+R12 Rate of Return
Expected annual return on a 12-month reserve fund (8% — invested).
Example Result
Sample DataBased on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.
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+R12 Rate of Return Formula
8% (invested portfolio rate)
Why It Matters
By holding 12 months of reserves, you can afford to invest them more aggressively. The 8% return compensates for the larger cash reserve requirement and can meaningfully improve your overall investment returns when viewed as part of your total real estate portfolio.
Detailed Explanation
The +R12 Rate of Return models the yield on a 12-month reserve fund invested in higher-return vehicles. At 8%, this could represent a diversified portfolio of index funds, REITs, or bond funds that generates meaningful returns while still being relatively liquid.
Example
Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.
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