In our opinion, the most important ingredient in accumulating wealth through real property investing is to have a good investment plan.
To insure accuracy and expedite the development of investment plans we have programmed a computerized investment planning system. The primary product of this system is a printed real estate investment plan covering periods of from five (5) to ten (10) years into the future.
The completed plan includes:
- An outline of your time oriented goals.
- Year by year estimates of total planned market value of properties owned under the plan.
- Year by year estimates of you gross equity and net cash equity positions after both normal sale and installment sale liquidation.
- Year by year tables of value, equity, cash flow, tax flow, and operating account balances.
- Complete year by year detail of the plan for guidance during the life of the plan.
Property Value Estimates
Maximizing the profitability of any real property investment depends first and foremost
on purchasing the property at or below "fair market" value.
Our large data base containing information for all properties sold in our market area enables us to give good estimates of "fair market" value. In addition, we can provide appreciation data for all cities in the Greater South Bay area for the last thirty (35+) years.
Computerized Property Analysis
To accommodate the increased difficulty in investing in the lucrative South Bay real estate market, Buckingham Investments has designed and programmed a unique computerized real estate analysis system which is available to our agents/brokers. This system is not your "super spread sheet presentation". The system was designed and programmed specifically for use by Buckingham Investments.
As opposed to the commonly used static snapshot approach used by most investment brokers, this system uses a dynamic forward projection approach. Cash flows and equity growth are projected using:
- city by city estimates of value based on long term average appreciation rates which result from an ongoing 35+ year value study,
- variable rate loan simulations,
- annual adjustments in income and expenses,
- fixed or randomly selected vacancy rates,
- realistic rents and expenses estimates,
- linear regression analysis for rate prediction
- many other features unique to our system
In our opinion, this system is capable of making extremely accurate forward projections of the financial performance of a given real property investment using history as our guide.
The system we apply is useful both in analyzing properties in an investor’s currently owned inventory and analyzing properties currently under consideration for acquisition by investors.
For persons currently considering the investment in income producing property the system offers two very important features:
- Property values in any given area can be summarized statistically for use during the selection process.
- Changes in long term return can be evaluated based upon changes in purchase terms. For example - instantly evaluate the effect upon your equity position in ten years by the negotiation of a twenty thousand ($20,000.00) dollar reduction in purchase price.
Our system has, among other capabilities, the ability to simulate the following important investment elements:
- Both time forward and backward estimates of yearly property value, loan balances, equity position, cash flows, tax benefits, value appreciation, and "tax-out" positions.
- Tax deferred exchange scenarios.
- Refinances and purchase of replacement property scenarios.
- Financial impact of capital improvements to the property.
In addition, the system can generate up-to-date statistics that are useful in valuing properties you are considering buying or selling. These statistics are generated on a city by city, area by area and type by type basis. The statistics include averages and value ranges for:
- Gross Multiplier
- Price per Unit
- Rental per Room
- Capitalization Rates
- Price per Room
- Rental per Square Foot
- Price per Square Foot
These statistics can be obtained using all properties currently in the market place, all properties which have been in the market place but withdrawn by the owner and/or all properties sold in the last year. Those numbers will be extremely valuable for beginning investors trying to determine the "fair market" value of any property being considered for purchase. This can help you avoid the situation where every one involved in the property purchase makes a profit, except the buyer!