Creative Financing Works For Both Sellers and Buyers

When I first went into the real estate business, my office building sat next to a little wooden shack. The proprietor, Frank, drove an old Toyota and seemed to have no means of income. One day he explained to me that he’d made over $100,000 per year for 30 years simply buying houses on low interest terms from owners and selling them on installment contracts at higher interest rates rather than renting them. Borrowers, who were owner/occupants took care of all expenses, taxes and insurance, and paid him interest for the privilege of doing so. When loans were defaulted, he foreclosed and resold the property at a price that reflected any appreciation in value. Thus, he captured income, appreciation, investment yield, leverage, and loan amortization. By giving up all depreciation, he also avoided all repair expenses. As a new Broker, I didn’t pay much attention, but when the real estate market slowed down and Frank’s income continued to come in while I worked harder just to stay even, I vowed to learn more about financing.

In the housing market buyers need credit to buy, and sellers need it to sell. When mortgage loans become hard to get, many more houses come into the market owned by highly motivated sellers. This can be a cornucopia for entrepreneurs who can find ways to buy and to sell. There’s usually very little competition and very strong demand for credit. So long as buyers can afford the down payment and monthly loan payments, they are usually willing to pay higher prices and higher interest rates. Let’s look as some of the ways this situation can be exploited.

1. Do what Frank did: He bought houses using minimum cash. When he offered them for sale, he kept the down payment and price low, but marked up the interest rate. When inventory is sold on interest-only installment terms, the profit is immediately taxable, but Frank didn’t make much profit by raising the price; he made it on the interest. By stringing out interest payments for years, he avoided tax on his profit until the loan was paid off. This gave him plenty of cash to pay taxes with.

2. Use idle self-directed retirement plan money to finance speculators, rehabbers, and people confronting balloon payments they can’t refinance. Structure “interest-only” terms, and wait until the loan is paid off realize any taxable gain. Rather than charging interest, secure your loan with a Purchase Option which will convey a percentage of the profits. By sharing the risk, you should get at least half of the net profit. On more speculative deals, structure a preferred position. Charge a specified yield plus half of the remaining profit. Never take so much money off the table that the borrower has no profit incentive to repay you, but bear in mind, there’s lots of potential profit when the market slows down.

3. Create a market for seller financing by buying the debt sellers carry at discount for cash. You can dictate the terms, collateral, credit score of buyers, etc. to the buyer prior to the sale to create the yield you want.

4. Option a seller’s house at a low price with very little cash, then mark up the price and finance a retail buyer by buying the Notes he uses to pay the seller at deep discount. This benefits the seller by creating a market for a slow-moving house; and the buyer by enabling him to buy the house; and yourself because of all the profit centers you’ve created.

5. When you’ve demonstrated that you can produce high-yielding transactions, you can divide profits with investors by using, or re-lending, their funds to finance houses; or to help others sell and buy houses. The profit potential far exceeds normal brokerage fees.

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Exploring Colorado and Its Home Finance Options

There are many people interested in residing in the state of Colorado and this means getting hold of the Colorado home finance options to be able to stay here permanently.

Reasons why people would want to settle in this state may differ for these individuals. It is not at all surprising since Colorado is one good state to raise a family and start a productive future.

Still, the challenge remains. Whether it is in Colorado or elsewhere, deciding to get a home will need some high finance. Houses do not come cheap nowadays and renting is not something to plan for in the long term.

Looking for the right amount of money is the primary task to get a house. Most sellers will not trust any deal or negotiation unless you have enough cash to cover the price or a reliable financial backing to ensure the payment.

As such, it is important to know the kind of help that will give you exactly what you needed. Get to know the right financing options that shall bring you to the house of your dreams.

Colorado and Home Finance Options

Living in a decent house in a good neighborhood in Colorado is possible as long you keep to the goal of owning a home and have the right finance options at hand.

Here are some of the home finance options.

1. Get a Bank Loan for Home Finance

When it comes to finances, the first thing that comes into mind for most people is the bank. Banks are financial institutions that have been relied upon by people ever since. Most people will have savings and checking accounts in banks to easily manage their finances.

If you have maintained a same savings or checking account in a Colorado bank, then it will be relatively easy to request for a home financial loan. Bank officers will have some good amount of information already on how you do business with them.

Approach the bank formally and express your desire to get a loan. They will give the other requirements. Once these are complied with, then simply wait for the application to be approved and you can easily get your dream abode.

The shortcoming of the banking institutions is their higher interest rate. Since they are reliable financial firms, they can indulge in the interest rates.

Banks are also bound by the stipulated interest rates in their charters. Thus, even if you get quite familiar with the bank officers, it is not very possible to renegotiate such terms.

2. Find a Mortgage Broker

There is the option of relying on mortgage brokers if you want to find lower interest rates. You can surely find one in Colorado. Then you can consult your home finance options.

Mortgage brokers do not own the funds themselves. These are firms that will give you a more advantageous option in your finances.

They will actually serve as a link for you to reach the lending institutions that can provide you better interest rates. They will do this for a fee and that will still be a good trade off compared if you have to pay high interests.

3. Seek a Correspondent Lender

The third alternative that you can resort to is the corporate lender. Correspondent lenders are relatively smaller financing firms. They are not as large as the banks but they do have enough funds to support your credit line.

They mainly concentrate in finding the right deal for you. They shop the market for a good mortgage deal until they find a lower interest rate. Then they will fund this to your application at very favorable terms still.

Finding a correspondent lender is not as easy as looking for banks. However, you can still review your options in Colorado by checking out the firms that give home finance options.

You can also search online for such a lender by just narrowing the field to those located in Colorado. Contact immediately the firm that you will find.

You may also want to check out the local yellow pages. Some might just about advertising their services there.

Finding a good a home in Colorado is not difficult. It is your home finance options that you must consider in order to purchase one. Review the choices given above and use one that will give you the best advantage in the deal.

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The Key to Financing: House Cleaning Business Plan

A business plan allows you to head to a financial institution or family in an attempt to get money to assist you start your own cleaning firm.

This article is meant more to help you think about growing a business plan by getting to know what it entails broadly – for detailed wisdom on how to write a business plan for house cleaning services, start by reading what’s below, then by reading something more detailed.

The soundest way to learn a business plan method is to check out a “guide for idiots” or similar publication at your local library. This type of material is going to have details regarding each section I talk about below, and is maintained pretty up-to-date. There is probably no “idiot’s guide to writing a maid service plan”, but a general guide about how to make a business plan will work. Read through a guide which was published sometime last year. This gives the author the best chance to give you information about banks’ overall lending policies, which change a lot.

Budget your time when you write a business plan. Don’t spend a long time sweating about what are perfect cleaning business names and what ones sound lame. Spend more hours thinking about what is your targeted market and what is your sales campaign. This is a bare bones outline of what you can expect to need when you walk into the lobby of your local bank.

Executive Summary – Terse couple of paragraphs that provide the info WHO, WHAT, WHERE, and WHY. Don’t worry too much about including target market info unless it’s a super gimmicky type of a thing, say a cleaning firm for retired nurses.

Objectives – What is it you plan to do? Say you plan to clean houses, simple as that. Arrange your objectives into solid, simple, bullet-point topics. It might be obvious, for instance, first objective, make a business, second objective, find clients, third objective, design the system to be sustainable and profitable.

Market analysis – Research the market for house cleaning and eloquently describe what you find. Who are the people spending the most money on house cleaning? Where are their houses? How much will they shell out for the work? Study many groups of potential buyers. It’s important that you are methodical about the way you research, and talk about how you conducted the research. If you’ve been to college, draw on your experiences there. Higher education spends a lot of time giving you skills that make writing a business plan easy.

Advertising – Describe what you plan to use as advertising methods and how much these will cost you. Say you’ll attempt a bunch of different methods of cheap advertising before finding the most successful means and paying more to continue that campaign. Be thoughtful with how you’ll spend money- everything should be a recorded experiment. When you’re in business, record the advertising experiment findings as carefully and meticulously as you can possibly imagine.

Competition – Similar to how you conducted the advertising portion of your business plan, research and describe your findings. A bang-up competition section is indispensable to a working business plan. Who will you be competing against? Show the competition, show rates, competition’s location, and their selling points in a visual table. When in doubt, it’s best to use a tables or chart.

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Learn About the Biggest Finance Houses Through Fictional Works

Ever wonder about how investment banks got to be as powerful as they are today? Ever wonder about the finance houses, their history and the reality of the who is who in New York City High Society? Sure lots of deals are made behind the scenes, but what else is going on and who is cozy next to who? Well if any of this sort of thing intrigues you then boy have I got a book for you?

Let me recommend a fictional book, with stories that are real and characters that are composites of many folks that shall not be named, it’s just not proper etiquette to exploit the rich and famous financiers and their families, or is it? After we watched Lehman Brothers crumble into the abyss, one has to wonder what on Earth they were thinking or how all this happened. Why don’t you please read:

“Hanover Place” by Michael M. Thomas; a Time Warner Books Company, New York, NY; 1990.

This is a great novel of Wall Street Greed, Hostile take-overs and decade repeating cycles of collapsing economies. This is a great book of the ups and downs plus Hanover Place is the pinnacle finance house of Warrington & Company. He mixes reality with fiction and the behind the scenes of high-society, rivalry, power, corruption and a little passion too.

Each page is interesting and by the time you read the first 50 or so pages, you will not be able to put it down, worse, it’s as if you could interchange the names with real characters of today and this last banking and financial fiasco. Please think on it.

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Guide to Forestry Equipment Financing and Leasing

As a general rule the most common place to get forestry equipment financing is your local dealership. Due to the recent recession however, most dealerships are losing their finance sources left and right. With the extinction of so many large investment banks, lines of credits have been drastically scaled back. You may now have to use alternative finance methods to get your forestry equipment loan.

I still believe the first place to find a finance source will be your dealership or supplier. If you are buying from a brand name dealer like Deere or CAT, then they should have no problem providing finance at good rates. If you are at a local dealership, you may get lucky and they will have in-house financing. If not, most dealerships have a list of finance companies for you to call or fill out an application. I believe it is best to call them first to make sure they are still offering finance for logging equipment.

Another great place to find finance sources is online. The internet has come along way in the last decade and you can now find information on anything from spec sheets to places to reviews of equipment. There are a few good companies that you can find simply by doing a Google search. The online sources are usually small to mid-sized finance houses with access to their own lines of credit. These companies have pretty good sources and can refer you elsewhere if they can’t get the deal financed themselves. The best thing about finance houses is that they can be a lot more flexible than the local dealerships and banks. If anything else you can compare their rates to your local bank.

Your local bank or credit union may help you get an equipment loan. This can be tough though as your credit union has no interest in repossessing a delimber if you can’t make the payments on it. It is why banks and credit unions shy away from giving loans. You may get lucky though and if you are in good standing with the bank, this would be the way to go. They are going to require a lot more paperwork than the other sources but it may pay off in a cheaper interest rate.

In conclusion, you have far more options now than you did 25 years ago for financing and leasing. Try to get at least 10% of the equipment price together before approaching any of the sources I mentioned. Most will require 20% if your credit is only fair. It also really helps to be a home owner of have some substantial assets to back your loan. This may seem like a tedious process but it is in your best interest to make sure you understand the loan as it is going to be one of your largest investments in life. The finance company has a vested interest in you as they want you to succeed in business so you can pay back your loan. Hopefully, this guide will help you find the right source for financing.

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Project Risk Management and Assurance

Why do so many organisations embark on high-risk projects without demanding robust project assurance?

Projects fail for many reasons. Recent global studies indicate that inadequate risk management is a common cause.

Successful project managers aim to resolve high levels of exposure before they occur, via systematic risk management processes.

Many projects are inherently exposed to myriad risks and are often significant in scale, complexity and ambition. Delivering large-scale projects can often be adversely impacted by a bias towards being over-optimistic.

Imperfect, insufficient or inadequate data increases exposure that often results in over-estimating benefits and under-estimating costs.

Managing macro and micro-level events related to achieving project deliverables, whilst balancing the needs of many stakeholders, has become increasingly important.

Assessing risks at both portfolio and work-stream levels helps increase confidence that risks are understood.

Projects are often prioritised relevant to their levels of perceived exposure and one has its own risk profile.

Project Risk Management

Project risk management focuses on identifying, analysing and responding to project events.

It should be designed to systematically identify and manage levels of uncertainty and potential threats to delivering project objectives successfully.

Risk management processes should be iterative throughout a project’s life-cycle and embedded in project management planning and activities. Smaller projects often require minor work and periodic monitoring.

Complex projects need formalised processes to analyse, manage and report risks.

Good reporting relies on clear descriptions of all exposure, their impact on the projects, and potential costs for mitigation and inaction.

This helps ensure project personnel understand the potential impact risks may have on projects’ success and have prepared strategies to minimise negative consequences.

Problems occur when there is limited visibility of risks at project and portfolio levels or approaches to risk-management are ad-hoc and inconsistent.

Further problems can arise when risks are identified but recorded at a very high level accompanied by highly subjective risk ratings, rather than being the result of more substantive risk assessment.

When these problems arise, an organisation would benefit from clearer, more formal and wide-spread processes for capturing and monitoring risks.

Project and Portfolio Risk Assessments

Project and portfolio risk assessments should be undertaken to understand their risk profiles and associated threats in achieving business objectives.

Assessments should identify the action plans to address the risks identified and allocate executive responsibility to manage them. Additional risk assessments should be carried out on selected projects (perhaps by prioritising them by value or complexity).

Risk management processes should be on-going and monitored throughout a project’s life-cycle.

Regular risk reports would provide Project Sponsors, Senior Responsible Officers and Steering Groups with better visibility of projects’ risk profiles.

Whether you’re responsible for overseeing or managing a project, robust project assurance will help you address the risks that threaten its success.

Mark Gwilliam FCCA CA is the founder and Director of Business Advisory Services.

From humble beginnings, the firm has grown from strength to strength.

It has matured from a small accounting and tax services practice to one that helps small business owners, entrepreneurs and executives navigate complex challenges; including strategy, risk management and internal audit, managing shared-service centres and operations.

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