The Wealth Calculator by Rent To Retirement
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foreign [Music] what's up wrench retirement community
exactly Master here I am super excited to showcase our new wealth tracker calculator tool now this
is something that we've been working on over the past year or so we spent tens of thousands of
dollars with software Engineers to actually build this thing out it's in its first beta version
of release but we'd like to go ahead and get it out to you as quickly as possible that way you can
start becoming familiar with it and actually using it it is functional right now although please bear
with us I'm sure there's some things that need to be fixed in the future so if you do use this and
come across an issue that or a suggestion please send that email to admin rentretirement.com and
reference the wealthtracker calculator and we'd be happy to continue to improve this tool for
you which is absolutely free to use for the rent retirement community this tutorial video is going
to go through like exactly what this calculator is and how to appropriately use it there are
a ton of different pro forma calculators and different calculators investment calculators to
use online but I in all all of my searching I have not found a good calculator that is able
to both analyze a property like today but also project future performance I think most of us
when we're interested investing in rental real estate really want to know like okay yes what
does this investment look like today but also am I making a smart choice investing right now
and what is my future cash flow and net worth and Equity position look like investing in rental
real estate over time is really essential to understand and conceptualize the numbers of like
I am making a smart financial decision now based on future anticipated projections and of course
there's some speculation in this but but some not like just calculating a loan amortization over
time and then combining that with an anticipated future appreciation and potential rental increases
potential future expense increases and all these things to really get a good grasp of like okay
what is my net worth Equity position and cash flow look like at Future years because certainly it's
not going to always perform like it is at day one buying it in year one usually when you're looking
at a pro forma analysis tool that is a projection for year one so when you look at things like cash
flow and cash on cash Roi and all these things that you're looking at that is a projection of
performance over one year we all know that every single year you own rental real estate the loan
is being paid down by the tenant the property is appreciating over time regardless of short-term
fluctuations so that's growing your Equity plus the rents should increase on this property over
time as well as some expenses too right like over time things like maintenance and capex you need to
also increase those over time but certainly rents are increasing as well so really the purpose
of this calculator is to look back and say all right if I held you know these three properties
over the course of seven or eight years this is what I would project my net worth and My Equity
to be at Mi cash flow in year seven or eight or whatever the case is so we're super excited to
release this tool for you the whole purpose of this is going Beyond just year one analysis in the
pro forma and actually look into the future to say you know what is my future financial position
look like and maybe to reverse engineer that to say okay if my financial goal and retirement date
is to have ten thousand dollar the passive income in eight years you can reverse engineer that
and say okay I need to buy this many properties that perform to x amount of dollars each year to
accomplish my financial goal so I'm super excited about this honestly we built this out just because
we personally needed something to project into the future uh because we simply haven't found a good
analysis tool so this is great you can log in to this tool it's absolutely free you can log in
and create a profile on the website and it will save all of your data if you currently have rental
properties you can add those rental properties to this tool and you can look at past performance as
well as project future performance you just have have to manually enter all that information and
then of course properties that you're evaluating you can also plug in numbers there and look
at a analysis based on an individual property but also look at a whole portfolio analysis to
see how your portfolio is performing and as you continue to grow your portfolio you can continue
to add those properties to your wealth tracker and save your profile so without further Ado let's
dive into it I'm super excited to present the rent retirement wealth tracker available to our
wonderful community of investors all right guys here is the wealth calculator tool the link is
available in the show notes to this calculator as well as available on our website and all our
team has access to this as well so yeah if you can't find the link to set up a profile and use
this tool go and reach out maybe we have to share it with you the first thing you need to do is
actually register so when you when you visit the website you'll see you'll need to go up here and
click register and you just put in whatever Gmail that you onto or you don't have to use an actual
email here and I think I think the password needs to be six characters then you will be entering
the wealth tracker you can see that it saves your profile up here so once you create a login you'll
have access to this forever and it will save your data before you get started if you want to play
around with a calculator you can load samples we have samples already built in here for you just to
show you an example or you can start from scratch and add your own property so I'm going to go to
add property but again if you want to load samples you can go in and delete those later I guess maybe
we'll start there this is five properties these are well these are actual deals that we've done
in the past these are just on here to give you an example of what this would look like this is your
home screen okay and this is your portfolio View and so you can see that there are five different
properties in this example portfolio that already has data pre-entered into them and if you didn't
want to add this again at the at the beginning you could go back and just add new property and it
would not have any of these however you can easily delete these if you want as well this shows right
here you can see that you have five properties in your portfolio right here the default is 10 years
that you've held them for but certainly you can scroll this and really show you know look at over
what period of time that you'd like to see so we know that perform as our evaluation of the first
year but we can obviously stretch this out to be future years if not if we if we'd like to see what
a future projection looks like so we'll go ahead and look at 10 years and then this is cumulative
equity and this is cumulative cash flow over a 10-year period across these five properties now if
you wanted to look at your cash flow annual cash flow to say all right well how much am I actually
bringing in in year 10 annually that would be down in this graph right here and that's an important
distinction to note that this cash flow is cumulative across the portfolio for 10 years and
then this is what I'm receiving per year at year number 10 okay and you can actually go through and
look at each one of these so year nine would be 26 000 and years eight would be uh 23 000 but at year
10 on this portfolio you'd have you know 20 28 485 expected cash flow um so this is a really cool
tool where you can actually save your portfolio and say okay not only individually but across
a portfolio of houses you know what what is my retirement picture look like what is my passive
income portfolio project at so let's go in and add a new property let's say we just bought one
we'll go through and walk through this and then we'll also show you how to edit it so we'll do
one two three main street we'll call this one a property in Lehigh Acres Florida purchase it today
I will say the purchase price is 325 000 and I'm not saying these are exact numbers I'm just using
these for example purposes Lehigh happens to be just top of mind because this is a recent deal
that we evaluated uh we know that we have a little bit of equity upon purchase which is sometimes the
case with a new construction at least right now monthly rent that we're seeing is 26.50 annual
taxes is 1600 insurance we know the quote just came in at 9 35 so obviously these are all input
data right that you're that you're obtaining from either the ProForm analysis that you're looking
at from from our uh website from a seller or information that you've gathered and obviously as
you've sharpened the pencil on these through due diligence you can go back and add these uh typical
loan term 30-year the the default right now is is six six percent interest rate which depending
on when you are watching this could be whatever right so you really need to you know put in the
appropriate numbers we know that right now we actually got put it six and a quarter closing
costs I think this is one in a automatically defaults to one and a half percent you can put
in whatever you want in Florida we know we have transfer taxes so actually closing costs are was
6200 on this this property and twenty percent down because it's a single family residence please
note on closing costs as we always mentioned this does not include prepaid taxes and insurance
this is only the closing cost to buy the property tax and insurances are calculated in a pro
forma in a different section so don't just look at the HUD and say okay well I had a total
out of pocket of my 20 down plus eight thousand dollars a lot of that is prepaid which is not
true closing costs you'd actually be accounting for it twice in here which is inappropriate so
this is just loan costs your title cost your loan costs not prepaid tax or insurance as well
as your appraisal and things like that so we'll go ahead and create this and this will give us an
analysis so we can see based on this this recent property that we just evaluated you know this has
a an analysis that will walk through individually each year and this will show you each year
the performance of this property based on some assumptions which we'll walk through shortly
and that's important to to kind of look at so we have our address property if you wanted to add
a photo to this you can add add a photo to it as well and we'll show you how to do that after
the fact if you don't add one initially purchase goth 325 here's our purchase date purchase costs
here this is anything beyond closing costs right so this would be if you had inspections more
applicable on Commercial if you have things like surveys and additional due diligence items
that you need if you're running cost segregation studies for accelerated depreciation things like
things like that beyond your typical closing costs you can put in here for most most properties will
be zero or very minimal um here's your loan terms which you can change over time and then here
is your pro forma analysis and again this is typically year one in fact it should match up
perfectly with year one performance because it kind of gives you a snapshot analysis and here's
your you can see cash flow at the end of year one um it would be about 5800 or 5700 which would be
about an eight percent cash on cash Roi that the number the percentage is here is the ROI after the
exact detail uh appreciation I believe we're doing an assumption of four percent and again I'll show
you how to how to change that and then you have your loan pay down which is not speculative this
is actually calculated by an amortization scale which you'll see and then it combines the ROI
which people are always wondering like most people are just focused on when they're looking at a a
property analysis you know the newer investors are are typically only looking at a cash flow number
and a cash on cash Roi based on you know the cash flow year one but it is important and really where
you grow your net worth long term in rental real estate is all the other things that you grow right
like cash flow actually surprisingly becomes the least important thing over time you want to make
sure that your properties are positive cash flow obviously you know uh rents grow over time to
increase cash flow but really we're people grow their net worth and become wealthy long term and
Rental real estate is through all the other things the appreciation the loan pay down using leverage
appropriately the depreciation and tax benefits that's absolutely huge so when we look down at
passive and active depreciation this is going to cause a lot of confusion for people and so what
I would encourage you just don't get too carried away with this or or worry about this too much
passive depreciation is something everyone takes advantage of this is something where if you're not
a real estate professional and you are just owning this rental property where you had this amount
of cash flow um fifty seven hundred dollars your passive depreciation which is basically the home
the home value divided by 27 and a half years um you know you're going to have you know roughly
so on this it's just over maybe called like four thousand dollars or whatever um or just under four
thousand dollars if you take 325 divided by 27.5 years then you can reduce that amount from your
your cash flow which is passive income on this property and then your four thousand dollars or
whatever would be reduced would be reducing the amount of taxes you have to pay on this fifty
seven hundred so that's where this number comes up everyone gets this right like you're required
by the IRS code to actually file depreciation on your rental properties active depreciation is
in addition to this if you're taking you know the additional depreciation you have and this is
not accelerated depreciation let me clarify that this is taking additional depreciation on this off
of your active income so if you have additional depreciation to use against other income sources
this is really going to confuse people so I almost say like ignore active depreciation only
worry about passive depreciation if you're real estate professional or active investor
you'll understand this a bit more and this is something to think about over time but for all
intents and purposes just forget active right now and then this would be if you combine active
and passive depreciation but my point is hopefully clear so we look at over here year one end of
year and this would be the case for each year that you own this property end of year shows you
what your total cash flow was total appreciation based on our assumptions the loan pay Down based
on the amortization scale and here is your total Equity if you look at here on the equity graph
you know that's where you're combining your down payment the 81 000 here is your down payment
initially plus this sixteen thousand that's appreciation and Debt Pay down after one
year oh and of course we just talked about the depreciation right so just I would focus on
passive depreciation here and then cumulative is from time of purchase and for year one it will
be the exact same right because we've only owned it for one year and then return over here will
show the overall return individually and then cumulatively and so if you have your your cash
flow cash on cash Roi you have your appreciation you have your loan uh paid down giving your total
return on um based on the equity growth of return on investment and then your passive depreciation
here for your total return on investment now if you go down to year two you can see now this is
cumulative this section here is actually taking into account years one and two combined right
so here's your total cash flow combined for those two years we would expect some rental uh
growth after one year especially in a Southwest Florida Market where you do see strong rental
growth there we have cumulative appreciation and here's your appreciation Year too and
it's just important to notice the cumulative appreciation so you can go down to year 10.
on this property and an annual cash flow in year 10 would be you know 13 13 580 based on our
assumptions and that's you know that's quite a large improvement from where we started out at
5700 and then you can show that your cash flow that you receive the entire time you know close
to 100K appreciation 156 loan pay down 40 you know almost 41 000 again that's not speculative that's
based on actual amortization scale on your fixed principle reduction payments and here's your total
Equity um just from appreciation and and Debt Pay down in addition then you know you add into your
your overall down payment as well let's look at assumptions so and that's what these graphs show
here if you just wanted a quick reference point to say all right well let's say in five years where
I'm going to be you can look at your total uh cash flow annually at that point in time again this is
not showing cumulative this is showing that year with that property of cash flow and then your
Equity is cumulative because it grows based on the the appreciation and the debt reduction so
what you want to do if you want to play around with some of these assumptions is to actually
go in and edit this just real quick let's say sometimes when people are buying properties this
would be more real in new construction if you're buying kind of a similar property and you're
looking at like two or three of the same model you can easily just easily copy this and it will add
this same property to uh to your overall portfolio um here's a just quick disclaimer and about the
calculator and here you can delete this and it's going to ask you if you're you're sure so you
don't accidentally delete that but this is the important one is where we can edit this and this
is where you can really refine your assumptions here and this is really important this is I'm
what I'm most excited about here is that you can add additional photos here or just an external
photo if you'd like General gives the information that we added in the beginning so this should
automatically be filled out your proforma is also information we filled out in the beginning
this is where if you have additional expenses this is where you would add this right so if
you have an HOA on this if you had utilities if this was a multi-family property and you had
some additional expenses this is where you would you would add things like that your loan is where
you have your interest rate your amortization so in most cases this is going to be a 30-year
fixed loan you have your closing costs again not prepaid tax or Insurance just true loan and
title costs for closing and your percent down and then your variables these are the these are the
assumptions okay and these are the important ones to look at to say if you wanted to change what
your anticipated appreciation what your expense increase is going to be um you know if this is
a commercial property that's depreciated over 39 years then you can add that based on your specific
tax bracket this will affect a depreciation you can change your property management rate here it's
it automatically defaults these are defaults what you're looking at right now but surely this is
something you want to probably adjust and so you know property appreciation four percent that's
pretty conservative we know that in Southwest Florida and everyone wants to be conservative
when you're running your own number so that's why we're providing you with this calculator
where you can actually go through and change the assumptions that you would like to see in
Southwest Florida I mean even even double this would be conservative I'm going to put it eight
percent rent appreciation you know we can actually look back at historicals and over the past few
years we've had double digit rent appreciation um you know rent appreciation you can leave it
at whatever you want to I'd say for the Midwest Ohio Missouri Indiana and some other market like
you know three two and a half to four percent or five percent foreign appreciation is is pretty
standard that's why we have it three percent property appreciation certainly Midwest 4 five
percent easy conservative number to put in but this is you know this is these are things you
need to start thinking about uh that will also determine which locations should you invest in I
mean they're really good use of this tool is to do a side-by-side comparison of a house that
is in a growth market like Southwest Florida um or some of the Alabama's there's the Sun
Belt areas Texas and compare that to some of the midwestern markets so the midwestern
markets may be a lower purchase price and make cash flow better day one coming out of
the gates but then after year 10 you can look and see okay maybe this this growth Market that
has stronger appreciation and Rental increases even though it was more expensive to start with
and it had a lower Roi to begin with maybe this is a better investment long term to actually
come out ahead all important things to put in here rent appreciation we'll put five percent
for Southwest Florida even though that's still conservative management or actually seven percent
on these specific properties maintenance you can put in whatever you want here this is brand
new construction property 30 so honestly well year one we should have actually zero because
there is no maintenance but then we'll have you know and being new construction we'll probably
have low maintenance here but everyone wants to be conservative we'll put five percent that
would probably be relevant for like a Midwestern Property uh vacancy completely up to you what
you want to put in average vacancy in this area is actually below three percent is like 2.8 um
based over the past five years of data that we've collected but you know you can put whatever you
want for vacancy tax bracket we'll put it somewhat realistic this is federal if you wanted to add
in I would say too if you have state income tax so you can also add that in here so you
know there's there's a lot of States out there that's creeping up in state income tax so
we'll use a realistic example for where we're at expense inflation again for this property uh
new construction we expect first 10 years very minimal maintenance but you know we'll just put
uh yeah two or three percent I think is fine there and single family depreciation so this is
really important this variable page make sure you save before you exit this that way it actually
adjusts the numbers right and then here you go this is your your new assumptions and you can
kind of see how this property is performing and then if you want to go back in and change some
of these variables please note that you have to change the variables per property you can't change
it for your portfolio as a whole and we did that intentionally because each property especially if
you're diversifying across multiple markets likely has different input data it would be I think
just a not real astute thing to do to go in and just make ballpark assumptions for everything like
actually think about the information that you're putting in here try to pull some data if you can't
get data ask our team we can assist you with this this is going to be a lot of this is going to
be geographically dependent and driven so that's why it's important to go into each property and
change these variables or if you just want to use the assumptions we have in there as a baseline I
think we use some pretty conservative assumptions for you to be fairly safe completely up to you
then we can go back when you go back you go back to your portfolio and you can see here's our
new property added into the additional ones here so we can see you know with this new added
property what are annual cash flow is going to be um based on the year that we're evaluating so
again we're year 10 here we can let's say we go to year 15.
We can see that our annual cash flow
if we just didn't buy a single other property and held these six properties here for 15 years we
would have an annual projected cash flow of 72 000 and we would have an equity position of
almost two million dollars you can see that you know the equity growth over time is much
more attractive you build net worth through Equity over time the cash flow is great to live
off of or reinvest if you're an astute investor but really the tax deductions and the equity
growth or appreciation and debt reduction is really what allows you to get ahead probably we
could look at things like doing a 1031 exchange on this property on some of these and selling them
and you know that all comes into play and that's where our team as your advisor and your guide
is is really going to be crucial and it would help us immensely if you have this calculator
prepared that way we can jump in and show you some theoretical options and look at this with
you so just some just some things to look at a couple other things uh you usability things here
so this is your portfolio view remember you can go on and look at any one of these properties
if you want to pull one up and then you can just tweak some of the numbers here and add some
photos if you wanted to copy this you can do that here you can go back let's say you're running
some future theoretical let's say this is your portfolio right now and you're just inputting
two or three properties that you're looking at just as a your prospecting or analyzing some
future potential deals that you want to add to your portfolio but you haven't bought them yet
you can easily turn these off and exclude them and then that's going to adjust your numbers
as if you did not own that property and then you can of course turn it back on that way if
you have two or three potential deals that you want to add into your portfolio certainly you can
do that and then of course you can change numbers and delete these if you want so guys that's really
about it for now hopefully this was a beneficial video we'll try to do a more Consolidated version
but I really am super excited about this because again we've been searching for a tool just to
help people conceptualize and visualize what a portfolio looks like long term just to give you
a better idea of how real estate Works time is on your side the longer you own rental real estate
and looking back over the past close to 15 years of investing uh professionally from with our own
portfolio it's really it's astonishing to see just like what time does and how rental increases year
after year and reducing the loan balance through the tenant paying the loan down and appreciation
as well is all these things the tax benefits and depreciation all these things combined over time
to create a strong financial position for you and every year that you own a property and every
every additional property that you add to your portfolio has a dramatic impact long term but
it is hard to conceptualize that sometimes and so that is why we put together this calculator so
not only can you look at an analysis year one and run a pro forma you can save this you can have a
place to come back to reference it you don't have to jump onto these calculators where you don't
have a saved profile and add in the information every single time you want to evaluate it you
can save it here and furthermore this gives you the ability to project in the future based on
whatever variables and and assumptions you want to make just to give you an idea that hey this is how
real estate performs over time this is what your net worth your equity and your cash flow Position
will likely be at some point in the future so hope hopefully this has been exciting for you guys
I hope you can see that I'm very stoked about it this has been a very cool tool for us if you
have you know input questions if you have things that you want to see on this as we improve this
tool over time email those to admin at rent to retirement.com other than that guys get on here
play around with this tool I would say the last thing is we don't have a print okay we don't
have an ability to print this off but if you just you know if you just use your print tool
right here it will print and a pretty reasonable assumption if you want to go and show your spouse
and sit down and look at this with your spouse if you want to show a banker or a potential deal
partner your projections on this or private money lender whatever the case is you can you
can show them this and walk them through this live you can send them a link and tell them to
log in right because you can put in whatever login information it can even be an alias or fake
email that doesn't matter and you can have them log into this or you can go ahead and just do a
print screen here and it actually turns out to be you know a decent analysis where it's got some
page breaks in here but they can at least point out the key data points so we don't have a nice
printed report that's probably version 2.0 but still the the information is there to utilize
so get on here play around with this you guys and certainly as you grow your portfolio please
continue to add these to this this wealth tracker we put a lot of work into this and this is going
to help the rent to retire team immensely to help you prepare and plan for your financial future
thank you guys so much in the rental retirement YouTube channel check out some of our other
videos like this one or this one here foreign [Music]