Wednesday, 4 September 2013

Maths Modelling for property investment

They say the numbers don't lie, Maths and spreadsheet is your best friend in making decisions. Here I am, obsessed with creating and modelling life using numbers and spreadsheet. How can one develop a property investment strategy safely and retires in 20 years? I crunched some numbers to see what could happen.

How do you like a strategy that allows you to replace your salary after 20 years of working.... conservatively speaking. My assumptions are based the following :

a.  Iron rice bowl salary with fixed increment of 5% a year. 
b.  Mortgage downpayment of 20%. 
c.  Nett cash flow of 5%. 
d.  No cash out.
e.  No cap gains.
f.  Interest only loan. (for easy calculation)
g. No vacancy.
h. Increment of 2% rental / year.



Year Base Salary Increment 5% Cumulative Mortgage Payment Passive Income Prop 1 (5% nett) Passive Income Prop 2 (5% nett) Passive Income Prop 3 (5% nett) Cumulative Passive Income Total Loan
1 $50,000.00 $50,000.00
2 $50,000.00 $2,500.00 $102,500.00
3 $50,000.00 $2,625.00 $155,125.00
4 $50,000.00 $2,631.25 $207,756.25 ($200,000.00) $10,000.00 $10,000.00 $800,000.00
5 $50,000.00 $2,631.56 $60,387.81 $10,200.00 $20,200.00 $800,000.00
6 $50,000.00 $2,631.58 $113,019.39 $10,404.00 $30,604.00 $800,000.00
7 $50,000.00 $2,631.58 $165,650.97 $10,612.08 $41,216.08 $800,000.00
8 $50,000.00 $2,631.58 $218,282.55 $10,824.32 $52,040.40 $800,000.00
9 $50,000.00 $2,631.58 $270,914.13 $11,040.81 $63,081.21 $800,000.00
10 $50,000.00 $2,631.58 $323,545.71 ($300,000.00) $11,261.62 $15,000.00 $74,342.83 $2,000,000.00
11 $50,000.00 $2,631.58 $76,177.29 $11,486.86 $15,300.00 $85,829.69 $2,000,000.00
12 $50,000.00 $2,631.58 $128,808.86 $11,716.59 $15,606.00 $97,546.28 $2,000,000.00
13 $50,000.00 $2,631.58 $181,440.44 $11,950.93 $15,918.12 $109,497.21 $2,000,000.00
14 $50,000.00 $2,631.58 $234,072.02 $12,189.94 $16,236.48 $121,687.15 $2,000,000.00
15 $50,000.00 $2,631.58 $286,703.60 $12,433.74 $16,561.21 $134,120.90 $2,000,000.00
16 $50,000.00 $2,631.58 $339,335.18 $12,682.42 $16,892.44 $146,803.32 $2,000,000.00
17 $50,000.00 $2,631.58 $391,966.76 $12,936.07 $17,230.29 $159,739.38 $2,000,000.00
18 $50,000.00 $2,631.58 $444,598.34 ($400,000.00) $13,194.79 $17,574.89 $20,000.00 $172,934.17 $3,600,000.00
19 $50,000.00 $2,631.58 $97,229.92 $13,458.68 $17,926.39 $20,400.00 $186,392.85 $3,600,000.00
20 $50,000.00 $2,631.58 $149,861.50 $13,727.86 $18,284.92 $20,808.00 $200,120.71 $3,600,000.00
Nett Cash Position $349,982.21
Passive Income $52,820.77
Total Mortgage $3,600,000.00
Nett Worth ($3,250,017.79)

3 comments:

  1. Start securing your business by trying to learn something that will help us achieve our goals for our Property Investment. Let any challenge in our business to take place and we must always try to fix this as fast as possible. We need to push ourselves to act fast for our business to ensure its stability and also to show how we are in this business.

    http://property-investment-mackay.blogspot.com/2013/06/4-steps-to-making-money-with-real.html

    ReplyDelete
  2. can you share some spreadsheet for reference? vpa re to@ gmail .com

    ReplyDelete
  3. Hi Vilfredo, I have many spreadsheet so I need to understand what you need. Can you give a scenario to plan out.

    ReplyDelete