Learn how to model the future purchase of rental properties in a what-if plan.
Transcript
In today's training, I’m going to do a deep dive on how to model the future purchase of rental properties in your client's plan, including any incomes, mortgages, and eventual sale of those properties.
We’ll start with my client’s test plan. Click the plus button in the bottom right-hand corner to enter future rental property purchases as a goal. This allows clients to see their aspirations as trackable goals on the timeline or dashboard.
Select Buy Property Goal, set the asset type to Rental Property, and assign it to the client. For this example, I’ll call it Rental Property 1. Enter the market value and purchase value, which are both $650,000 for this example. Keep in mind, if this is a future purchase, the value would be inflated for the number of years until purchase. You can also use the Future Value option to ensure it enters the plan at a set amount in future years and grows from there. For this demonstration, we’ll use present value.
For the timing, select an existing event icon on the timeline—here, the Rental Property Purchase at age 54. Leave the sell event at the plan end for now.
Next, link a mortgage to this property. The purchase price is $650,000, and the client wants to put down $50,000, leaving a mortgage of $600,000. Enter an interest rate and term, then click Done to save. The software will now automatically handle the mortgage payments and repayment if the property is sold.
Click Save and repeat for Rental Property 2, with the same purchase price and a purchase event at age 56. Link another mortgage for $600,000, and click Done.
Now, you can view the progress bars to see whether the client is likely to afford these purchases. In Year View, you can see more details: expenses for each property, mortgage amounts, and any cash used for down payments.
Under the Property tab, you’ll see both rental properties listed. The Debt screen shows mortgages, payments, end-of-year balances, and interest rates, which continue until the mortgage is paid off. The properties remain in the plan until sold or until the end of the plan.
Back on the Dashboard, properties are listed in the Property section. Here, you can link rental income. For example, create a linked income for Rental Property 1, modeling $40,000 annually. Select the correct tax status and growth, then click Done. Repeat for Rental Property 2.
In Year View, you can see the rental incomes reflected as other income, growing over time. Both incomes continue until the properties are sold.
To sell properties, go to the Property section and set a sell event on the timeline, for example, at age 65. Assign the proceeds to roll into the client’s non-registered account. Repeat for both properties. You’ll now see asset liquidation events, totaling $1.7 million.
Next, schedule a transfer: click the plus button, select Transfers, transfer to the non-registered account, and choose All Surplus. Link the transfer to the sell event so it happens simultaneously. Click Done. In Year View, you can see a large contribution added to the non-registered account in that year.
I hope this was helpful. If you have any questions or need one-to-one sessions, reach out to support at support@planwithvoyant.com, or click your client’s name in the top right, select Request Support, enter your question, and Share Client Access.