Hi Eric. We use Prosper as an example, but you can use any cash-flowing investment that meets the same criteria. Diversification is also important to consider with your risk profile.
I used an excel sheet to run through the example in the video around 36:22, quite sure the result is not as good. The assumption is "short burning fuel" generate return at 9% interest rate and it matches perfectly for first 2 years of the result showed in the software (two 10K flip, three 17.5K flip, time also matches). However, the issue happens at the time when the example begin to split with 27.8K down pay and only use 2825 for short burning fuel. It takes 8 months to payback the line of credit first time, then it begin to take longer and longer, because 2850 is tooooo little to keep the momentum and it only generates $90 per month under 3 year term. The overall cash flow reaches to 4k per month at end of year 3, then it drops to about 2700 at year 6. So it will take much longer to payback the line of credit. I used an assumption that a 27.8K down pay give you a rental property with roughly $200 cash flow, which is very good for turn key properties, it has to be much higher than that to match the example result. Another major issue is, at the end of year 10, with 10 rental properties each generates $200 per month, there is no way to reach stable income that you can withdraw $8900.65. At end of year 10, the example makes another flip at 30625, this move along only gives you 973.87 per month with 3 years. So if you stop at year 10, the cash flow will go back to $2000 per month with rental property only.
Hi Yiyi, Thanks for the detailed question, and great due diligence. Our team saw and responded to your email come in as well about this question, and your Wealth Coach will be able to go through this with you in more detail on your call with her. However, with a quick glance at the spreadsheet recreation you sent, it looks like you left the cash flow created from the rental out of your calculation. So, the "split" flip that bought the rental would be generating the "fast burning fuel" income + the rental income. As for the last question about what happens after 10 years - you are never "stopping." You will reach a point where your snowball is "self-sustaining" meaning you can withdraw your goal amount and it the machine can keep running with what is left, and you won't have to put your own money in - but the investments do need to keep being managed. Hope that helps. Your coach can dive in to more detail with you, as well as lay out how it would work for your specific situation as everyone has different starting points.
@@TardusWealth Hey, team, Thank you for responding to my question, that shows you do care for your customer! I actually included the rental income in the cash flow, for example, the rental income is always in row 1 and cash flow of the months is in row 2, if you check the excel formula, you'll see I added that there. I did discuss this with my coach, unfortunately she is not too sure what happened as well, my assumption with her is that the down payment of 27800 in the example likely generates a rental return of 470, if that is the case, then your cash flow will keep up with the example. That is a CoC more than 20%, in reality, unless you flip house yourself (but then you can not use financial initially and your budget will be way higher), you'll never find such a deal from turnkey or on Market (you'll be lucky to find anything above 8%). The coach told me they probably used a random property from r2r with the number on it directly. I hope your team will do more checking to make sure input assumption is valid, otherwise the result is way off. To your last point, yes, after 10 years the rental property supposed to cover some expense for you, but in order to get back to the level before, based on my calculation it will take another 24 months, and the majority of the income after that will still come from the rental property. Given the assumption of the rental return is way off, (please feel free to reach out, happy to discuss further), I think the example is a bit misleading.
the chances of people not paying are very low. Regardless of prosper, whether you use them or not.. Tardus offers several other strategies for monthly passive income that does not involve other people paying you back. I am using Tardus to pay for my rental properties. Prosper is not the only avenue you can use. They use something called Legacy wealth management that pays you principal ++interest back on your investments monthly.
Actually, the people who got the loan are stuck with the debt, or lower credit score + collections because they defaulted. You would just lose that money you invested.
Hi David, as Tiffany said, you don't have to use Prosper - there are alternatives, but there are also ways to use Prosper that are less risky. Of course, no investment is risk-free, but investing small amounts across a high number of loans can help - so if a couple $25 loans default, you won't feel it as much. Also, the speed at which you invest helps too - you might start with 400 loans, then in 6 months have 800, 1,200... so your performing ones will outperform the nonperforming over time. A coach can help you determine your own risk profile and make a decision you feel comfortable with.
the returns assumed from (example) Prosper seem absurd...the equivalent of saying you can depend on 10% annual increases in stocks indefinitely.
Prosper seems a little iffy to build a house of cards on. Im sure it works in the right environment, but not all the time?
Hi Eric. We use Prosper as an example, but you can use any cash-flowing investment that meets the same criteria. Diversification is also important to consider with your risk profile.
Any discussion about risk? Or details?
I used an excel sheet to run through the example in the video around 36:22, quite sure the result is not as good. The assumption is "short burning fuel" generate return at 9% interest rate and it matches perfectly for first 2 years of the result showed in the software (two 10K flip, three 17.5K flip, time also matches). However, the issue happens at the time when the example begin to split with 27.8K down pay and only use 2825 for short burning fuel. It takes 8 months to payback the line of credit first time, then it begin to take longer and longer, because 2850 is tooooo little to keep the momentum and it only generates $90 per month under 3 year term. The overall cash flow reaches to 4k per month at end of year 3, then it drops to about 2700 at year 6. So it will take much longer to payback the line of credit. I used an assumption that a 27.8K down pay give you a rental property with roughly $200 cash flow, which is very good for turn key properties, it has to be much higher than that to match the example result.
Another major issue is, at the end of year 10, with 10 rental properties each generates $200 per month, there is no way to reach stable income that you can withdraw $8900.65. At end of year 10, the example makes another flip at 30625, this move along only gives you 973.87 per month with 3 years. So if you stop at year 10, the cash flow will go back to $2000 per month with rental property only.
Hi Yiyi,
Thanks for the detailed question, and great due diligence. Our team saw and responded to your email come in as well about this question, and your Wealth Coach will be able to go through this with you in more detail on your call with her.
However, with a quick glance at the spreadsheet recreation you sent, it looks like you left the cash flow created from the rental out of your calculation. So, the "split" flip that bought the rental would be generating the "fast burning fuel" income + the rental income.
As for the last question about what happens after 10 years - you are never "stopping." You will reach a point where your snowball is "self-sustaining" meaning you can withdraw your goal amount and it the machine can keep running with what is left, and you won't have to put your own money in - but the investments do need to keep being managed.
Hope that helps. Your coach can dive in to more detail with you, as well as lay out how it would work for your specific situation as everyone has different starting points.
@@TardusWealth Hey, team,
Thank you for responding to my question, that shows you do care for your customer! I actually included the rental income in the cash flow, for example, the rental income is always in row 1 and cash flow of the months is in row 2, if you check the excel formula, you'll see I added that there.
I did discuss this with my coach, unfortunately she is not too sure what happened as well, my assumption with her is that the down payment of 27800 in the example likely generates a rental return of 470, if that is the case, then your cash flow will keep up with the example. That is a CoC more than 20%, in reality, unless you flip house yourself (but then you can not use financial initially and your budget will be way higher), you'll never find such a deal from turnkey or on Market (you'll be lucky to find anything above 8%).
The coach told me they probably used a random property from r2r with the number on it directly. I hope your team will do more checking to make sure input assumption is valid, otherwise the result is way off.
To your last point, yes, after 10 years the rental property supposed to cover some expense for you, but in order to get back to the level before, based on my calculation it will take another 24 months, and the majority of the income after that will still come from the rental property.
Given the assumption of the rental return is way off, (please feel free to reach out, happy to discuss further), I think the example is a bit misleading.
so if prosper dosent payback then you get stuck with the debt
the chances of people not paying are very low. Regardless of prosper, whether you use them or not.. Tardus offers several other strategies for monthly passive income that does not involve other people paying you back. I am using Tardus to pay for my rental properties. Prosper is not the only avenue you can use. They use something called Legacy wealth management that pays you principal ++interest back on your investments monthly.
Actually, the people who got the loan are stuck with the debt, or lower credit score + collections because they defaulted. You would just lose that money you invested.
Hi David, as Tiffany said, you don't have to use Prosper - there are alternatives, but there are also ways to use Prosper that are less risky. Of course, no investment is risk-free, but investing small amounts across a high number of loans can help - so if a couple $25 loans default, you won't feel it as much. Also, the speed at which you invest helps too - you might start with 400 loans, then in 6 months have 800, 1,200... so your performing ones will outperform the nonperforming over time. A coach can help you determine your own risk profile and make a decision you feel comfortable with.