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+R12 Months of Reserves
+R12 Return in Dollars
Single Input Reserves Risk Assessment Operating Expenses

+R12 Rate of Return

Expected annual return on a 12-month reserve fund (8% — invested).

Example Result

Sample Data
8.00%

Based 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)
8% (invested portfolio rate)
8.00%

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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

Sample Result
8.00%

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

Related Calculations

One Month of Reserves

2

Monthly amount needed for one month of operating expenses, debt service, and PMI.

$3,043 Example

6-Month Reserves

U

Six months of operating reserves: enough to cover expenses, debt service, and PMI for half a year.

$18,257 Example

+R6 Months of Reserves

1

Number of months in the conservative reserve scenario (6 months).

6.00 Example

+R6 Rate of Return

1

Expected annual return on a 6-month reserve fund (1% — savings account).

1.00% Example

+R6 Return in Dollars

2

Annual dollar return earned on a 6-month reserve fund at 1%.

$183 Example

+R6 Reserves + Total Invested

2

Total capital deployed including both the property investment and 6-month reserves.

$88,733 Example

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