Real Estate Brokerage & Property Management Blog

Here you will find the latest real estate endeavor stuff I engage in on a daily basis.

Wednesday, May 20, 2009

Asset Equation

Hi Propsects & Friends,

Wanted to quickly share an asset equation I use when I analyze my assets needed for my age. This equation will work for anyone, and is greatly needed to determine where you need to be with your financial assets. Meaning what you would need in assets based on your age and income. See equation below and examples:

Yearly Income X Age/10= Assets needed

So let's say I'm 49 and make $125,000/year. Equation would be $125,000X49/10=$612,500. So you would need at least $612,500 worth of assets to satisfy this equation. So if your 49 and make $125,000/year and don't have $612,500 worth of assets, your in deep trouble!

Lets say I'm 25 and make $25,000/year. So $25,000X25/10=$62,500. So if your 25 and don't have $62,500 worth of assets then your in deep trouble!

It's recommended you take equation seriously, and start making it a habit to calculate your numbers ASAP. I have equation on my refrigerator and calculate my asset worth once a month to see where I stand with numbers, as well as what I need to do, if I'm not close to what equation says I should have in assets for my age. A trick I like to do with this equation is calculate futuristically my age and asset worth and act on it at current age so when reach futuristic age, the assets have been already accomplished and may have alittle more than planned since it was orginally calculated futurisitcally from beginning. See example of my trick:

So if I make $150,000/year at age 33, but calculate using age 55 instead, I would need $825,000 worth of assets to satisfy equation. So if I'm 33 this will be a no brainer since this is being calculated on being 55 instead of me calculating the equation based on being 33. So I know at 33 I got 22 years to gain $825,000 worth of assets to satisfy asset equation for 55. This trick just makes you work harder in the years you don't need too, because if I calculate on being 33 I would only need $495,000 worth of assets, but if I'm 33 and calculate as if I'm 55 I would need $825,000, get my point? (you get ahead faster thinking this way, well for me anyway) Also remember to don't let the asset equation scare or discourage you if number you get is no where near what you already have acculmulated in assets. Treat equation like it is a state test you have to pass (attorney/real estate broker/teacher/nurse/doctor/etc) you know if you don't pass state test you won't get license to practice, and you also know if you fail by a merely 2 points you have to retake whole state exam again, not just questions you missed. So treat this equation like that, and good luck. Check with my online store regulary to see if I've posted a book for sale about the asset value equation.

PS- Assets can be liquid or non-liquid or a mixture of both, when trying to figure out once get asset value where to start. **If like clock picture, actual clock is for sale in my A.C.H.P., LLC online store, click link and check it out on right part of my blog***

Monday, May 18, 2009

Recession Business Decision

Hi Prospects & Friends,

I wanted to share a real life business experience with you all that just happened recently, and hope you all learn from it. I recently had a tenant contact me by phone and said he loss his job of two years and would not be able to pay rent anymore. At first as a business owner I went into shock and told my tenant I would have to call him back so I could figure out what I needed to do to work our such a situation. I immediately pulled his file from my filing system and glanced at his lease and saw he would still owe me $8,500 since he signed a 13 month lease this year. After careful consideration I called back my tenant and said their is no need for me to hold you accountable for the remaining $8,500 you will owe me, or me start the eviction process because at that moment I felt sad that he was going through so much. He was taking care of his ill mom, dealing with a divorce, loosing his truck, & at that second I put myself in his shoes & told him I understand as a individual & not analyzing the whole situation based just as a business. I told him he could leave out of the lease without owing me the $8,500 and to stay with a friend or family member until he found work and not to tie himself down to another lease, and I wished him luck. He told me he didn't understand why I didn't put a landlord lien on his credit for the $8,500 he owed me because he's seen his friends go through same situation with other places they've rented and their property managers started the eviction process with no concern of their personal situation. I told him just think of me at this point as someone assisting you from the work of an angel, and not a business at this time. He told me thanks and he would never forget how I helped him in this bad recession. I realized as a business owner no matter what my business mind said was the normal thing to do, which was start eviction process, it was my heart as an individual that realized what if this was me? I know there's not many businesses out their that will take a lost first, because it's not business smart, but I guess in my case no one is telling me how to run my business, since I'm the owner. It is always wise no matter what to look at every situation as a business owner very carefully, because you never know when something major will happen to you. Many of you may see me as taking a major loss for not collecting the $8,500 from my tenant, but I see it as a gain, because I know somewhere someday God will look back on my decision and be very proud of me.