![]() ![]() ![]() This allows you to plan your strategy with more confidence. It will even plot your Minimum Gross Monthly Income Required versus Gross Paychecks to show you how much you need to make and how much you are making. Plus, it will calculate the Minimum Gross Monthly Income Required to be below a 45% Debt-To-Income ratio over your entire Scenario to show you how much you’d need to be earning from your job. Here’s an example of a Debt-To-Income chart for Andrea from episode 1. That way you can see if you’ll be able to qualify for the loans for your entire plan. The Real Estate Financial Planner™ software does do a lot of these calculations for you as well.įor example, it will calculate your Debt-To-Income for you over the entire Scenario. So, you don’t need to support the full amount of the loan yourself without the help of the income you’re going to receive on that property too. If you’re buying a rental property, many lenders will count 75% of the rents on the property you’re buying to help you qualify as well. If it is negative, you need income from elsewhere (like your job) to carry that and support the new loan. If that calculation is positive that property helps you qualify for your next loan. Typically lenders will use 75% of gross rents minus your mortgage payment on the property. Many lenders will use a “modified cash flow calculation” to see if they believe a property provides positive cash flow and helps you qualify for additional loans or hurts you and makes it harder to get new loans. In phase 4, your cash flow and/or account balances could drop considerably and you’d still be able to comfortably support your ideal income requirements from your investments.īesides being used to determine if you’ve achieved financial independence, cash flow also helps you qualify for additional loans. Once your cash flow and your safe withdrawal rate times your account balances exceeds two times your Ideal Target Monthly Income in Retirement the software considers you to be in phase 4 of the Phases of Financial Independence™. When you’ve met your ideal and you’re working toward generating twice your ideal each month, this is phase 3 of the Phases of Financial Independence™. When the combination of your cash flow and your safe withdrawal rate times your account balances exceeds your Ideal Target Monthly Income in Retirement (ITMIR) then the software considers you having achieved your ideal level of financial independence. When you’ve met this minimum and you’re working toward your ideal, this is phase 2 of the Phases of Financial Independence™. When the combination of your cash flow and your safe withdrawal rate times your account balances exceeds your Minimum Target Monthly Income in Retirement the software considers you having achieved a minimum level of financial independence. When the combination of your cash flow and your safe withdrawal rate times your account balances does not yet meet your Minimum Target Monthly Income in Retirement (MTMIR), we consider you to be in phase 1 of the Phases of Financial Independence™. The Real Estate Financial Planner™ software uses the sum of your cash flow and the safe withdrawal rate times any cash you have in your Accounts to determine if you’ve got enough income coming in to support yourself. It is one of the two inputs for determining whether you’re reached your target monthly income in retirement. As just one example, if you bought a property with 20% down (or more), you’re not likely to have Private Mortgage Insurance.Ĭash flow from rental properties provides you with spendable money to live on and/or invest. Just like with the different sources of income, your property may not have every one of these expenses. And, unless you’re offering your property on a lease-option or lease-purchase to a tenant-buyer, you’re likely not going to have option fees or a mid-month payment as a sources of income. ![]() For example, unless you have a multi-family property, you’re not likely to have income from on-site laundry. Your property may not have every one of these sources of income. When we include Cash Flow from Depreciation™ we instead call that True Cash Flow™. IMPORTANT NOTE: We do not typically consider Cash Flow from Depreciation™ as income for cash flow. Income from onsite amenities like laundry or internet.Cash flow is the money generated from your rentals after you account for all the income from the property and subtract all the expenses for the property.
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