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New Patent Pending Software Determines Maximum Purchase Price of Investment Real Estate
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Added: 01/05/2004
Type: Summary
Viewed: 674 time(s)
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New Patent Pending Software Determines Maximum Purchase Price of Investment Real Estate
Norman Neinchel, a Silicon Valley mathematician and long time investment property entrepreneur who is a national income property advisor, has discovered what may be the single most important breakthrough ever involving income producing investment properties . . . a revolutionary new technique offering the virtual certainty to earn double-digit yields.
After years of observing the success and failure characteristics of thousands of income property purchases, Mr. Neinchel discovered a remarkably consistent correlation between the annual yield that the properties earned for their investors and the interest rate they were charged on their purchase loans. He found that, almost without exception, the successful ones were purchased at prices that generated annual yields on the investors' cash down payments of between 1.5 and 3.0 times that interest rate. He also noticed that the higher quality lower risk properties were closer to the 1.5 number while the troubled properties in troubled areas were closer to, and even higher than, the 3.0 number. In effect, this defines a true risk-assessed yield.
For example, for purchase loans with 10% interest, the price paid for lower risk properties generated annual yields of at least 15%. The price paid for the higher risk properties generated annual yields of 30% or more. As expected, the overwhelming majority of successful properties posed average risks and earned a yield about half way between those numbers, or about 22.5%.
Since there has never been a mathematical mechanism available to work the process backwards -- that is start with an appropriate risk-assessed yield and then compute the purchase price that will generate that yield -- Mr. Neinchel used his extensive math background to accomplish just that. After developing the math in a software program, he tested it on about 1,000 properties whose complete data he already had, and with startling results. His process computed purchase prices that were within 2.5% of the actual purchase prices!
For the first time ever, anyone can easily determine, with absolute mathematical certainty, the maximum price to pay for any income property anywhere solely by the property's own data and the risk-assessed annual yield it must earn! That has never been done before and is not available anywhere else. This process is now patent pending.
Since interest rates for income properties now begin at about 8.0%, the annual yield that an investor should demand must be at least 12% (1.5 times 8%) to as much as 24% (3.0 times 8%), or more.
Gary Parsons, a 35-year veteran broker in San Mateo, California writes, "I have used your software to help me sell millions of dollars of properties from duplexes to large apartment and office projects, and wouldn't think of dealing with any of them without it. It has also helped me to buy properties for myself quite profitably."
Seaborn Wicker, founder of TEN31 Investment Corporation in Baton Rouge, Louisiana, which buys millions of dollars of income properties each year, writes, "At last we have found something that helps us buy properties at prices that make economic sense. We like it so much that we created a link to your site on our site telling everybody that we use your process to value our purchases so that others may benefit from your incredible software. It was the most profitable $75 that I ever invested. Thank you so very much."
More details about the process are located on Mr. Neinchel's Web site . Incidentally, most of the major search engines on the world wide web bring up Mr. Neinchel's site as the very first one when the search phrase "income property value" is entered into their search box.
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