How the Lineage investment plan does its math

The plan builder at /investment-plan takes the cash you have today and what you can add each year, and projects a 10-year rental portfolio. The default example starts with $65,000, adds $25,000 a year, and shows 6 rentals by 2036 and about $527K in projected equity, a figure that rests on 3% yearly appreciation and on cash-out refinances in the later years. It works with no sign-up.

That's a big number from a short form, so you should know where it comes from. Below are the assumptions, how they add up to more than one rental, and what any projection like this leaves out.

The five assumptions

The $230,000 figure comes from a real listing. 2107 S Seale Rd in Phenix City, Alabama, is priced at $230,000 and takes about $58,000 in cash to close, including the 20% down payment of $46,000. That's why $65,000 covers the cash to close on one rental, with about $7,000 left over, and reserves come on top.

The plan is illustrative, not a promise. Each assumption is a round, steady number, and real properties don't behave that steadily.

How one rental turns into several

Three sources of cash fund the next purchase in the builder: your yearly additions, cash flow from the rentals you own, and, in later years, cash-out refinances. Our arithmetic below uses only the first two, so it's a rough check and not a copy of the builder's method.

Your yearly additions. At $25,000 a year, it takes a bit over two years of additions alone to reach the roughly $58,000 a purchase needs.

Cash flow from the rentals you own. Each one adds $295 a month, or $3,540 a year. One rental barely moves the timeline. Four of them add over $14,000 a year, and the wait for the next purchase gets shorter each time.

Buy the first rental, then add $25,000 a year plus its $3,540 and you have enough for a second purchase in about two years. In the builder's default example the purchases land in 2027, 2029, 2031, 2033, 2034, and 2036. The first cash-out refinance comes in 2032, and by 2036 refinances have recycled about $38,000 of equity into new purchases. The builder says the portfolio paid $7,000 of rental 2 and $54,000 of rental 6. Our guide to building a portfolio covers the strategy behind that kind of sequence.

Build my plan with your own starting cash and yearly addition.

Where the $527K comes from

Equity is the value of the rentals minus what you owe on them. The plan's loans are interest-only for 10 years, so the balances don't fall during the 10 years the plan covers. So nearly all the equity comes from two places: the down payments you made and 3% appreciation on every rental you hold. Refinances in the later years take some of that equity back out to fund purchases.

That's why the appreciation assumption carries so much weight. A rental bought early gets years of growth on its full $230,000 value, while your stake in it started at a $46,000 down payment. Small changes in the rate swing the equity figure by a lot in either direction. Of all five assumptions, this is the one to push on hardest for the markets you care about.

What the plan leaves out

A projection is a way to compare paths. It isn't a forecast, and here is where this one is simpler than real life.

• Every rental follows the same model. The plan prices later rentals higher but otherwise treats each one alike. Real properties differ in rent, taxes, and insurance, and the next one you buy won't match the last.
• Rates and rents move. The plan holds the loan at 6.5%. Your rate depends on the market and your loan when you buy.
• Vacancies and repairs are lumpy. The plan starts each rental at $295 a month and grows rent 3% a year on a smooth line. Real rentals have a month without rent, a repair that comes early, or a tenant who leaves mid-lease.
• Reserves are extra cash. Lineage recommends keeping six months of the full monthly payment (mortgage, taxes, and insurance) in reserve. On Seale Rd that's six times $1,297, or about $7,782 per property. It can sit in a cash or investment account. Lenders often count a 401(k) or IRA toward reserves, sometimes at only part of its value, but money you may need for a repair is easier to reach in a regular account. The lender sets its own minimum, which your consultant confirms.
• Appreciation isn't a straight line. Values can go flat or fall for years at a stretch, and a 10-year projection at a steady 3% smooths all of that out.

For a fuller look at the cash a single purchase takes, read how much money you need to buy a rental property.

Turning the illustration into real numbers

The plan uses one model property. Real decisions need real ones, with their own prices, rents, taxes, insurance, and financing. A consultant can put actual listings next to your plan and show how the timeline changes when the inputs stop being round numbers. Talk to a consultant when you want to do that.

The plan is an illustrative projection, not a promise of returns. Actual results vary with property performance, market conditions, and financing terms. This is not investment, tax, or legal advice.

Put your own starting cash and yearly addition in and see where the plan lands: Build my plan. To check it against real listings, talk to a consultant.