The Rule of 72

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The Rule of 72 helps us to realize when we can double our investment

The Rule of 72

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DEFINITION OF ‘RULE OF 72’

A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double.


INVESTOPEDIA EXPLAINS ‘RULE OF 72’

For example, if you want to know how long it will take to double your money at 12% interest, divide 12 into 72 and you get six years.

SOURCE: Read more: Investopedia
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DISCLAIMER: We do not own the rights to this video. It is for educational purposes only. Always seek competent and licensed legal and/or financial advice when seeking to invest your capital or resources.



The Rule of 72 helps us to realize when we can double our investment

This table serves as a demonstration of how the Rule of 72 concept works from a mathematical standpoint. It is not intended to represent an investment. The chart uses constant rates of return, unlike actual investments which will fluctuate in value. It does not include fees or taxes, which would lower performance. It is unlikely that an investment would grow 10% or greater on a consistent basis, given current market conditions.


DISCLAIMER: Don Johnson is a Licensed Real Estate Broker acting in the capacity as an investor/principle in Time Value Assets LLC and/or Time Value Investments LLC. You are not being represented in any manner whatsoever by Don Johnson as a real estate licensee. You are always advised to act in your own best interest and to consult with legal, and/or accounting professionals as you deem necessary to conduct business with or through Time Value Assets LLC and/or Time Value Investments LLC.

© 2015 All Rights Reserved on all materials contained on this website


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Time Value Assets LLC - The Florida Tax Deed Experts

It’s all about that CAP rate, or is it?

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REMEMBER I.R.V.

As a real estate investor if you were to only rely upon just one method of evaluating the investment potential it may not only be detrimental to your profits on each deal, but eventually it may end up costing you all of your money!

On this post we’re going to evaluate several real estate formula’s that could ultimately put us ahead of our would be competition.

Sound appealing?



So what is I.R.V. anyhow?

IRV is a formula that allows us to evaluate in different formats the potential investment we are looking at in the moment. We can understand the CAP Rate, (most of you’ve heard this one bantered about in the Social Groups), but we can also evaluate the yield we seek, or the CASH-ON-CASH Return we might make given a certain estimated profit. There are several, which we will cover below.

First let’s look at what IRV represents.

  • “I” represents “INCOME”, or Cash Flow.
  • “R” represents “RATE”, or yield.
  • “V” represents “VALUE”, or Market Value.

  • Let’s look at some ways to use the formula!

    CAP RATE: You may have heard of a CAP Rate, but you might not be sure how it works, exactly! We’ve all seen the posts by investors stating the property has a “10% CAP”, or a “12% CAP”.

    So which is better, a 10% or 12% CAP Rate?

    The short answer to that question is, it depends. The actual use of the CAP Rate, or “Capitalization Rate“, is to Compare Investments. You would then need to know how the market around the subject property boasting the CAP is actually performing.

    There are other considerations as to whether a specific CAP Rate is good for you. Are you Buyer, or are you the Seller? As a Buyer you may want a higher CAP, as a Seller a lower CAP is almost always better. It comes down tot he fact that the CAP Rate is the cost of the asset

    See, the CAP Rate denotes a Higher Valuation when it is lower, meaning, a 5% CAP Rate is a Higher Valued property than a 10% CAP Rate given a defined NOI (“Net Operating Income“, it is also called EBIT or Earnings Before Interest and Taxes). Confusing huh? Look below, this is the formula, (Remember I.R.V.).


    Here watch – (using the above formula – again Remember I.R.V.):

    We have a building we are evaluating that we’re told has a NOI of $10,000 (annually). The owner is asking $100,000. Using the formula we can ascertain that the CAP Rate on this property is 10%. In other words after we have paid out expenses (EBIT) we will have $10,000 left to pay our Real Property Tax Bill and Interest on the loan (if one was taken out, it can also be Principal and Interest, depending on the loan). So in order to pay our “debt service” we must know if the NOI will be enough.

    Remember the question was, which rate was better, 10% or 12%? So how do we calculate the given NOI amount to come up with a CAP Rate of 12%? We already know how we got the 10%. Simple, use the same formula, (Remember I.R.V).

    What we really want to know is how much will this property cost for that 12% CAP Rate. So start with; Income = $10,000, we want a 12% CAP, so then we enter .12, we then solve for the answer. Take out your calculator – now enter – 10000 then the division sign – now enter .12 (be sure to enter the decimal point) – now press the equal or solve button and you will get the answer of $83,333.33. So which would be better for you? See how it depends on if you are the buyer or seller?

    Now you next job is to compare other buildings in the area to see what their CAP Rates are reflecting. This will help you to determine if the seller is asking too much for their property or not.

    This post is starting to run longer than originally wanted so we will continue on another post(s) showing other ways to use the I.R.V. Formula.


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    Understanding the legal description means understanding the survey system!

    Understanding legal descriptions

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    *Legal Disclaimer*

    We are not attorney’s, a title company or any other entity that can legally disclose condition of title, warranty of marketability, or condition of survey. Please contact your closest competent professional that can render you good opinion on your specific situation. This article is for informational purposes only and gives only a brief overview of what a Legal description is and the basics of reading the information. The author is a Licensed Florida Real Estate School Instructor and Broker but is not representing any one particular person or entity by providing this information.

    What is a legal description?

    Understanding the legal description means understanding the survey system!

    Simply put a legal Description is the exact position of a specific area of real property on the face of the earth as compared to it’s nearest landmark.

    The Legal Description allows us to understand where that property is and what person(s) have legal claim to that specific property via the Title.

    Another manner in which it can be stated is that the Legal Description is the boundaries of a specific parcel of real property that is recognized under law. It can be used as evidence in a dispute in court.

    Where can I find the legal description?

    There are several places the legal Description can be found for a specific parcel of real property.

    The first and best place is always on the “Deed”. This is the instrument that was used to convey the legal ownership at the time of last sale (or transfer). The Deed holds the most weight because it is what would be contested if there were a dispute regarding a particular parcels legal ownership. The survey may have contained a mistake, but what is conveyed in the Deed is what sticks. So it is to be sure that making certain that the Deed reads the legal Description correctly BEFORE you complete the transaction is a priority.

    You can also find the Legal Description in public records in several locations, including the County Property Appraiser. Each parcel is assigned a Tax identification Number so that when the County looks to collect the annual taxes in order to operate all it’s holdings, such as Unincorporated Areas and Incorporated Areas, it can narrow down to precise location the ownership area of any parcel within it’s boundaries. This is important to the County and Cities, but it is very important to the land owner as well to make sure they are not getting taxed more than necessary in accordance to where the property lies within the State.

    Today it is easier than ever before to find this information since the State of Florida many years ago mandated that all Counties provide public access information online. In later posts we will be relaying information that can help to aid you in finding those resources to help you get the best information possible when it comes to vetting investment properties.

    How do I read the legal description?

    First you need to know there are four types of Legal descriptions.

    Understanding the legal description means understanding the survey system!

  • Metes and Bounds
  • Government Survey System (GSS)
  • Lots and Blocks
  • Monuments

  • Metes and Bounds explained: This is a widely used system of survey. METES indicates the Distance, while BOUNDS indicates the Direction. First the Point of Beginning (POB) is established. Think of a clock. We start with the POB on a clock of 12 and work around that clock to establish the hours, minutes and even seconds. That is the same thing with Metes and Bounds. We can diagram a parcel in any form. It doesn’t matter if it is a circle, square or rectangle. The top image on this page shows a Metes and Bounds survey description. CLICK HERE TO SEE A LARGER VIEW. An example of a metes and Bounds survey might read like this: “Beginning at a point (POB) on the North side of Jerricho Street 50 feet East from the corner formed by the intersection of the East boundary of Thomas Road and the North boundary of Jerricho Street; thence East 90 degrees 200 feet; thence North 300 feet; thence West 200 feet; thence direct to the POB.”

    Government Survey System explained: The image above represents that of the Government Survey System. Today it is widely used to breakdown a very large geographic area, such as the State of Florida, all the way down to it’s smallest Cities and Towns. The entire system is actually quite simple to follow, once you understand the larger picture of how it is read. Reading it is best served in a reverse manner because of the way it printed on the Legal description. just image a square that represents the whole. Then quarter that square. Naturally since we are dealing with earth and the basis of the axis of North, East, South and West we would divide those quarters into appropriate labels. We can not use direct north as Point of Beginning (POB), so we use the left Northern Quadrant as Northwest, the right as Northeast, the bottom left as Southwest and the bottom right as Southeast. it is that simple. If you CLICK HERE you can see a larger image of the one above. Now you can see plainly how that works. Now we take each quadrant and break it down, and so on and so forth until we have precisely the parcel of land we are looking at purchasing or selling.

    Lots and Blocks explained: This is widely known as Plat Mapping. Subdivisions use this method to narrow down a specific group of parcels, usually smaller “lots” located on “blocks” within the larger spectrum of the Government Survey System and/or Metes and Bounds system. You find this quite often, maybe described as; “Take It Easy Trails Lot 1 & 2 Block C”. Further reference would need to be made on the recorded Plat Map to locate these two parcels, Lot 1 and Lot 2. This method is generally established by using an Engineer to draft out a parcel of land and break it down into the Lots and Blocks. For example, if someone sold a 40 acre parcel to Joyful Developers and then Joyful Developers wanted to sell say 100 lots they would need to break down that larger 40 acre parcel to establish room not only for the lots, but also for road systems, easements for utilities and other facilities, which would likely include Blocks in the description since the whole parcel would eventually not represent a square or whatever form it was sold to Joyful developers when all is said and done. CLICK HERE TO SEE A LARGER VIEW. Again, this is probably the most common way you will see a Legal description, especially when it comes to investing in Single Family Homes.

    Monuments explained: A Monument is simply an easily identifiable fixed location that is used as a Point Of Beginning (POB) when establishing a parcel of land. It could be nearly anything. Older Monuments used were sometimes not the best object such as, “the big oak tree at the west end of the land”. That description could easily be disrupted by natural forces, as well as later development. It could be something like an actual monument where an item such as a slab of concrete were used. CLICK HERE to see the image of the Florida Meridian Monument Marker. This is otherwise an archaic way of establishing a set limits on a parcel and is not readily used in most parts of Florida, except as established by legal precedent such as in the image where the GSS Monuments are established.

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    Time Value Assets LLC - The Florida Tax Deed Experts

    What are Tax Deed properties?

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    Ready? Skip the read and join the network here to get started today!

    WHAT ARE TAX DEED PROPERTIES?

    Simply put, a tax deed is issued when a property owner fails to pay their County based tax bill for a period of time and the person (or company) that paid the taxes on the owners behalf, and which received a Tax Lien Certificate, waited the Statutory time until they felt the need to force the redemption through an action of foreclosure, (we’ll get into the time frames in another post).

    When the Tax Lien Certificate Holder files the appropriate paperwork with the Clerk of the Court for that County and the full Statutory action of display, disclosure and announcements have been fulfilled the County will then proceed to publicly auction off the property at a Tax Deed foreclosure sale.

    This is all done by Florida Statute(s), which makes it factually legal. By use of Florida Statute 197.522, the owner is legally and lawfully informed that there is a pending action against them regarding the property in questions outstanding tax debt liability. Further, they are informed of their legal right to redeem in F.S. 197.522(2)(a)(1). In fact, F.S.197.542 illustrates to us that the property owner has the ability to redeem the property by paying the debt all the way up to the time the successful bidder has paid the Clerk of the Court in full for the bid. At the time the bid is paid in full – that is when a Tax Deed is issued.

    WHEN IS POSSESSION MADE?

    The Florida Statutes provide for every step of the Tax Deed Sale process. The Clerk of the Court for that particular County MUST follow procedure, or the property owner can come back and demand a recall and possibly redeem the property.

    Property owners facing this situation would be well advised to seek and hire legal counsel if and when they get notice of a pending Tax Deed Sale, or even if their taxes have been secured by a Tax Lien Certificate.

    So the answer to the question presented is found in Law in F.S. 197.562. The reader can CLICK HERE to follow and read the law that specifies exactly what we are stating so that they can be relaxed in knowing that they are covered by Law when investing in the Tax Deed arena.

    Florida Statute 197.562 illustrates that the Grantee receives Immediate Possession rights to the transferred property.
    Click The Image To Go The Florida Senate Website To See All Of Florida Statute 197

    HOW DO YOU GUYS FIT IN TO ALL THIS?

    We buy Tax Deed properties either directly at the sale, or we may offer properties that another person (or company) that acquired it through auction wants to sell because believe it or not many people simply do not want to own the property, they invested in the Tax Lien Certificate only to make an ROI (Return On Investment).

    We know how and where to find these people and then we negotiate a deal with them that will benefit them, us and you. That part of it sounds easy enough but it takes a while to learn where to look, to then cultivate those sources and then to know how to exactly acquire them and move them to other investors such as you.

    We can also help investors such as yourself by acting as your proxy to get Tax Deed properties at the auctions, since this IS what we do Full-time (see disclaimer below). IF you choose to hire us to perform as a proxy bidder, possession will be taken using a LLC that allows us to be an Authorized Member which allows us to get paid, you will not be hiring Don as a licensee for that service.

    * DISCLAIMER – Don Johnson is a Licensed Real Estate Broker acting in the capacity as an investor/principle in Time Value Assets LLC. You are not being represented in any manner whatsoever by Don Johnson as a real estate licensee. You are always advised to act in your own best interest and to consult with legal, and/or accounting professionals as you deem necessary to conduct business with or through Time Value Assets LLC.


    Ready? Skip the read and join the network here to get started today!


    Time Value Assets LLC is a Florida based company
    Time Value Assets LLC owns and operates TimeValueAssets.com
    Managing Member – Don Johnson
    © 2014 All Rights Reserved on all materials contained on this website


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    Welcome To Time Value Assets

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