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Old 12-27-2014, 08:05 PM   #81
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PB4Uski, where did you find the calculator to create that chart? I'd like to run one for my own situation. Thanks!
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Old 12-27-2014, 09:25 PM   #82
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PB4Uski, where did you find the calculator to create that chart? I'd like to run one for my own situation. Thanks!
I assume that you're talking abut the table on post #33 of this thread? If so, it is simply an Excel spreadsheet using the =RATE function within Excel that calculates the interest rate implicit in a time zero negative cash outflow for the premium paid and positive cash inflows for the monthly benefits for a given number of years.
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Old 12-27-2014, 10:31 PM   #83
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I don't know about kgryfon but I would be lost about how to use that spreadsheet to compare options. Perhaps the poster would share what s/he thinks are the more attractive options for the sharp pencils on the forum to comment upon.
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Old 12-28-2014, 06:04 AM   #84
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Just curious - where are you finding properties like that?
It's a lot of work and you are responding to a "best case" scenario.

I've never gotten into the rental business but I looked at it. I'm not saying I won't but I doubt I will. I've known a number of people that are/have been in it. They work very hard at it. It's a real job and anyone that gives you impression they just sit back and collect checks is blowing smoke.

You have to know the rental market in your area. You have to specifically target where the renters want to rent. You have to find below market houses. That usually means fixer uppers. You apply capital there and/or sweat equity.

You have to price your property correctly or you won't get any applicants which is why you needed a below market cost. Renters have to been carefully checked out to minimize the number of deadbeats and vandals.

You have to chase down non-payments. You have to keep up with maintenance issues and pet restrictions. Most laws favor tenants so non-payments could drag out for months is a tenant knows how to pull the legal strings.

After each tenant a certain amount of maintenance needs to be done. After 15 or 20 years, the property is probably in need of a major make over.

Don't let anyone kid you. Being a landlord is work, work, work. There are assets to protect that can rise and fall in value with the local market. There is cash flow to maintain which requires a steady stream of tenants. Maintenance happens.
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Old 12-28-2014, 09:05 AM   #85
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I don't know about kgryfon but I would be lost about how to use that spreadsheet to compare options. Perhaps the poster would share what s/he thinks are the more attractive options for the sharp pencils on the forum to comment upon.
You could use the Annual Interest Rate section of this calculator.

Present Value of an Annuity Due Calculator

If you input the upfront premium as the present value, the annual benefits as the payment and the number of years, it will compute the implicit interest rate. It will not exactly match the table because the tables uses monthly cash flows rather than annual cash flows but it will be close enough for making a decision.

If you want the interest rate based on a monthly benefit, substitute the monthly benefit for the annual benefit and then take the interest rate result and multiply that result by 12.

If you are doing it this way rather than using Excel, you could just calculate the rate at 5 year intervals to get a sense of the internal rate of return should you live to a certain age.
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Old 12-28-2014, 11:24 AM   #86
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I've never gotten into the rental business but I looked at it. I'm not saying I won't but I doubt I will. I've known a number of people that are/have been in it. They work very hard at it. It's a real job and anyone that gives you impression they just sit back and collect checks is blowing smoke.

You have to know the rental market in your area. You have to specifically target where the renters want to rent. You have to find below market houses. That usually means fixer uppers. You apply capital there and/or sweat equity.

You have to price your property correctly or you won't get any applicants which is why you needed a below market cost. Renters have to been carefully checked out to minimize the number of deadbeats and vandals.

You have to chase down non-payments. You have to keep up with maintenance issues and pet restrictions. Most laws favor tenants so non-payments could drag out for months is a tenant knows how to pull the legal strings.

After each tenant a certain amount of maintenance needs to be done. After 15 or 20 years, the property is probably in need of a major make over.

Don't let anyone kid you. Being a landlord is work, work, work. There are assets to protect that can rise and fall in value with the local market. There is cash flow to maintain which requires a steady stream of tenants. Maintenance happens.
Rental investing doesn't have to hard work or difficult. I would never have done it if it was as you describe it. You can do it on a small scale and do nicely. In 1997 I bought a two family house in a good neighbourhood close to several colleges and high tech industries. I live in the upstairs apartment and rent out below. That way I can keep an eye on the place and only have to deal with a single renter. It has always been occupied, never a late check, the maintenance isn't hard and now that the mortgage is paid off the rental income covers half of my expenses.
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Old 12-28-2014, 11:28 AM   #87
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I assume that you're talking abut the table on post #33 of this thread? If so, it is simply an Excel spreadsheet using the =RATE function within Excel that calculates the interest rate implicit in a time zero negative cash outflow for the premium paid and positive cash inflows for the monthly benefits for a given number of years.
RATE function works, or you can just compound some starting principal at an interest rate and make annual withdrawals for a number of years and see when the pot goes to zero for various combinations of the variables. There are also lots of annuity and present value type calculators on line that will give you the present value of a stream of payments over a number of periods for a given interest rate.
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Old 12-28-2014, 12:53 PM   #88
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Investing a lump sum in a Vanguard fund such as Dividend Appreciation, High Dividend, Wellesley Income, Lifestrategy Income, or in an REIT such as Realty Income Corp (you really need to check the 'horse's mouth' of any REIT as some are really mortgage investment firms and we all know how well that worked out) may be a better long term choice.


The minus of this approach is that if you can't keep it in an IRA it isn't protected from attachment (bankruptcy). Annuities are typically treated as a pension and protected. A lot depends on your state laws.
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