by Jack Sternberg
The focus of this article is advanced strategies for experienced real estate investors who want extra protection for your investments. The use of the strategies I’ll cover will depend upon your investment strategy. Also, they may not be solutions you’ll commonly use, but you’ll have the knowledge you need should you decide to employ them. It’s always good to have more weapons in your investment arsenal!
The Fundamental Protection of the Memorandum of Option A primary negative of lease options concerns financial difficulties of sellers. These problems can result in liens, delinquent property taxes and other similar hassles. For the investor, this can result in a considerable amount of time and money spent on resolving these issues before the property can be sold.
The Memorandum of Option is a basic protection for the investor. The memorandum is a document is a record against the title of the property and should always be recorded. It informs the public that you have an interest in the property.
The memorandum has an important purpose–to prevent an unethical seller from selling the property out from under the investor’s nose to someone else. It also provides protection from bad faith sellers trying to squirm out of their obligations. My advice–always record a memorandum of option!
Advanced Strategy 1-the Deed in Escrow Usually, the term escrow refers to the deposit of funds by one party for delivery to another party upon completion of a specific event or condition.
But, the definition also refers to the deposit of deeds and other written financial/legal instruments. Here’s my suggestion–place the deed in escrow at the same time the memorandum of option is filed. When this happens, the seller signs the deed along with the other contracts. The deed isn’t recorded on the title at this point however; it’s held in escrow by an attorney or title company, and they’re provided with instructions for its release.
You should know that this action doesn’t protect against the filing of liens against the property. However, its effect is to impress upon sellers the fact that they’ve actually sold the property. The result-it creates reluctance on the sellers’ part to attempt to back out on lease option agreements.
It also has another advantage: It allows you to close on the property without the seller being present! With the deed in escrow, you should specify how and when the deed is to be released and recorded. The instructions can be simple, such as this example: “When Sam Smith pays $200,000 in certified funds to John Jones, the deed will be released to him. By (date), these funds must be paid.”
Advanced Strategy 2: The Performance Mortgage With this technique, the seller pledges the property as collateral for the lease option agreement, and, thus, ensures good faith performance by that seller. Once the mortgage is assigned to the buyer, it prevents the seller from selling the mortgage to other people. (It replaces the memorandum of option filing.)
The performance mortgage allows the seller’s insurance company to put the buyer’s name on the owner’s policy as another insured. It also shows that the buyer is a lien holder and requires that he or she be notified if any type of foreclosure action is taken.
Of course, some sellers don’t like the idea of a performance mortgage and won’t agree to this deal! If a performance mortgage is agreed to, have your attorney review the terminology of the mortgage to make sure the appropriate, specific clauses are included.
Advanced Strategy 3: The Land Trust A land trust is an organization established to hold land and to administer use of that land. This technique is useful with subject-to’s. Its purpose is to minimize possible exposure to litigation.
It does this by hiding true ownership. The actual owner or beneficiary is not recorded in the public records, just the name of the trust. This means potential litigants find it difficult to identify someone to sue.
Land trust contracts tend to be complicated and long so investors will definitely need an expert lawyer to draw them up.
Advanced Strategy 4: Form a Partnership There are times when investors may want to consider subject-to high-end properties (in terms of rapidly appreciating value). There’s more risk with these properties, and since there is more risk, you can spread that risk by taking on the seller as a partner. With this method, the buyer and the seller share the profits.
Here’s an example: Assume a property is worth $800,000 and the monthly rental is $3,500. Under normal circumstances, you’d likely back away from this deal. However, let’s assume that you discover this home might be sold for $200,000+ in profits. This deal makes good financial sense for both you and the seller. So, you agree on a 50-50 partnership (or another percentage arrangement), and you both end up happy.
My recommendation: If you take this course, require that the seller cover all the risks.
Advanced Strategy 5: Refinancing Refinancing is a great tax-deferment strategy. Here’s an example: Assume you have a house worth $300,000, and $230,000 is owed on it. Through a new mortgage, you can take out some or all of the $70,000 in equity, and it’s not a taxable event. The result-you can use that money to reinvest in other properties while still holding on to your original property.
It’s a good idea to check with lenders and brokers in your area to find out what refinancing programs are available and which ones best suit your needs.
Tax Concerns Remember that with any of the methods I’ve just described they have to meet IRS regulations. So, make sure that you and/or your tax person are on top of them; the regulations do change from time to time and can affect the legality and profitability of deals. One area to really stay on top of is capital gains.
Capital gains are the profit on the sale of a property. At the present time, you can sell your primary residence (the one actually lived in, not investment properties) every two years.
If a person is single, he or she can keep the profits up to $250,000; if a person is married, he or she can keep up to $500,000. In both instances, the profits are tax free. If the seller of a property lives in his or her home for two out of five years, then that property qualifies for a tax-free gain. The seller can rent the home out for three years - and not a single day more.
My Advice Never stop learning! Keep advanced strategies in mind as you grow your investment portfolio. It’s not likely you’ll need them for the majority of investments (especially early in a career), but, as is often said, knowledge is power. With that knowledge, you’ll be able to apply it quickly and easily when the right investment situation arises.
Key Idea: Always get the Lender’s written permission first. Study advanced strategies diligently, so you can make use of them at the appropriate time for maximum protection of your investments.
About the Author:
Jack Sternberg is the creator of the renowned “Buyers First Program”. As the “gurus’ guru”, he is well known by the professional creative real estate community as “Obi-Won Kenobi”. Having been a full time investor since 1977, Mr. Sternberg has been “at” the closing table more than 1,500 times. Mr. Sternberg has the depth of experience that lend value to his associations. Contact Mr. Sternberg at
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Home Accessories Eleanor McWilliams on 13 May 2008
by Eleanor McWilliams
The advent of plasma televisions has certainly changed our perceptions about what makes best television viewing. Even though when they first hit the market, plasma televisions were so exorbitantly priced that only the wealthy could afford them, today nearly everyone can own one. However, taking the help of plasma TV buying guides will certainly prove to be advantageous especially as it helps one to learn about latest technologies as well as knowing who the better manufacturers are.
You will certainly find the information provided by plasma TV buying guides to be very useful because it can show you how manufacturers such as Sony, Panasonic and Samsung and a whole slew of others are outdoing themselves in coming up with more appealing products. There are certainly considerable differences in prices with plasma televisions falling in the range of $2,000 to $3,500 as compared to the under $1,500 it costs to own a traditional color television. In fact, you can even use the information provided by plasma TV buying guides to compare not only different brands and models of plasma televisions, but also learn about comparative advantages that such televisions have over the cheaper CRT televisions.
The guides can also show you more about the types of accessories that can also help further improve your plasma television functioning and viewing. So, as you prepare to find out more about the latest types of technology used in plasma televisions, reading up on various plasma TV buying guides and reviews will also show you how such technologies are radically different to those used in CRT televisions.
Thus, from available plasma TV buying guides you will learn that plasma televisions require an external tuner such as cable TV or even satellite TV boxes or other similar types of devices. What’s more, you can even learn about how to connect other devices to your plasma television including DVD and Laser Disk players. Because plasma television technology is radically different from that used in conventional color televisions, you would profit from reading plasma TV buying guides which can show you that plasma television technology requires using two slim panels of glass that make up the television screen and in these panels are contained many pixels made from compressed gas and that there is no need for the conventional cathode tubes anymore.
What’s more, it is interesting to learn from plasma TV buying guides how these red, blue and green sub-pixels are each controlled through use of very advanced technology that can produce a staggering over, it is believed, sixteen million unique individual colors. Once you get into learning about plasma televisions from available plasma TV buying guides, you will soon forget about wanting to own color televisions and be prepared to shell out the extra money it takes to buy a plasma television.
About the Author:
Eleanor McWilliams: Comparing companies and prices is important, regardless of what particular item you are shopping for. If you are looking for plasma TVs, using plasma TV comparisons can be very much to your advantage.
Plasma TV Buying Guide
Finance Chris Channing on 13 May 2008
by Chris Channing
A home equity loan is a loan in which the borrower uses the equity in their home as collateral. Medical bills, major home repairs, and college education are examples of what home equity loans can help finance. A lien is a type of security interest over an item of property to secure a payment. Why do you need to know this? A lien is created against the borrower’s house, and actually home equity is reduced through a home equity loan.
Home equity loans may be a first, second or third position lien, but it is most common that they are a second position lien. When you are trying to get a home equity loan you should have reasonable loan-to-value and combined loan-to-value ratios. You will also need a very good credit history as it is required most of the time.
There are two types of home equity loans, closed end and open end. Both of these are generally referred to as second mortgages, this is because, like a traditional mortgage, they are secured against the value of the property. Home equity loans tend to be for a shorter term than first mortgages, but sometimes last longer.
Closed End Loan
A closed end home equity loan is when the borrower receives a lump sum at the time of the closing and cannot borrow anymore. The factors that determine the maximum amount of money that can be borrowed include: appraised value of collateral, income, and credit history. It is not unusual that you will be able to borrow up to 100% of the appraised value of the home; in fact there are lenders that will go above 100% through an over-equity loan. Some states may, however, have a limit on the amount you can borrow.
Open End Loan
An open end home equity loan is when the borrower chooses when and how often they borrow against the equity in the property. The lender sets an initial limit to the credit line based on the same factors for closed end loans. An open end home equity loan is also known as a home equity line of credit. Similar to a closed end loan, you may be able to borrow up to 100% of the value of the home. The lowest monthly payment can be as low as the interest that is due. Generally, Prime rate plus a margin bases the interest rate.
Home equity loans generally come with quite a few fees. Some of these fees include: arrangement fees, early pay-off, originator fees, stamp duties, title fees, closing fees, and other costs. There is also a surveyor and conveyor or valuation fees. If you find your own licensed surveyor to inspect the property you may be able to cut the cost of the fee.
Home equity loans are normally used for paying off things that costs a large sum of money. You can choose a closed end or an open end home equity loan. You may be able to borrow up to 100% or over of the value of the home. It’s good to have a good credit history and a steady income if you want to borrow a large percent. Remember to check the loan you are thinking of choosing before you choose it to see what fees may come with it.
Finance Chris Channing on 13 May 2008
by Chris Channing
It is most common that if you are going to purchase a new or used car that you will be taking out an auto loan. Before you can get a loan you have to qualify first. If you have had credit mistakes, late bill payments, and low income then your chances of getting a loan won’t be as good as they could be. It is possible that you can still qualify for a loan even with poor credit.
A good way to qualify for a loan is to prepare ahead of time. You should limit your purchases with credit cards. You should also pay off any remaining balances before you apply for the loan. Doing this will boost your credit rating and lenders will see that you are responsible with your money. Hold off on making payments with your credit card until you receive the loan or else it could hurt your chances of getting the loan.
Make sure the car you want to buy is one that you can afford. When picking out your car you should also make a budget that will include your monthly insurance payments on the car. Lender don’t normally want to grant loans to people who plan on using over 60% of their monthly income on the car loan, other bills, and their living expenses. Lenders like it when a person is willing to put up their own money so it’s is good idea to save up money to use as a down payment for the car.
After you have made a budget, found a car in your price range, and saved money for a down payment, you need to find a lender. There are several types of lenders to choose from such as banks, credit unions, online lenders, and auto finance departments. It is best to start with your local bank because the already know your financial history and will want to work with you more if your already a customer. Another good thing about banks is that they normally offer the lowest interest rates. Credit unions also offer low interest rates so if you belong to one you should try applying for a loan there.
If you cannot get a loan at the bank then your next course of action would be the finance department at the dealership where you want to buy the car. The finance department works with a number of lenders to find one that will grant you a loan. The only downside is that you may have to pay a higher interest rate.
Your final option for finding a lender is to shop around online. There are a large number of lenders online who want to work with you. Online lenders compete with traditional lenders and other online lenders so they will want to offer you a better deal regardless of your credit. You will want to research an online lender before choosing one to make sure they are a legitimate company. Make sure you also read all the contracts to make sure they don’t charge any hidden fees.
Your interest rate will be higher if you credit history isn’t very good. You can make the rate go down if you provide larger down payments or pay off the car sooner than the terms of your original loan. Don’t risk taking out a loan for two or three years if you aren’t positive that you can pay it off. You can take out a loan for five years or more if you need to. This will cost you more interest but you will still be able to make a payment each month.
Remember to research all your options before hand and apply for several loans before you qualify for one. Make sure the vehicle you want to purchase is within your range, limit your purchases on credit cards, and straighten out your finances. Qualifying for an auto loan can take some time so just remember to be patient and try different lenders if you have to.
Finance Chris Channing on 13 May 2008
by Chris Channing
The type of insurance that pays for a person’s medical expenses is known as health insurance. It can be purchased as premiums so the holder is defended from medical expenses due to illness or injury. A person can purchase social insurance, the insurance that is sponsored by the government, or receive insurance from a private insurance company. Plans such as these can be purchased by an individual or in group packages by companies as benefits to their employees.
The estimated price of healthcare is found by the likely hood that the customer will be in need of medical attention. A healthy young insurance holder will most likely pay less that an older sickly insurance holder.
Health insurance works by a person buying a policy from the insurance company. A policy is the contract agreed upon by the insurance company and the policy holder. The contract can be paid for monthly or annually. The amount paid by the insurance holder to the company is called the premium.
The amount the insurance holder is forced to pay before the insurance company will pay their share is called the deductible. In some cases a co-payment must be paid by the holder out of their own pocket. This can be done each time the policy holder goes to the doctor for a visit. This can all be avoided by the policy holder purchasing coinsurance. This plan allows the holder to pay only a certain percentage of the total cost of their medical expenses.
The amount the insurance holder must pay in order for the company to pay its share is called a deductible. In some cases a co-payment must be paid by the insurance holder with his or her own money. This could be done each time the insurance holder goes to the doctor for a checkup. An insurance holder can avoid this by purchasing coinsurance. With this plan the holder pays a certain percentage of the total cost of his or hers medical expenses.
All policies have limits and exclusions. Not all services are covered by the insurance company. If a situation in which a medical expense is not covered the policy holder will be forced to pay the bill with their own money. When the medical expenses of the policy holder surpass the amount agreed upon in the policy the holder will be forced to pay the remainder of the bill.
Out-of-pocket maximums are almost he opposite of coverage limits. This maximum is the amount that a policy holder is allowed to pay out of pocket, after this amount is exceeded the holders obligation stops. Capitation is the amount of money paid by the insurance company to the health care provider. A provider on a list of healthcare providers that are selected previously by the insurance company is called an in-network provider. When a healthcare provider is used that is on the list the policy holder can receive discounts or additional benefits to their policy.
Moral hazard is a problem faced by insurance companies and policy holders everywhere. Moral hazard occurs when the healthcare provider and the insurance holder agree to tests that are deemed unnecessary by the insurance company. Most of the time the insurance company is still forced to pay for the expenses but this can cause problems between the company and the insurance holder in the future.
Finance Zul Rahman on 13 May 2008
by Zul Rahman
Choosing the right dental insurance for you and your family is a difficult task. The right dental insurance plan should cover all the basic dental services like capping, filling and many other basic services.
When comes to dental insurance, you can always get free dental insurance quote online. There are many insurance companies that offers various dental plan. One thing to consider, is the amount quoted worth the services offered.
One of the thing that you should look for in the quotation is, if there is any limitations or restrictions of the benefits offered. Make sure that all the benefits that you and your family needs are covered in the quotation.
All of the terms of coverage should be spell out clearly in your dental insurance quote. These are Common terms such as period of coverage, the cost of your monthly premium and your services benefits.
How to choose the right dental insurance quote?
Obviously the amount quoted must be within your budget and it should covers all of the essential dental services that you need. Don’t get drawn into the cheap dental insurance quote that does not give you the benefits you need.
If you have a family you might want to check the family dental insurance plan. It works almost the same way as regular health insurance family plan.
Get quotation for the family plan dental insurance from your agent or online. There are some limitations such as waiting period and others on the plan. Just be sure you study the plan carefully.
It is important to make sure that the dental needs for the entire family is covered in the quoted plan.
Make sure that your dental insurance quote includes all the basic features of dental care that you and your family needs. Features such as regular dental check up and annual check up are no doubt should be included. Another thing is of course the plan should be affordable to you.
What you should be looking for in the quotation is a savings over the long term. Another alternative is to look at the discount dental plan. They do provide a great savings and discount on many of the expensive dental procedures.
Last but not least, study your quotations carefully. Get a handfuls of quotations from various dental insurance plan. Also get quotations from various dental insurance providers. Compare them carefully before you come to a conclusions.
When you come to a conclusions, it is preferable to get a second opinion from any one that you know who are on that plan.
Look at all aspect of the quotation given to you, for example the limitations of the plan and the scope of the benefits. Also don’t forget to ask your agent if there is any discount available. Apart from regular discount, sometimes there are special seasonal discounts offered by the company from time to time.
Finance Russell Marsh on 13 May 2008
by Russell Marsh
According to our current analysis application fees have practically doubled this past year on the most popular, best deal fixed rate mortgages.
Fees for the best two year fixed deals around have increased in the last year from 995 on average to 1,400 over the past year. The cost of three year deals has also gone up from an average of 580 to nearly 1,150.
Last October the Bank of England base rate was 5.75% and the average rate amongst the best 3 year fixed rate mortgages was 5.84%. This has gone down to 5.65% which is expensive comparatively speaking. Two year deals were at 5.68% and they have only gone down to 5.57% in the same time period.
The recent, very high profile, problems in the banking and mortgage industry have meant that lots of people are jumping the gun a little and opting for the lowest interest rate deal they can possibly find. They should also consider the fees associated with these lower rate loans as when added together over a two or three year deal these are working out to be much more expensive.
People really need to consider seriously the cost of these fees. It’s too easy to just focus on the interest rate that’s been charged but especially in a shorter term deal they will have a serious impact on the true cost of the mortgage.
Even in todays uncertain financial circumstances there are many good deals to be had but people with not much equity in their homes or without a perfect credit score are unlikely to be able to get some of these deals as Banks and Building Societies and increasingly taking a tougher line.
With Clients wishing to raise capitol intermediaries should now be changing their strategies for raising this money in light of the credit crunch. Also changes in the Consumer Credit Act have come into force and this means that a secured loan could probably be a better option than re-mortgaging.
The major impact of the changes to the Consumer Credit Act is the fact that every secured loan for residential purposes is now under the umbrella of the Consumer Credit Act and therefore there’s a compulsory cooling off period which takes pressure of the individual and also there is a ceiling on early repayment charges of two months interest (depending on when in the month they tell the lender). When you also take into account that there are no valuation, conveyancing, booking and application fees it doesn’t take a genius to work out that these secured loans are probably more advantageous to the client.
So if you’re tied in to your mortgage provider and wish to restructure some finance or raise money for a project then a better alternative to a re-mortgage could be a secured loan. Given the protection of the CCA and the lack of any upfront fees backed up by a simple one month’s interest to redeem a secured loan, clearly they are significantly, cheaper, easier to arrange, more transparent, and possibly more accessible than a re-mortgage.
Finance Chris Channing on 13 May 2008
by Chris Channing
Business marketing can be a tricky industry for those who are new to getting their name out on the market. But for those who are resourceful enough, opting for the lamination of business cards instead of going for conventional business cards can have several astounding benefits for businesses.
Lamination is a simple term to describe the coating of plastic that is placed around a business card after it is created. This barrier of plastic will keep the business card safe for viewing- despite being caught in the rain, mud, or even bent. This keeps investments in printed business cards safe, as the cards are less likely to need a replacement as quick. Thus, lamination can provide a high return on investment.
Businesses aren’t the only ones who gain anything from laminated business cards. In fact, customers will commonly keep a hold of such business cards for a longer period of time due to their elasticity and durability. This gives more potential profits for businesses, yet also keeps customers happy as they have a continual source of contact information for the said business.
Lamination also gives business cards a sleek design and feel to them- meaning they stand out from the rest. If a possible client is going through business cards, it is likely that the most visually appealing cards will be the first viewed. The slick exterior of a laminated business card can help cards stand out in such a way that gives them edge over competitors who stick to convention formats of business cards.
A small drawback to many laminated business cards is that writing on them is very difficult. Because of the plastic exterior, only certain types of markers will be able to leave a lasting mark on such business cards. This is poor for customers who wish to write notes on business cards for later. There are, however laminated business cards that have surfaces that are able to be written on- these, however, will cost extra for the business owners.
As far as pricing goes, it should be expected that business cards with lamination will almost always cost more than those that don’t. This is because it takes extra work and materials to give the coating its ability to shield all of the obscene from the business card inside. But as previously mentioned, the benefits can often be too great to ignore- as the longevity and repeat business that laminated business cards give is too beneficial to discount.
Closing Comments
The options in business card printing are vast- but choosing the right options and spending enough money can essentially give any investment a large return in the long run. The trick is, of course, to find out which options are worth paying for and which are a waste of time. But as businesses can well see, lamination is an option in business card printing and design that has too many benefits to not try at least once. After all, business marketing can be a tough game- and experimenting with what works and what doesn’t is half the battle.
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