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The Wealth Calculator by Rent To Retirement

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 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 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]

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Retirement Guide

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