“You miss 100 percent of the shots you never take, and if you think it’s expensive to hire a professional to do the job, wait until you hire an amateur “
There are a significant number of successful real estate investing formulas which have been created over the years regarding the potential creation of real estate wealth. Here are a few real estate formulas which I have followed for many years myself. These formulas may still hold true these days during both boom and bust real estate cycles.
Investing Formulas for Success
These real estate formulas are described by the following acronyms: “A.T.E.C.”, “L.I.D.S.”, and “F.A.T.”. All of these real estate formulas were created by my father almost forty years ago. As I have learned more about the fundamentals of real estate from my father than from any other source, I thought that I would share some of his real estate knowledge.
A.T.E.C. Investing Formula
The A.T.E.C. formula measures elements associated with owning a property, and consists of the following information:
Anticipated Future Value. Appreciation is typically what creates wealth, not cash flow. How is appreciation best determined? Will the property appreciate 5 percent, 10 percent, or a greater or lesser amount each year? What are some of the primary factors affecting appreciation?
The answer may be through another formula described as the L.I.D.S. formula. The L.I.D.S. formula consists of the following items:
Legislation: Taxes, Wages, Environmental, Social, Zoning, and Banking Controls.
Inflation: Wage Increases and Shortage of Supply.
Demand: Ability to Pay.
Supply: Availability plus Increased Replacement. All four of the L.I.D.S. formula elements are constantly interplaying with one another.
“T”ax Savings: Net Cash Flow Gain/Loss
+ Equity/Principal Reduction
= (Tax Loss)
X Tax Payer’s % Bracket
= Tax Savings
– Interest Payment
= Equity/Principal Reduction
“C”ash Flow Ideal % Ratios
Scheduled Gross Economic Income 100%
– Operating and Vacancy Expenses 40%
– Debt Service Loan Payments 50%
= Net Cash Flow Gain / (Loss) 10%
Net Cash Flow Return = 10% Return on Cash/ Total Cash/Equity Invested Equity Invested
Total Cash/Equity Invested
You must evaluate all four A.T.E.C. elements before making an informed decision. Both the A.T.E.C. and L.I.D.S. formulas help support the “F.A.T.” (Financing, Appreciation, and Tax Savings Flexibility) formula.
The F.A.T. formula is not a diet craze, but rather a description of important factors associated with real estate ownership. Financing is normally the driving force behind real estate, and the most important part of the F.A.T. formula.
“F”inancing: The controlling and most important factor affecting real estate. 1 to 4 unit residential properties have many more lending options than other forms of properties. The ability to buy or sell properties is primarily affected by the availability of capital for that specific type of property. The severity of our on-going Credit Crisis is just a recent example of how true this statement is today.
“A”ppreciation: Produces the greatest investment return. Many investors purchase investment properties even with a negative monthly cash flow in hopes of a much higher future value.
“T”ax Savings Flexibility: Postpone taxes and retain earnings. How many other forms of investments offer better tax benefits than real estate?
When & Why To Use Real Estate Investing Formulas?
The A.T.E.C., L.I.D.S., and F.A.T. formulas may help investors decide whether or not to invest in specific types of real estate. There are different types of real estate to choose from as we all know, and there are different types of real estate investors. These are but a few of the formulas which may help with the decision making process.
These real estate formulas all try to simplify the complex world of real estate investing. Regardless of when these formulas were created, these descriptions of what may create value still hold true even today. The ability to acquire a $100,000 or a $1 million dollar property with little to no money down has made many property owners quite wealthy over the years.
The significant price appreciation and tax benefits offered through the ownership of real estate may not always be as consistent now as in years past. However, few other investment options though have offered as steady a return as real estate has throughout our nation. Real estate continues to offer tremendous wealth building options for all of us if we continue to learn the basic concepts which worked back in the 1960s, 1970s, 1980s, 1990s, 2000s, and even still today.
Phoenix Commercial Real Estate and Investment Real Estate: Investors and Owner / Users need to really know the market today before making a move in owner user Commercial Properties, Investment Properties and land in Phoenix / Maricopa County, Pinal County / Arizona, as the market has a lot of moving parts today. What is going on socio-economically, what is going on demographically, what is going on with location, with competing businesses, with public policy in general — all of these things affect the quality of selling or purchasing your Commercial Properties, Commercial Investment Properties and Commercial and large tracts of Residential Land Therefore, you need a broker, a CCIM (Certified Commercial Investment Member) who is a recognized expert in the commercial and investment real estate industry and who understands Commercial Properties and Investment Properties. I am marketing my listings on Costar, Loop-net CCIM, Kasten Long Commercial Group. I also sold hundreds millions of dollars’ worth of Investment Properties / Owner User Properties in Retail, Office Industrial, Multi-family and Land in Arizona and therefore I am working with brokers, Investors and Developers. I am also a CCIM and through this origination ( www.ccim.com ) I have access to marketing not only in the United States, but also internationalClick here to find out what is a CCIM: https://en.wikipedia.org/wiki/CCIM
Please call or text me on my cell: 520-975-5207 or send me an e-mail email@example.com
- DEMOGRAPHIC FACTS ABOUT MARICOPA COUNTY:
- The average age of the population is 34 years old.
- The health cost index score in this area is 102.1. (100 = national average)
- Here are some of the distributions of commute times for the area: <15 min (22.7%), 15-29 min (36.8%), 30-44 min (25.1%), 45-59 min (8.6%), >60 min (6.8%).
Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Properties in Phoenix, Tucson, Arizona.
Kasten Long Commercial Group tracks all advertised apartment communities, including those advertised by other brokerages. The interactive map shows the location of each community (10+ units) and each location is color coded by the size (number of total units).
Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years. If you have any questions about Commercial / Investment Properties in Phoenix or Commercial / Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us.
Please reply by e-mail firstname.lastname@example.org or call me on my cell 520-975-5207
Walter Unger CCIM
Senior Associate Broker
Kasten Long Commercial Group
5110 N 40th Street, Suite 110
Phoenix , AZ 85018
Delivering the New Standard of Excellence in Commercial Real Estate
- Commercial Real Estate Scottsdale
- Commercial Real Estate Phoenix
- Commercial Real Estate Arizona
- Commercial Investment Properties Phoenix
- Commercial Investment Properties Scottsdale
- Commercial Investment Properties Arizona
- Land Specialist Arizona
- Arizona Land Specialist
- Land Specialist Phoenix
- Phoenix Land Specialist
- Land For Sale Phoenix
- Land for sale Arizona
- Commercial Properties For Sale Phoenix
- Commercial Real Estate Sales Phoenix
- Commercial Properties Phoenix
- Commercial Properties Arizona
- Commercial Land Specialist Phoenix
- Commercial Land Phoenix
- Multifamily land Phoenix
- Retail Land Phoenix
- Industrial Land Phoenix
- Land Commercial Phoenix
- Land Retail Phoenix
- Land Industrial Phoenix
- Land Multifamily Phoenix
- Industrial Land for sale Phoenix
- Land Industrial
- Investment Real Estate
Disclaimer of Liability
The information in this blog-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.