Investing in Commercial and Foreclosure Real Estate

02. May 2013 · Comments Off · Categories: Financial Restructuring

Investing in commercial real estate is not for the faint hearted. One thing the financial crisis has taught us is that property values can go down as well as up. Most commercial property funds around the world are currently frozen, meaning investors may not withdraw their investment.

Originally, these funds were frozen for a limited period of time, but as the crisis deepens the freezes have been extended. Most commercial real estate has seen a substantial fall in value – at least a 40% fall over the last year, and this will mean inevitable losses as most commercial mortgages are short lived – 5 years. As they need refinancing over this year and next, many investors are going to discover that banks are not willing to refinance a property that is now worth substantially less than when the original mortgage was taken out.

This means either defaulting on the loan – or coming up with the shortfall in cash. Either way, the commercial mortgage defaults have the potential to far outweigh the residential ones.

As the world moves into a deeper recession (the US voodoo banking stress tests notwithstanding) commercial property will continue to see falling demand and values. No one expected the banks to fail the stress tests, although I personally fail to see why a solvent bank would need to raise more capital.

In Las Vegas for example, commercial property development has come to a complete standstill and the amount of foreclosed property is quite staggering. Just take a look at the amount of foreclosures for sale here: http://bankproperties.com There is already a 28 percent vacancy rate, so most developers – if they are still in business – are taking the view that it is better to cut their losses and walk away from a development rather than to throw more money into what is unlikely to be sold or let out in the foreseeable future.

But, one man’s loss is another man’s gain. For those with the wherewithal and patience to wait for an upswing, there may well be bargains to be had in the commercial real estate sector. Las Vegas may be one of the worst hit markets currently, with Casinos going broke left and right, but it could offer the best bargains also.

Realistically, one must take a gamble here – will the upswing take place in time to make an investment in commercial property worthwhile? Some markets will recover quicker than others. Some markets may never recover in our lifetime. It is estimated that there is 100 million square feet of empty commercial space in Beijing, China. That would be a longshot bet to me. Las Vegas is another gamble. There is a huge amount of investment property for sale in Las Vegas, and other parts of the US. An upswing will, no doubt happen, but in some areas, I suspect it will be too little, too late for a lot of developments. 

Do Credit Unions offer Better Service?

06. December 2012 · Comments Off · Categories: Financial Restructuring · Tags: , , , ,

Here in New York Credit Unions  are becoming much more popular. In the past, in the popular mind, credit unions were only associated with labor unions, company owned towns and small town politics. But, Credit Unions have done a lot of growing up in the past half century and have become a very competitive place to bring your business.

Particularly, following the fallout surrounding the “Banksters” and the Occupy Wall Street movement and other symbolic and real representations of “greed” in the traditional banking establishment.

People are starting to take their money away from Big Banking and feel more safe in community based (but still Federally Insured!) Credit Unions where they feel they are treated as a person and not just a number. This influx of new blood is leading to credit unions establishing a larger and more diverse customer base and being able to become competitive in the lending and savings markets.

Credit Unions have been doing a great job getting the word out about and offering personal service on “smaller” loans such as Home Improvement Loans, Fully Secured Loans utilizing your credit union share certificates as collateral and other loans that are decided at a much more personal level than one expects and tends to receive from a traditional bank.

 

 

The trend towards a more popular opinion of credit unions as opposed to banks is not a new one. As illustrated by the above video, the anti-Big bank feeling in the world is quite obvious, enough so to spur this ad campaign that plays off of the “Apple vs. PC” concept and turns it into “Bank vs. CU”

There really is no guarantee that the Credit Union you select will have better rates or offer more personal service than your bank would but its rather easy to simply try another credit union! It does take some smart shopping and some discovery to find the right financial institution for your own needs.  But in the end its worth it.

Credit Unions are member owned so at least if you come across any practice you dislike you have a board you can point fingers at or attempt to influence unlike the faceless global banking corporations we have become accustomed to shaking our fists at. 

How To Secure A Business Loan

24. August 2012 · Comments Off · Categories: Asset Based Lending

The title says it all but, unfortunately, there is no magic answer, no ‘one size fits all’. Recently I worked with a young couple that wanted to go into a business venture together. Their proposed plan was to create an online store that sold specialist wholesale diamond jewelry to the public. Their problem was the lack of capital required to invest in diamond rings, earrings and necklaces.

So, they approached me for advice. Being a financial adviser by profession, I was perfectly equipped to offer what they were looking for. And of course we had a couple of meetings before they went away knowing what they needed to do. Were they successful? I don’t know, but I do know they’ve now submitted their business plan to their lenders, so fingers crossed.

Anyway. Business loans and how to secure them.

Business plan – have one. And make sure that you’ve done your research.

  • what did the competition look like?

  • what was your projected outcome (middle and long term)

  • what solutions will be in place in the event of issues that (will) arise?

  • what are the risks?

  • what niche are you wanting to enter?

  • who will run the company, how will the operation of the business play out?

The above are just some of the aspects that you need to focus of and then work into a business plan that’s easy to interpret for your intended lender.

Collateral – do you have any, and if so how much and how easily can you get your hands on it? Most lenders will prick their ears up once they know you’ve got cold, hard assets behind you, so make sure that you have something solid to bring to the table.

Size – what will the size of your operation be? Lenders need to be able to satisfy legislation regarding SBA loans.

Cash flow projection – how will you repay your loan, and can you evidence it?

Experience – just how much do you have in the field into which you want to break? Are you qualified? Have you worked in the industry for some time? What is your interest based upon? What do you aspire to, and why?

Over and above the aforementioned, you can also bet your last dollar that you’ll need to prepare your personal finances for inspection, as well as undergo a credit rating report. All being well, providing that you’ve complete a thorough market analysis, delivered a sound business plan and met all other relevant criteria, you’ll get what you’re looking for.

Good luck.

Securing Home Owner Loans

25. April 2012 · Comments Off · Categories: Asset Based Lending · Tags: , , ,

Despite just how cold and bitter the financial world feels right now, there remains hope on the horizon for home owners and property investors. If you’re in a position to repay a mid-term loan, and your prospective new home needs an overhaul (or you’re a real estate investor), there are plenty of companies out there that are more than willing to meet your needs.

Rehab hard money lenders are doing big business, more so because they’re providing a bridge between those that need money and those that can’t get it via more conventional money lenders. Banks and big financial institutions are tough nuts to crack, and none of them seem to care that we (the men on the street) weren’t the cause of the 2008 crash – they were.

Still, if you’re looking to secure Chicago hard money loans, there are plenty of lenders dotted around the state that are willing to take up the slack left by the banks. Generally most of them lend to both commercial and residential applicants, and providing you’ve got a mid-range credit score, you should find that your bases are covered by the loan offer.

You’re also more likely to secure a rehab loan on medium to large properties as it’s worth bearing in mind that these companies base some of their evaluation (part of that being the risk that you present with) on an increase in the properties value post rehab-works. Another aspect to bear in mind is the fact that it’s more likely that you’ll secure funding as a non-occupier. Generally this is the norm rather than the exception.

As there are more than a few companies out there, make sure you do your homework first. Don’t, whatever you do, jump on the nearest, the easiest to apply to and so on. Look at their background, who they deal with, how they deal and what rates they offer. See if their open to negotiation (many are) and who they’re affiliated with. Treat your application much as you would any other form of borrowing, be sensible and make the right choice.

Using Gold As Loan Collateral

20. March 2012 · Comments Off · Categories: Asset Based Lending · Tags: ,

If you are in need of cash, say, for a new business venture or for urgent personal expenditures, you can use gold assets, such as bullions or jewelry. Many people today put their money in gold in order to create more diverse portfolios because the price of gold moves opposite to that of stocks in the global market. This is the general picture and having around 10% to 15% of your investments in gold or other varieties of precious metals, like silver, palladium or platinum is recommended by financial experts.

One form of gold that you can use as collateral is the bullion. Various types exist, like the more recognized bullions, such as the American Gold Eagle and the Krugerrands, as well as newer editions, like the 2012 Chinese Pandas and Australian Kangaroos. Take note that bullions are different from the coins that were or are used in circulation.

Those used as currency are known as numismatic coins and are normally collected for their gold content and other critical attributes including age, minting, and rarity. But for the bullion coins, their value is only based on the gold that they contain. The quality of the gold must be high, with fineness of about .9999, meaning that the coin contains 99.99% gold.

Carat wise, this is equivalent to 24 carats. Examples of coins that are 99.99% pure are the 2012 releases mentioned earlier, as well as other recent coins like the Lunar Rabbit (2011) and the Lunar Dragon (2012). Established coins, like the Krugerrands, have fineness of about 91.6, which is equal to 22 carats. This is almost similar to the fineness of the American Gold Eagle. You can check United’s Rare Coins to see the selection of bullion coins on hand, as well as their varying fineness and features.

Using gold in order to loan from banks is actually very helpful in improving the value of gold in the world financial market. By having this as collateral, you take your gold away from the scene, so to speak. So, you aid in increasing the demand for this precious metal. With increased demand and less supply, the price of gold will be sure to increase too.

All in all, gold is definitely an asset that you can use in order to loan money from huge banks. Some financial institutions even accept numismatic coins in exchange for loans because these collections are normally backed by gold. To learn more about coins, bullions and other precious metal options that you can utilize when borrowing money, see tips and advice on reliable sites, like United Rare Coins & Precious Metals.

Save Business Expenses with Free Checking

14. March 2012 · Comments Off · Categories: Business Capital · Tags: , ,

They say that nothing in life is free. And, for the most part, that is true. However, there is one free service that seems to be taking hold in the banking industry; free checking accounts. Of course, there are certain criteria that must be followed for most of these accounts such as having a minimum monthly balance.

While a lot of people have switched to online banking and pay their bills directly from their bank account, there are still some stallwarts who insist on still using paper checks to pay their bills. And, there are also those who don’t have access to a computer and want to continue to do things as they always have done them.

Many institutions that you would not associate with banking now offer bank account. That includes supermarkets who not only provide a debit card, but also provide free checking accounts and points back on any purchase you make on that debit card.

There are many banks who also offer free business banking accounts. The minimum monthly balance accepted is slightly higher than expected for individuals. Most banks seem to expect that the client keep a minimum of $3000 in their account every month before offering them free services such as checking. That is not a lot of money to most businesses.

Like with individuals, most businesses now do their banking online. However, not all of their suppliers have come that far and many employees do still expect to receive a pay check rather than have direct deposit. While it is not a huge financial outlay, having a free checking account which comes with free checks will ensure that prices are not raised because of business expenses and that employees may even get a raise because of it.

Banks want your business so they will try and offer services that draw you into their bank, free checking is just one of those perks they offer.

 

 

Quick Payday Loans for Emergency Cash

09. March 2012 · Comments Off · Categories: Business Debt · Tags: , , ,

Cash

Eventually there comes a time when you will need money but payday is far away. Getting a typical loan takes up to a few weeks or even up to month. People who are desperate try to find quick payday loans so they can use the money for their immediate needs. These instant loans can help get you through your time of need. However, it is also important that you know what you’re getting yourself into. These loans are often small and have to be paid back when you get your paycheck; so it’s best if you think about it carefully.

Instant payday loans can be your emergency lifeline for when your car is broken down on the side of the highway or for when you have unexpected medical emergencies that aren’t covered by insurance. You shouldn’t use this to purchase a brand new TV, to go shopping or on anything that is not important and time sensitive as the interest rates are often much to high. This loan is good for emergencies and when you need cash badly. You have to make sure that you understand the loan and terms. So, always read the fine print and make sure you know the details. Use the money wisely and try to do some research online as well.

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