
338 17,352 61 787.11 16,627 2453.88 4910.957291 2457.075029
339 16,627 59 787.11 15,898 2457.97 4927.327149 2469.355083
340 15,898 56 787.11 15,168 2462.07 4943.751573 2481.682887
341 15,168 54 787.11 14,434 2466.17 4960.230745 2494.058611
342 14,434 51 787.11 13,698 2470.28 4976.764847 2506.482427
343 13,698 49 787.11 12,960 2474.40 4993.354063 2518.954505
344 12,960 46 787.11 12,218 2478.52 5009.998577 2531.47502
345 12,218 43 787.11 11,474 2482.65 5026.698572 2544.044142
346 11,474 41 787.11 10,728 2486.79 5043.454234 2556.662047
347 10,728 38 787.11 9,979 2490.94 5060.265748 2569.328907
348 9,979 35 787.11 9,227 2495.09 5077.133301 2582.044898
349 9,227 33 787.11 8,473 2499.25 5094.057078 2594.810195
350 8,473 30 787.11 7,716 2503.41 5111.037269 2607.624974
351 7,716 27 787.11 6,956 2507.58 5128.074059 2620.489411
352 6,956 25 787.11 6,193 2511.76 5145.16764 2633.403684
353 6,193 22 787.11 5,428 2515.95 5162.318198 2646.367969
354 5,428 19 787.11 4,660 2520.14 5179.525926 2659.382446
355 4,660 17 787.11 3,890 2524.34 5196.791012 2672.447293
356 3,890 14 787.11 3,116 2528.55 5214.113649 2685.562691
357 3,116 11 787.11 2,340 2532.77 5231.494028 2698.728818
358 2,340 8 787.11 1,561 2536.99 5248.932341 2711.945856
359 1,561 6 787.11 780 2541.21 5266.428782 2725.213986
360 780 3 787.11 -4 2545.45 5283.983545 2738.533391
-
Your magical no-maintenance, no-vacancy, no CapEx, no bad tenants that have to be evicted house is indeed an awesome investment.
-W
-
Didn't include the expenses because that goes in another bucket which I didn't describe well. Even if in one month I would need to pay for a repair, the rent would still be whatever it should be in that given month.
Vacancy would be harder to quantify, but almost the same idea as the maintenance, it would just be lower rent (none) instead of higher expense (the repair)
Don't know what Cap Ex is
Don't know what you mean by bad tenant
-
Didn't include the expenses because that goes in another bucket which I didn't describe well. Even if in one month I would need to pay for a repair, the rent would still be whatever it should be in that given month.
Vacancy would be harder to quantify, but almost the same idea as the maintenance, it would just be lower rent (none) instead of higher expense (the repair)
Don't know what Cap Ex is
Don't know what you mean by bad tenant
*slams forehead repeatedly against wall*
Go read some books on real estate and come back.
-W
-
Please note I am anything but a professional on RE.
A bad tenant is a tenant that doesn't pay the rent and trashes the place. One example is my former up neighbours, who didn't ventilate the bathroom enough because it was in the middle of the house. Result was a whole lot of black mold. My estimate for the costs would be 2-3 k for that alone and that wasn't the only visible damage.
If you are going to consider this as a rental it is a business. A business that operates with costs and income, rather than income and expenses. The difference is costs are things that are written off that month, not necessarily expenses that go out that month. So you do have the put the % you assign for repairs aside every month, whether there is a repair that month or not.
A general rule of thumb is that approximately 50% of what you get as rent you can use for income/mortgage payments (see other thread inhere). Please look up some threads on this board.
-
Yes, you get some interesting numbers when the rate at which something is getting more expensive exceeds the rate of inflation for a long period.
College and health care are two macro examples that have been following that pattern for a while.
-
Didn't include the expenses because that goes in another bucket which I didn't describe well. Even if in one month I would need to pay for a repair, the rent would still be whatever it should be in that given month.
Vacancy would be harder to quantify, but almost the same idea as the maintenance, it would just be lower rent (none) instead of higher expense (the repair)
Don't know what Cap Ex is
Don't know what you mean by bad tenant
*slams forehead repeatedly against wall*
Go read some books on real estate and come back.
-W
I am, as well as forums, where apparently my posts make people so upset they inflict physical harm on themselves for no logical reason.
-
ok look it's really hard to see 30 years into the future but your assumption that rent will grow at 4% and other expenses at 2% is causing the issue. 2% differential sounds small but compounded over 30 years is a massive difference (why do you think we talk so much about mutual fund fees???)
I would suggest keeping both at 3% growth and reworking your calcs. Forget inflation for now, try and keep it simple, and perhaps only look at it over 15 years.
Take 4 weeks rent off a year for nominal vacancy and allow for HOA fees or major repairs of $3k per year (whichever is higher). Add insurance, local taxes, water, property manager fees, and another $1000 a year for things like air conditioner maintenance, carpet cleaning, new sets of keys, blinds, curtains, gardening, plumbing repairs etc etc.
Now show us your results.
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This might help, the numbers portion starts at min 44
Bigger Pockets How to Invest in Real Estate.
https://www.youtube.com/watch?v=l1u2qPXBadc&feature=youtu.be
Warning as with all seminars of this type there is the inevitable hype just ignore it.
-
You say that maintenance and vacancy are a different bucket. Okay, but you still have to account for that. How can you "not see how that impacts the calculation? If you spend an average of $2500 per year on maintenance, that directly affects the bottom line, even if some years that is $200 and some years (when the roof goes and the fridge dies and the toilet stops up and needs a plumber, and you have to replace the carpet because it's 14 years old, and ...) are $7500. Likewise, if the place is empty for an average of 1 month every 2 years, that affects those rental incomes you have in your chart. (Even if you are in a super hot rental market right now where there are almost no vacancies, you certainly can't assume that won't change over the next 30+ years). You can't just dismiss very real expenses because you are mentally categorizing them differently, and because they are less predictable and evenly distributed over time. Why not declare that "taxes" are a different bucket, since they aren't paid monthly, either? Then you can delete those, too, and your numbers look even better! That makes no sense, right? Well neither does not counting maintenance or vacancies.
Also, where are you getting those 2% and 4% rates? Did you pull those from some kind of research, or just pick them somewhat randomly?
Do you live in a state where property tax increases are capped? If not, those could potentially go up at a far, far greater rate than 2%/yr.
-
ok look it's really hard to see 30 years into the future but your assumption that rent will grow at 4% and other expenses at 2% is causing the issue. 2% differential sounds small but compounded over 30 years is a massive difference (why do you think we talk so much about mutual fund fees???)
I would suggest keeping both at 3% growth and reworking your calcs. Forget inflation for now, try and keep it simple, and perhaps only look at it over 15 years.
Take 4 weeks rent off a year for nominal vacancy and allow for HOA fees or major repairs of $3k per year (whichever is higher). Add insurance, local taxes, water, property manager fees, and another $1000 a year for things like air conditioner maintenance, carpet cleaning, new sets of keys, blinds, curtains, gardening, plumbing repairs etc etc.
Now show us your results.
I took out the first month's rent of the year (4 weeks vacancy) then on the last month took out $4,000 for fees, also accumulating at 3% a year, and subtracted it from the rent to get a negative cash flow. End result is that I pay $40,000 up front to lose $24,750 over the next 15 years, which will then continue to grow as the expenses outpace the income.
So, obviously this is a good model (and accurate!) because everyone would be all over this fantastic opportunity.
month balance interest payment new balance Total payments Total Rent Gain
1 160,000 567 787.11 159,780 1400 1600 200
2 159,780 566 787.11 159,558 1403.50 1604 200.5
3 159,558 565 787.11 159,336 1407.01 1608.01 201.00125
4 159,336 564 787.11 159,114 1410.53 1612.030025 201.5037531
5 159,114 564 787.11 158,890 1414.05 1616.0601 202.0075125
6 158,890 563 787.11 158,666 1417.59 1620.10025 202.5125313
7 158,666 562 787.11 158,440 1421.13 1624.150501 203.0188126
8 158,440 561 787.11 158,214 1424.68 1628.210877 203.5263596
9 158,214 560 787.11 157,988 1428.25 1632.281404 204.0351755
10 157,988 560 787.11 157,760 1431.82 1636.362108 204.5452635
11 157,760 559 787.11 157,532 1435.40 1640.453013 205.0566266
12 157,532 558 787.11 157,303 1438.98 1644.554146 -3794.430732
13 157,303 557 787.11 157,073 1442.58 1648.665531 206.0831914
14 157,073 556 787.11 156,842 1446.19 1652.787195 206.5983994
15 156,842 555 787.11 156,610 1449.80 1656.919163 207.1148954
16 156,610 555 787.11 156,378 1453.43 1661.061461 207.6326826
17 156,378 554 787.11 156,144 1457.06 1665.214114 208.1517643
18 156,144 553 787.11 155,910 1460.71 1669.37715 208.6721437
19 155,910 552 787.11 155,675 1464.36 1673.550593 209.1938241
20 155,675 551 787.11 155,440 1468.02 1677.734469 209.7168086
21 155,440 551 787.11 155,203 1471.69 1681.928805 210.2411007
22 155,203 550 787.11 154,966 1475.37 1686.133627 210.7667034
23 154,966 549 787.11 154,727 1479.06 1690.348961 211.2936202
24 154,727 548 787.11 154,488 1482.75 1694.574834 -3908.178146
25 154,488 547 787.11 154,248 1486.46 1698.811271 212.3514089
26 154,248 546 787.11 154,007 1490.18 1703.058299 212.8822874
27 154,007 545 787.11 153,766 1493.90 1707.315945 213.4144931
28 153,766 545 787.11 153,523 1497.64 1711.584235 213.9480293
29 153,523 544 787.11 153,280 1501.38 1715.863195 214.4828994
30 153,280 543 787.11 153,036 1505.13 1720.152853 215.0191066
31 153,036 542 787.11 152,790 1508.90 1724.453235 215.5566544
32 152,790 541 787.11 152,544 1512.67 1728.764368 216.0955461
33 152,544 540 787.11 152,298 1516.45 1733.086279 216.6357849
34 152,298 539 787.11 152,050 1520.24 1737.418995 217.1773744
35 152,050 539 787.11 151,801 1524.04 1741.762543 217.7203178
36 151,801 538 787.11 151,552 1527.85 1746.116949 -4025.335381
37 151,552 537 787.11 151,301 1531.67 1750.482241 218.8102802
38 151,301 536 787.11 151,050 1535.50 1754.858447 219.3573059
39 151,050 535 787.11 150,798 1539.34 1759.245593 219.9056991
40 150,798 534 787.11 150,545 1543.19 1763.643707 220.4554634
41 150,545 533 787.11 150,291 1547.05 1768.052816 221.006602
42 150,291 532 787.11 150,036 1550.91 1772.472948 221.5591185
43 150,036 531 787.11 149,781 1554.79 1776.904131 222.1130163
44 149,781 530 787.11 149,524 1558.68 1781.346391 222.6682989
45 149,524 530 787.11 149,266 1562.57 1785.799757 223.2249696
46 149,266 529 787.11 149,008 1566.48 1790.264256 223.783032
47 149,008 528 787.11 148,749 1570.40 1794.739917 224.3424896
48 148,749 527 787.11 148,488 1574.32 1799.226767 -4146.004654
49 148,488 526 787.11 148,227 1578.26 1803.724834 225.4656042
50 148,227 525 787.11 147,965 1582.20 1808.234146 226.0292682
51 147,965 524 787.11 147,702 1586.16 1812.754731 226.5943414
52 147,702 523 787.11 147,438 1590.13 1817.286618 227.1608272
53 147,438 522 787.11 147,173 1594.10 1821.829834 227.7287293
54 147,173 521 787.11 146,907 1598.09 1826.384409 228.2980511
55 146,907 520 787.11 146,640 1602.08 1830.95037 228.8687963
56 146,640 519 787.11 146,372 1606.09 1835.527746 229.4409683
57 146,372 518 787.11 146,104 1610.10 1840.116565 230.0145707
58 146,104 517 787.11 145,834 1614.13 1844.716857 230.5896071
59 145,834 516 787.11 145,563 1618.16 1849.328649 231.1660811
60 145,563 516 787.11 145,292 1622.21 1853.951971 -4139.164004
61 145,292 515 787.11 145,019 1626.26 1858.58685 232.3233563
62 145,019 514 787.11 144,746 1630.33 1863.233318 232.9041647
63 144,746 513 787.11 144,471 1634.40 1867.891401 233.4864251
64 144,471 512 787.11 144,196 1638.49 1872.561129 234.0701412
65 144,196 511 787.11 143,920 1642.59 1877.242532 234.6553165
66 143,920 510 787.11 143,642 1646.69 1881.935639 235.2419548
67 143,642 509 787.11 143,364 1650.81 1886.640478 235.8300597
68 143,364 508 787.11 143,084 1654.94 1891.357079 236.4196349
69 143,084 507 787.11 142,804 1659.07 1896.085472 237.0106839
70 142,804 506 787.11 142,523 1663.22 1900.825685 237.6032107
71 142,523 505 787.11 142,240 1667.38 1905.577749 238.1972187
72 142,240 504 787.11 141,957 1671.55 1910.341694 -4263.242528
73 141,957 503 787.11 141,673 1675.73 1915.117548 239.3896935
74 141,673 502 787.11 141,387 1679.92 1919.905342 239.9881677
75 141,387 501 787.11 141,101 1684.12 1924.705105 240.5881382
76 141,101 500 787.11 140,814 1688.33 1929.516868 241.1896085
77 140,814 499 787.11 140,525 1692.55 1934.34066 241.7925825
78 140,525 498 787.11 140,236 1696.78 1939.176512 242.397064
79 140,236 497 787.11 139,945 1701.02 1944.024453 243.0030566
80 139,945 496 787.11 139,654 1705.27 1948.884514 243.6105643
81 139,654 495 787.11 139,361 1709.54 1953.756726 244.2195907
82 139,361 494 787.11 139,068 1713.81 1958.641117 244.8301397
83 139,068 493 787.11 138,773 1718.10 1963.53772 245.442215
84 138,773 491 787.11 138,478 1722.39 1968.446564 -4255.979419
85 138,478 490 787.11 138,181 1726.70 1973.367681 246.6709601
86 138,181 489 787.11 137,883 1731.01 1978.3011 247.2876375
87 137,883 488 787.11 137,584 1735.34 1983.246853 247.9058566
88 137,584 487 787.11 137,285 1739.68 1988.20497 248.5256212
89 137,285 486 787.11 136,984 1744.03 1993.175482 249.1469353
90 136,984 485 787.11 136,682 1748.39 1998.158421 249.7698026
91 136,682 484 787.11 136,379 1752.76 2003.153817 250.3942271
92 136,379 483 787.11 136,075 1757.14 2008.161702 251.0202127
93 136,075 482 787.11 135,769 1761.53 2013.182106 251.6477632
94 135,769 481 787.11 135,463 1765.94 2018.215061 252.2768827
95 135,463 480 787.11 135,156 1770.35 2023.260599 252.9075749
96 135,156 479 787.11 134,847 1774.78 2028.31875 -4383.556453
97 134,847 478 787.11 134,538 1779.22 2033.389547 254.1736934
98 134,538 476 787.11 134,227 1783.66 2038.473021 254.8091276
99 134,227 475 787.11 133,916 1788.12 2043.569204 255.4461505
100 133,916 474 787.11 133,603 1792.59 2048.678127 256.0847658
101 133,603 473 787.11 133,289 1797.07 2053.799822 256.7249777
102 133,289 472 787.11 132,974 1801.57 2058.934322 257.3667902
103 132,974 471 787.11 132,658 1806.07 2064.081657 258.0102072
104 132,658 470 787.11 132,340 1810.59 2069.241861 258.6552327
105 132,340 469 787.11 132,022 1815.11 2074.414966 259.3018708
106 132,022 468 787.11 131,702 1819.65 2079.601004 259.9501254
107 131,702 466 787.11 131,382 1824.20 2084.800006 260.6000008
108 131,382 465 787.11 131,060 1828.76 2090.012006 -4375.844796
109 131,060 464 787.11 130,737 1833.33 2095.237036 261.9046295
110 130,737 463 787.11 130,413 1837.92 2100.475129 262.5593911
111 130,413 462 787.11 130,088 1842.51 2105.726317 263.2157896
112 130,088 461 787.11 129,761 1847.12 2110.990632 263.873829
113 129,761 460 787.11 129,434 1851.73 2116.268109 264.5335136
114 129,434 458 787.11 129,105 1856.36 2121.558779 265.1948474
115 129,105 457 787.11 128,775 1861.00 2126.862676 265.8578345
116 128,775 456 787.11 128,444 1865.66 2132.179833 266.5224791
117 128,444 455 787.11 128,112 1870.32 2137.510282 267.1887853
118 128,112 454 787.11 127,779 1875.00 2142.854058 267.8567573
119 127,779 453 787.11 127,444 1879.68 2148.211193 268.5263992
120 127,444 451 787.11 127,108 1884.38 2153.581721 -4367.898582
121 127,108 450 787.11 126,771 1889.09 2158.965676 269.8707094
122 126,771 449 787.11 126,433 1893.82 2164.36309 270.5453862
123 126,433 448 787.11 126,094 1898.55 2169.773997 271.2217497
124 126,094 447 787.11 125,753 1903.30 2175.198432 271.8998041
125 125,753 445 787.11 125,412 1908.06 2180.636428 272.5795536
126 125,412 444 787.11 125,069 1912.83 2186.08802 273.2610024
127 125,069 443 787.11 124,725 1917.61 2191.55324 273.944155
128 124,725 442 787.11 124,379 1922.40 2197.032123 274.6290153
129 124,379 441 787.11 124,033 1927.21 2202.524703 275.3155879
130 124,033 439 787.11 123,685 1932.03 2208.031015 276.0038768
131 123,685 438 787.11 123,336 1936.86 2213.551092 276.6938865
132 123,336 437 787.11 122,985 1941.70 2219.08497 -4642.10984
133 122,985 436 787.11 122,634 1946.55 2224.632682 278.0790853
134 122,634 434 787.11 122,281 1951.42 2230.194264 278.774283
135 122,281 433 787.11 121,927 1956.30 2235.76975 279.4712187
136 121,927 432 787.11 121,572 1961.19 2241.359174 280.1698968
137 121,572 431 787.11 121,215 1966.09 2246.962572 280.8703215
138 121,215 429 787.11 120,857 1971.01 2252.579979 281.5724973
139 120,857 428 787.11 120,498 1975.93 2258.211429 282.2764286
140 120,498 427 787.11 120,138 1980.87 2263.856957 282.9821196
141 120,138 425 787.11 119,776 1985.83 2269.516599 283.6895749
142 119,776 424 787.11 119,413 1990.79 2275.190391 284.3987989
143 119,413 423 787.11 119,049 1995.77 2280.878367 285.1097959
144 119,049 422 787.11 118,684 2000.76 2286.580563 -4781.257755
145 118,684 420 787.11 118,317 2005.76 2292.297014 286.5371268
146 118,317 419 787.11 117,949 2010.77 2298.027757 287.2534696
147 117,949 418 787.11 117,580 2015.80 2303.772826 287.9716033
148 117,580 416 787.11 117,209 2020.84 2309.532258 288.6915323
149 117,209 415 787.11 116,837 2025.89 2315.306089 289.4132611
150 116,837 414 787.11 116,464 2030.96 2321.094354 290.1367943
151 116,464 412 787.11 116,089 2036.03 2326.89709 290.8621363
152 116,089 411 787.11 115,713 2041.13 2332.714333 291.5892916
153 115,713 410 787.11 115,336 2046.23 2338.546119 292.3182648
154 115,336 408 787.11 114,957 2051.34 2344.392484 293.0490605
155 114,957 407 787.11 114,577 2056.47 2350.253465 293.7816831
156 114,577 406 787.11 114,196 2061.61 2356.129099 -4924.576598
157 114,196 404 787.11 113,813 2066.77 2362.019422 295.2524277
158 113,813 403 787.11 113,429 2071.93 2367.92447 295.9905588
159 113,429 402 787.11 113,044 2077.11 2373.844281 296.7305352
160 113,044 400 787.11 112,657 2082.31 2379.778892 297.4723615
161 112,657 399 787.11 112,269 2087.51 2385.728339 298.2160424
162 112,269 398 787.11 111,879 2092.73 2391.69266 298.9615825
163 111,879 396 787.11 111,488 2097.96 2397.671892 299.7089865
164 111,488 395 787.11 111,096 2103.21 2403.666071 300.4582589
165 111,096 393 787.11 110,703 2108.47 2409.675237 301.2094046
166 110,703 392 787.11 110,307 2113.74 2415.699425 301.9624281
167 110,307 391 787.11 109,911 2119.02 2421.738673 302.7173342
168 109,911 389 787.11 109,513 2124.32 2427.79302 -5072.19139
169 109,513 388 787.11 109,114 2129.63 2433.862502 304.2328128
170 109,114 386 787.11 108,713 2134.95 2439.947159 304.9933948
171 108,713 385 787.11 108,311 2140.29 2446.047027 305.7558783
172 108,311 384 787.11 107,908 2145.64 2452.162144 306.520268
173 107,908 382 787.11 107,503 2151.01 2458.29255 307.2865687
174 107,503 381 787.11 107,096 2156.38 2464.438281 308.0547851
175 107,096 379 787.11 106,689 2161.77 2470.599377 308.8249221
176 106,689 378 787.11 106,279 2167.18 2476.775875 309.5969844
177 106,279 376 787.11 105,869 2172.60 2482.967815 310.3709768
178 105,869 375 787.11 105,456 2178.03 2489.175234 311.1469043
179 105,456 373 787.11 105,043 2183.47 2495.398172 311.9247715
180 105,043 372 787.11 104,628 2188.93 2501.636668 -5224.230899
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Dude, format the damn cells!
-W
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Or just attach the spreadsheet . . .
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Sulame66 you have a lot to learn about real estate, but it is good that you are starting early at 23. You haven't done a ton of research yet, but that is ok, you will learn. There is no better way to learn than from experience. (I am being sincere and not sarcastic.)
I see you are getting a lot of negative comments, and this may upset you some, but the other posters are right (except for being mean about how some things are worded.) I started in real estate at 25 and now I am 30 and getting closer to retirement (so congrats on starting even earlier!)
I will demonstrate why your numbers don't work with a simple example. This is an example of one of the properties I own (this is one of the least profitable properties, so I am not choosing the best one to brag or to give you unrealistic numbers.)
All in cost 93k
Rent $1,100 month
My conservative estimates on costs (this is specific to my area, yours maybe different:)
$1400 taxes (current assessment is different than "All in cost")
$550 insurance
$1980 repairs (Only averaged $200 per year for the last 4 years, but room needed to be replaced and I spent $5,300)
$1320 vacancies (haven't had any yet, but my tenant is moving out in July, so it will happen, and if it takes me a couple of months to rent it out then I will close to half that number for average over the years.)
$0 mortgage (it is paid off now, but you can substitute your number here)
If I had a mortgage on this house my cash flow would be very close to zero, but this is one of my worst investment (my first house I bought for myself to live in.) The reason I am showing you all this is to show that rent-to-value is what determines your cashflow (the area and the quality of tenants in that area plays a large role too, but lets assume that both of our properties are in good areas, mine is.) My rent-to-value ratio for this property is 1.18% in percent and I make little cash flow (assuming I have a mortgage), and your rent-to-value ratio is 0.7%, which realistically will not cash-flow. Numbers just won't work out, no matter what you do, and I think you saw that in your last calculations. Most people in real estate (from blogs and podcasts and real estate meetups) have bare minimum rent-to-value ratio of 1%, and that depends on the market and the demographic of the area because some expect that ratio to be a lot higher than that.
Keep in mind that even at cashflow of close to zero you are paying off your principal, so your net worth is growing regardless, so it may not be a total loss. The property is more than likely appreciating as well, so your net worth is gaining not just by principle being paid off, but by principle and appreciation rate in your area. I think you are starting to realize that you need to learn a bit more, and I wish you luck on your journey. I wouldn't call myself an expert, but I am not a novice either, so if you have any questions, I would be happy to attempt to help.
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I have no idea what a rent-to-value is, but there is absolutely nothing anywhere near me that would return $1,100 a month for a cost of 93k. And at that level, that property is barely profitable to you, and it also seems evident you're not using a property management company, which I need to.
Essentially, I'm trading dumping $750 a paycheck into my 401(k) where it will go up and down for 30 years (while I ignore it) and then hope it's valued at whatever the math turns out to be for an ~7% return over those 30 years for saving that $750 a paycheck for 120 weeks to get the $45k cash required to put a down payment on a property that I will see an actual in or outflow of cash each month as opposed to virtual money until I retire. Because of this I'll either win big and see all the benefits of a 401(k) investment except with the added advantage of getting the gains each month, or lose big and just go bankrupt by having to pay rent + a mortgage on a property I don't live in or use because nobody will move in. In other words, a crap chute like every other investment. Just something to toss money at because instead of dying off at 55 like my ancestors I get the privilege of living to 110 with no family or relatives while a nursing home caretaker changes my diapers and spoon feeds me liquefied carrots for the low cost of 250k a year that I worked my entire life to accrue but by virtue of saving never actually got to do anything with. And because working for 40 years while saving 40-60% of my income gives me a lower standard of living for just myself than working 40 years and saving 5% of my income would have provided for my entire family not even 50 years ago, I don't have any other option. But that's ok, because I guess I have a smartphone and a computer and a bigger TV so I'm clearly coming out ahead.
Awesome. Glad I spent 2 months of my life looking into this.
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If it is any comfort, you'll probably die a long time before 110. Medicine has improved, but it isn't yet magic.
You know what also isn't magic, and never has been? Investing. Stocks, real estate, even government bonds all have risks.
Since your issue with stock market investing is fear, read the stock series. http://jlcollinsnh.com/stock-series/ (http://jlcollinsnh.com/stock-series/) If you're still afraid, read it again.
Have you actually read any of the blog here? Because investing 40-60% for 40 years is pretty fucking dumb. If you're for sure going to work for 40 years, and simply want to maintain lifestyle in retirement, go with a lower savings rate. The whole point of investing large sums like that is that you won't have to work for 40 years.
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I make 62k. To hit the 18k 401(k) and 5.5k Roth 401(k) max, I'm looking at (18,000 + 5.5*1.25) / 62,000 = 40% of my income. This is also assuming zero debt, which isn't currently the case. And once the debt is gone, good debt will eventually be taken on, and paying that off is savings as well
And it isn't fear, it's annoyance that saving that much money is now a requirement to sustain myself until I die, which is either going to be in a car wreck tomorrow or at some indeterminate point within the next 60 years that the best actuary can't predict but I'm supposed to be able to
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So you're angry that you're "required" to invest 40-60% per year for 40 years to "sustain yourself until you die". Who told you that? There is no such requirement. Lots of people save essentially nothing over their lives in this country and manage to live good, long lives.
People on this forum do invest that amount per year or even more, but it is so we can reach financial independence in 10-20 years or less, not work into our 60's and 70's and eventually die with 8 or 9 figure estates.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ (http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)
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Dude, this is easily the best time to be alive in human history. You have a much better chance of living a long, healthy life than you ever would have even 50 years ago, and you'll need to work much less than you would have at any time in history to support yourself, too.
Focus on the positive. You are one lucky SOB. Go out and kick some ass and save up to do whatever it is that you want to do. Just don't buy any real estate that isn't 1%/50% rule compliant along the way!
-W
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So you're angry that you're "required" to invest 40-60% per year for 40 years to "sustain yourself until you die". Who told you that? There is no such requirement. Lots of people save essentially nothing over their lives in this country and manage to live good, long lives.
People on this forum do invest that amount per year or even more, but it is so we can reach financial independence in 10-20 years or less, not work into our 60's and 70's and eventually die with 8 or 9 figure estates.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ (http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)
Here are the two scenarios:
1) Invest 5-15%, save the rest. Pay off the remainder of my debt within 6 months. Take 2-3 years to save a 20% down payment using projected real estate inflation in my area, then drop $45k on a $225k home. Pay off the $180k balance over the next 10 years or so, and have a paid off house with no other debt. Save another 10 years to get a large enough nest egg to retire early. All together, spending essentially nothing other than extra towards debt, we're looking at almost 20 years. Keep in mind I've been working for 5 already doing nothing but paying down debt and spending ~ 3% of my income a year on 'fun'.
2) Invest 40-60%, save the rest. Pay off the remainder of my debt within 12 months. Take 5-6 years to save a 20% down payment using projected real estate inflation in my area, then drop $50k on a $250k home. Pay off the $200k balance over the next 15-20 years or so, and have a paid off house with no other debt. Save another 3-5 years or so to get a large enough nest egg to retire early. All together, spending essentially nothing other than extra towards debt and investing for retirement, we're looking at 25-30 years. Keep in mind I've already been doing nothing but paying down debt and spending ~ 3% of my income a year on 'fun'.
Fantastic options. Or I could just continue to rent forever, have an excess of $2,000 a month with no clue what to do with it or what the point is, and save that for when I inevitably get cancer or diabetes at 42 and lose it all on a doctor bill. But, hey, at least I'm healthy and alive, right
Honestly, at this point, I might as well just get into a 4 bedroom house as quickly as possible, rent out the other 3 rooms, and just combine every idea in this thread
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This will be my last post in this complainy-pants thread:
Actually that is a great plan at the end there - your net on your house will be quite a bit less with 3 roommates. You might even come out ahead on the deal.
Why am I done with this? Deliberately doing your math wrong over and over again is a bad look.
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Honestly, at this point, I might as well just get into a 4 bedroom house as quickly as possible, rent out the other 3 rooms...
I don't know if you were being sarcastic here, but yes, this is exactly what you should do.
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Have you read the MMM blog posts? Have you run the actual numbers in your first scenario? Would it really take you 10 years to save up enough for FIRE, with a paid off house? You'd be able to take all the money currently servicing your debt, and then all the money that was paying the mortgage (once it is paid off) and add that to what you were already saving. It seems to me like that should add up to a nice 4% stache pretty quickly. But without actual numbers, it's impossible to say.
Have you considered other ways to increase your income or reduce your expenses? Have you posted a case study?
Plenty of people make it to FIRE in far less time than you've come up with for your two scenarios.
And yes, a house with roommates is a great idea.
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I've run numbers twice and nobody cared so I'll just toss some out and wave my hands.
By the time I can get a 20% down payment the houses in the range I'm looking will probably be 250 (since I wouldn't be buying to rent out anymore, I'd go a little higher) if not 260. Property taxes at that level are around $450-$500 a month, and will continue to rise forever since real estate will continue to rise forever.
Before we even get to that, let's just figure out 4%. Well, CURRENTLY, $450-$500 a month averages to $5,700 a year. Let's add in another $175 for auto and home, that's $2,100. Can't forget food and gas and utilities which is probably around $400, that's $4,800. Without a job I'll be on some ridiculous health plan probably costing $300 or so a month, that's another $3,600. So far we're at $16,200 before I've even spent money on, you know, doing stuff since I'm FIRE. Let's be super conservative and say I only need $1,300 a year for whatever. That's $17,500 all in. At 4% that means my nest egg needs to be $437,500 in today's money. Using JUST inflation and moving out 10 years, which also means I'd have to be in the house TODAY, 437,500 * (1.03^10) = $587,963.4.
So with a whopping $42k in my 401(k), dumping everything into debt, then needing to save $50k cash money asap to get into a house and then throwing everything I have at the mortgage, I need to gain $540k in 10 years with a cap of $23.5k a year. Then I need to take the penalties since I'm not 59.5 when any of this happens. Now factor in that this is all delayed X years where X is how long it takes me to get into the house and pay it off, and we're looking at a long time.
But, as evidenced by everything I've ever posted, I know nothing about anything
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A couple of thoughts:
1. FIRE isn't easy. If it were, everyone would do it. Some in this forum make it sound easy, and some people earn 4x what you earn. That being said, make some sacrifices, work hard, and be creative, and it can work.
2. Your attitude is one of the worst ones I have ever come across. From your posts you seem like a spoiled, whiny 12 year old. I think you need to spend some time in a poor country to get some perspective on life.
3. When you return from your gaining perspective trip, house hack.
Sent from my SM-G900V using Tapatalk
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Wow.
Go post a case study in that subforum. You'll get lots of good advice on how you can be FI and you can figure out scenarios in lots of detail if you want to. There's a nice form you can fill out to figure out exactly what you're spending where, what your gross/net pay end up at, your assets, etc.
And seriously, if you don't like the answers, whining about your life isn't a great response. There's a lot of information and help available here, but nobody likes a crybaby. Your life does not (financially at least) suck at all compared with most of the world, or even most of the United States.
-W