The Wealth Building Power of Leverage/Inflation/Time/Tenants & Scale

For the projections below and for illustration purposes we're going to use a home selling for $220,000.00 with a 20% down payment of $44,000.00. The rent it will collect each month is $1650.00. The graphs below show you the potential cash flow positive wealth building potential at 1 year, 10 years, and 20 years. I think you'll agree the potential is incredible.
​Year 1 starting assumptions
$$ Figures
Annual Free cashflow after all mortgage payments and overheads
$4800
Annual Mortgage Principal Payments
$3169
Inflation at 2% assumed
$4400
Depreciation/Deduction
$1500
Total Wealth created year one
$13,869

*This is a potential annualized return of 31% on your down payment*

Year 1 through 10 accumulated gains:
$$ Figures
​​Annual Free cash flow after all mortgage payments and overheads
$45,982
Annual Mortgage Principal Payments
$35,019
Inflation at 2% assumed
$84,000
Depreciation/Deduction
$15,000
Total Wealth created year 1 to 10
$166,501

*A potential total annualized return of 378% on your $ 44,000 down payment*

Year 1 through 20 accumulated gains:
$$ Figures
​​Annual Free cashflow after all mortgage payments and overheads
$101,621
Annual Mortgage Principal Payments
$91,953
Inflation at 2% assumed
$117,690
Depreciation/Deduction
$30,000
Total Wealth created year 1 to 20
$341,264

*A potential total annualized return of 756% on your $ 44,000 down payment*

Notes and assumptions regarding projections above:
  • Annual Free cash flow - I used actual CPI inflation 2000-2010/20 data to calculate this figure
  • Tax depreciation - For ease I'll make a general allowance.   
  • Mortgage Principal - 30 yr. Fixed at 4% amortization schedule used to calculate.          
  • Inflation - 2% assumed - CPI inflation 2000-2010 data to calculate this figure
*Please note:
  • This is simply for illustration purposes to highlight the true mechanics of a well purchased new build home making inflation assumptions from the CPI 2000 to 2020.  I made these assumptions on the rental amount and value of the home. I have factored in actual amortized gains from principal payments and not factored in appreciation gains.
  • Tax calculations for depreciation on Real Estate can be complex so please consult a professional accountant to garner a professional opinion.
  • I have not allowed for maintenance and turnover costs; new homes generally experience less maintenance that older homes but still have moving parts and tenants.
  • *This is a simple Macro analysis and I am sure numerous other line items could be included. This breakdown is a useful personal observation and should be used as such. 
West Florida Invest / Atlas Realty Group
P.O. Box 1923
Largo, FL 33779
All enquiries: info@westfloridainvest.com
Hours of operation: Monday to Friday 9:00am to 5:00 pm EST.
Phone: 727-506-8177
​Please allow 3 business days to book any in person visits.
​Privacy Policy | Terms and Conditions
Copyright 2021 West Florida Invest

See Our New Listings First

Never miss a single opportunity. Our homes sell extremely fast. The best way to ensure you get one is to be on our email list. Click below to join our list.
The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. West Florida Invest its directors its employees, or agents do not provide legal or tax services.  Buyers are responsible for reviewing tax and legal issues with their own counsel or independent experts.  It is the ultimate responsibility of the buyer to perform its own due diligence and independently determine what is best for its business, what steps to take to accomplish its goals, when to act, and the repercussions of such actions.  West Florida Invest its directors, employees, or agents do not provide legal or tax services.  Buyers are responsible for reviewing tax and legal issues with their own counsel or independent experts.  It is the ultimate responsibility of the client to perform its own due diligence and independently determine what is best for its business, what steps to take to accomplish its goals, when to act, and the repercussions of such actions. 

West Florida Invest its directors its employees, or agents disclaims any liability connected to the use of this communication.  West Florida Invest its directors its employees, or agents associates disclaims any responsibility for the content or impact of any third-party content or resources referenced in this communication.  West Florida Invest its directors its employees, or agents makes no representations or warranties, express, implied, or statutory, as to the services, advice, or information provided by West Florida Invest its directors its employees, or agents, or to the ultimate results of any such services or advice, including without limitation any implied warranty of reliability, accuracy, suitability, usefulness, merchantability, fitness for a particular purpose, non-infringement, or those arising from the course of performance, dealing, usage, or trade.  West Florida Invest its directors its employees, or agents shall not be liable to the client for error of judgment. 

Special Note Regarding Forward-Looking Financial Projections:
Any Forward-Looking Financial Projections contained herein are subject to a number of risks and uncertainties, and actual results may differ materially.  You are cautioned not to place undue reliance on the Financial Projections, which speak only as of the date hereof.  These Forward-Looking Financial Projections such as those related to projected revenue and profitability levels are only predictions.  No assurances can be given that the future results indicated, whether expressed or implied, will be achieved.  While sometimes presented with numerical specificity, these Forward-Looking Financial Projections are based upon a variety of assumptions which may not be realized, and which are variable.

Because of the number and range of the assumptions underlying the Forward-Looking Financial Projections, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of West Florida Invest its directors its employees, or agents, many of the assumptions inevitably will not materialize and unanticipated events and circumstances may occur subsequent to the date of this Financial Model.  Consequently, West Florida Invest its directors its employees, or agents take no responsibility for any of the Forward-Looking Financial Projections or any other information contained within this document, and none of the information contained herein should be regarded as a representation by West Florida Invest its directors its employees, or agents that these estimates and projections will be realized.