Thursday, May 15, 2008

Real Estate Investing-30 Year vs. 15 Year Mortgages

-30 Year vs. 15 Year Mortgages

Discussion of the Asher Institute Report, entitled “Profiting From the Banking Industry’s Biggest Secret.” Copyright 2003. The Asher Institute is a non-profit consumer advocacy organization.

Who agrees with what the report proposes? What are some alternative points of view that may conflict with the point of view expressed in the report?
Click to below to read more.

The equity in your house is a mirage, its not doing anything just sitting in your house. Leverage it! Understand how high net worth individuals go through life: liabilities are a strong element on their balance sheets. Its all a play of arbitrage, leveraging your debt to acquire assets and increasing your rate of return in other asset classes. This is also what is known as “velocitizing” your money.

From this Report, you could have 2 primary objectives:
• 1. Pay less interest to the bank…….OR
• 2. Leverage your equity and/or extra money you are paying each month in other asset classes. (The money you are putting toward the 15 yr mortgage on the property, if you could put that toward an investment that is making more than the interest you’re paying, you’d be making more having the money working for you. i.e. arbitrage)

Posting from Chad Albury, C.F.O. of Bray-Conn Inc. and C.E.O. of Albury Investments, LLC on the topic Real Estate: Alternatives to the Traditional Mortgage
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Real Estate Investing

Due Diligence Checklist on Real Property:
(Good list found at: )

  • Title Report

  • Inspection

  • Multiple Appraisals

  • County Assessment

  • Motives for selling property

  • Water rights

  • Rental History + Leases

  • Utilities History

  • Tax Returns last 3 yrs

  • Zoning

  • Economic direction of neighborhood

  • Crime

  • Talking with neighbors

  • Production of illegal drugs inspection

  • Electrical and plumbing

  • And of course much more….

    Check out  Private Money Utah for private and hard money information

Posting from Cary Valerio, C.E.O. of Valerio Investments and Bray-Conn Inc. on the topic Real Estate: 30 Year Mortgages and Asher Institute Report.
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Monday, May 12, 2008

Raising Money For Your Business or Idea

A Term Sheet is what you give to a bank, angel investor, venture capitalist, or an investor from whom you would like to get money for your business or investment. This is something that everyone should know how to do as it goes along with writing business plans. Most of the time, the above sources of capital will only want to take a look at your term sheet. This is a snapshot of your business plan, a 30 second infomercial for your business plan or idea.

If I’m a bank or a hard money lender and its just a debt, what I want to see are the 3 Cs – Cash flow, Collateral, and Character. But if you are an equity investor, you focus on the strength of the team, their business plan, and their ability to execute it. This is usually based on past experience.

When is a Term Sheet used? When you are looking for private money and/or VC. Hard Money lenders go more on collateral. When you have an off the wall idea, a residential development project, an invention, and basically anything that is outside of the box you need a Term Sheet. Anytime you are presenting your story and have a desire to raise money that’s not in a traditional banking setting, you want a Term Sheet. Something in a one or two page format, that’s pleasing to the eye graphically. There are one page term sheets and there are 14 page term sheets, and everywhere in between.
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Funding Your Business

Posting from David Soper, ex Private Banker for JPMorgan Chase and Financial Advisors for AIG on topic of funding your business:

Use VC as a last resort because bottom line, they take too much!!

PRE-IDEA BUSINESS FUNDING: If you are new business, think of how you can fund your business organically with a Home Equity Line of Credit or through family members or friends.

PRE-OPERATION BUSINESS FUNDING: You have a bizz plan and people and maybe a prototype but not operating yet. This is when you are ready for your ‘Angel Investors or an SBA LOAN. Angel investors are a softer form of VC because it is usually an individual that looks for start-ups. They usually do look at the business plan. Some of them just want an interest payment but most of them want to become partners with start-ups. They want to see that you have some of your own money in it or they may take a lien on your house. In other words, they want you to have “skin in the game.” SBA Loan process is much more rigorous and demanding.

POST-OPERATION BUSINESS FUNDING: After one year, this is when banks are going to consider lending to you, particularly if you have equipment or collateral. After two years, this is when the red carpet is rolled out in that banks will be willing to give you a line of credit. They look at your gross revenues, your ability to repay. Read more!


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