Bad #s in The Book on Rental Property Investing by Brandon Turner

[Bora O.]

Has anyone else actually ran the numbers being used in the Example Plans in Chapter 5 of The Book on Rental Property Investing by Brandon Turner?

I’ve been plugging the example numbers being used into a spreadsheet so that I can better understand what was being explained in the book. I also wanted to compare the 4 different example plans to each other and eventually develop a customized plan for myself.

In doing so however I’m noticing that the numbers didn’t add up from Example Plan #1 $1 Million in Net Worth in Rental Properties.

In the example there is a discrepancy in the numbers when moving from the end of year 3 to the end of year 4.

It is hard to notice because by the end of year 3 we are up to 3 properties and the numbers are being described in a summary total instead of by each property individually. When you break down the numbers by individual properties using the first purchased property as a templated for the additional properties purchased however, you will notice that the numbers being used in the example are not scaling correctly.

It took me some time to figure out why the numbers were not scaling and adding up correctly but I finally believe I at least partially figured out why the numbers didn’t add up.

By the end of year 3 the 3 properties are owned for the following lengths of time and reflect the correct numbers associated with that length of ownership (loan balance, equity, property value, etc).

Property A - owned 3 years
Property B - owned 1 year
Property C - owned 0 years, it will be purchased at the start of year 4

But by the end of year 4 the properties should reflect the following years of ownership with their respective numbers associated with the years of ownership (loan balance, equity, property value, etc).

Property A - owned 4 years
Property B - owned 2 years
Property C - owned 1 year

However the summary total numbers that were provided in the book for all 3 properties at the end of year 4 did not add up correctly. It took me awhile to figure out how the author came up with the numbers that were provided in the summary numbers for the end of year 4, but I believe I figured out at least part of the mistake. I believe I know why the combined property value numbers are incorrect but still am not sure why the total loans, total equity, and total net worth are incorrect.

For the total of the value of the properties, the amount of years of ownership being used for 2 out of the 3 properties is wrong, hence the incorrect scaling.

I was able to get very similar numbers to the author (hard to get the exact numbers because the author rounds up and then summarizes 3 properties on top of that) when I changed the years of ownership to as follows:

Property A - owned 4 years
Property B - owned 2 years 3 years
Property C - owned 1 year 2 years

So I guess my question to the community is, has anyone else ran the numbers and noticed the discrepancy? Where you able to figure out why the total loans, equity, and net worth don’t add up correctly? OR is there a flaw to my math/logic that I’m not seeing?

You can use this Google spreadsheet for an exact breakdown and explanation.
https://docs.google.com/spreadsheets/d/1agHJrh-a9CIvV_zVEOtFqWR6SKr8SNooRJ65CWrYK-M/edit?usp=sharing

FYI the exact book I’m referencing is actually an audiobook and here is its information:

• By: Brandon Turner
• Narrated by: Brandon Turner
• Length: 11 hrs and 38 mins
• Unabridged Audiobook
• Release date: 12-10-15
• Language: English
  https://www.audible.com/pd/The-Book-on-Rental-Property-Investing-Audiobook/B0195LQYF4?pf_rd_p=ae76b2bb-e63d-4a67-b357-dab3dee05ca1&pf_rd_r=SYQWK9EMNEBSZGYTZ6SK&ref=a_lib_c4_libItem_B0195LQYF4

Looks like it was released around the same time as the e-book and there are no updates/addendums/correction releases to my knowledge.

• Language: English
• Publisher: BiggerPockets Publishing LLC
• Publisher Date: December 1, 2015
• ISBN: 978-0-9907117-9-7
  https://www.biggerpockets.com/store/rental-property-investing-ebook