Archive for April, 2007

by Steve Gillman
Make hard money loans and you get a high rate of return on your cash. You have to do it properly to be safe, of course. You also need a lot of money to invest to do this.

What are “hard money” loans? They are short-term loans (usually 24 months or less) made to real estate investors, usually so they can purchase and rehab a property. There is often a loan fee of as much as five percent or more of the loan amount, and up to fifteen percent or more annual interest. Why do they want these loans?

Hard money means speed and simplicity. When using hard money lenders, an investor can tell a seller “I can close for cash in a week.” That gets the seller’s attention, especially if he has had offers that have fallen through due to financing contingencies.

Hard Money - How It Works

An investor can usually borrow 65% to 70% of the property value, but not just the current value. As a hard money lender, you’ll loan money based on the ARV, or “after repair value” (as determined by your appraiser). You’ll look at the property, more than credit scores, another reason investors will come to you. Let’s look at an example.

An investor finds a beat-up house that he can buy for $105,000. He has a plan that when complete will bring it up to a market value of $182,000. He figures it will take a month to complete, and two months more to sell it. He comes to you, and you agree that his projections seem reasonable. Your appraiser estimates a $186,000 market value when the project is done.

You agree to loan him 65% of the ARV, which amounts to $120,250. The excess beyond the $105,000 purchase price (about $15,000) goes into an escrow account, to be doled out as the repairs begin. Notice that if this investor keeps his costs down, he might do this whole project without any of his own cash invested.

The 4% loan fee you charge is $4,810, and is added to the loan balance, so the investor owes you a total of $125,060. You are charging him 15% interest, and he can pay just the interest due each month, but the whole balance is due within one year. If it takes longer than that and you have confidence in his plan, you might do another loan after that.

For the sake of our example, we’ll suppose that it takes Two months to finish the house, and two months to sell it. The investor gets $181,000 for it. He paid $105,000, and he made a profit of $31,000 after a total of $45,000 for all of his expenses. he is happy. Now let’s look at what part of those “expenses” went to you.

You had the buyer pay for the appraisal and any other costs of closing the loan, so your total investment was $120,250. This was repaid when the house sold, along with the loan fee of $4,810. You also collected four months of interest on the whole balance of $125,060 (the loan and the fee that was also financed), which totals $6253. Your total profit then was $11,063 on an four-month investment of $120,250. That’s an annual rate of return of 27.6%. How many banks make that on their loans?

Does that seem like a lot for the investor to pay? Well it is, but the interest rate and other fees are irrelevant if they allow you to make a good profit. remember that he made $31,000 after paying those expenses. In any case it makes sense that hard money lenders get paid well to take risks that banks won’t take. If he screwed up the project, stopped paying, and you had to foreclose, you might be selling a half-finished house for just enough to get your money back.

Suppose you keep most of your money out there in these kinds of loans. Since it isn’t all invested all the time, and is making only 5% in the bank, you average just an 18% return. What does that do to a $200,000 investment portfolio in 12 years? It makes it into 1.6 million dollars. You can see why investors with cash make hard money loans.

Copyright Steve Gillman. This article was an excerpt from 69 Ways To Make Money In Real Estate. Want to know the other 68 ways? Visit http://www.99reports.com/make-money-in-real-estate.html

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by Steve Gillman
Theoretically you can get some cheap property at tax sales. However, it can be difficult to get good information, not many properties make it to a tax sale, and the sales are getting more competitive.

Tax sales, or to be more precise, property tax sales, are the selling of real estate for back taxes. These are properties that have not had the property taxes paid on them for some time - as much as three years in many states. The local taxing authority can then sell the property to recover the taxes owed.

Of course, if tax liens on the property have been sold, then the lien holder is the one that can take title to the property. Only if the county doesn’t sell liens, or if the liens on a particular property aren’t sold, does the property go to the tax sale.

There Aren’t Many Tax Sales

Relatively speaking, tax sales are rare now. If the tax liens are sold, the lien holder will likely take the property. If there is a loan on the property, the lender will foreclose on the loan, take the property and pay the taxes. If the owner of the property owes nothing on it, he would have to be mentally challenged not to sell the property rather than lose it over a tax debt of 15% of the value.

However, there are tax sales. People forget to pay their taxes on land that they haven’t even looked at for years. Banks may even forget to foreclose and pay the taxes in time. For whatever reasons, some properties do make it to the tax sale.

You will hear stories of people simply bidding the amount necessary to cover the taxes owed, and getting the property. Getting a $60,000 house for $2,100 makes for a good story - and it is sometimes a true story. Don’t count on it though.

Bottom line? If there are good properties regularly showing up at tax sales in an area, there will be good investors regularly showing up. You will not be buying properties for pennies on the dollar. But you might still get a good price. Just be sure to do your homework before showing up at the tax sale.

Copyright Steve Gillman. For a Free Real Estate Investing Course, and to see a photo of the home we bought for $17,500, visit: http://www.HousesUnderFiftyThousand.com

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by Dustin Cannon -
Heard of eBay? Who hasn’t? Anyone who has even a minimal amount of internet searching under his or her belt has heard of what is becoming iconic in our world. We have turned the site into a verb even. Mothers claim to be eBay-ing their daughters’ prom dresses. Men talk about eBay-ing in the evening, buying and selling at will. However, to the inexperienced person, eBay seems daunting and scary. Surfing it brings pleasure, but the fear of selling can paralyze the average e-Bay surfer. Thanks to some smart businessmen, those who wish to take advantage of the business investment opportunity available through online auctions no longer have to know how to sell. They just need an e-mail address.

Online brokers are quickly becoming a great way to sell items. The typical broker will take care of everything from listing an item to finalizing the purchase. Those looking for the business investment opportunity of online auctioning just needs to contact the broker and give him the necessary information about the product.

The typical broker will cost a seller some money in fees, but those with great reputations also have the potential to acquire a higher price for an item than a regular, unknown Joe would online. Typically a broker will have requirements. For example, many require a minimum value on the sale item. They will not sell items worth only a couple of dollars. Additionally, they will require a maximum day limit so the auction has a definite ending.

Broker fees will vary depending on both the broker and the sale price of the item. Many times, the higher an item sells for, the less percentage a broker will take. The broker should present a fee schedule so the seller can see how much the broker will take off the top. For example, if an item brings a lower amount of money, the broker will take as much as 35 percent of the profit. If it brings a larger amount of money, he will take as little as 5 percent of the profit. The broker should present a fee schedule to the seller when the seller contacts him initially. If he does not, then the seller should ask for one specifically.

The world of online brokers has revolutionized the online auction world. It has given the average Joe a great business investment opportunity, because just about anyone can market his or her product to the world, literally. Reputable brokers will maintain a high rating and reputation in the auction world, and thus the average Joe does not have to worry about doing so himself. He can just let his broker work for him while he seeks out some great products. He can spend time doing what he enjoys most: finding those quality products and taking advantage of great business investment opportunities.

Learn how to start your own home business online earning multiple streams of income at Plug-In Profit Site.

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by Ohad Livne
Benjamin Graham was not only a widely respected author and expert on value investing; he is often credited with creating the foundation for modern fundamental analysis of stocks. Graham created many well known and widely used theories for investors, including the concept of the margin of safety.

Graham advocated value investing. For value investing to work, the investor must find companies that are trading at a market price that is a discount to the intrinsic, or real, value. The difference between the market price and the intrinsic value of a stock is known as the ‘margin of safety’.

Because a guiding rule of value investing is first and foremost preservation of principal, the margin of safety is in important concept for making stock and bond choices. Benjamin Graham was aware that prices fluctuate based on emotions, interest rates, news, reports, and other outside forces. To protect the investor, an adequate margin of safety is necessary.

The margin of safety protects the investor from both poor decisions and downturns in the market. Because true value is very difficult to accurately compute, the margin of safety gives the investor room to make a mistake.

It is important to realize that market prices and intrinsic values of a share of stock are not always in synch. By choosing stocks that have a significant enough separation between the two values, a smart investor can snap up bargains with the comfort that a margin of safety can help protect them in the event of a downturn.

An essential element of Graham’s concept of margin of safety is the size of the margin. A small margin gives little room for error, so the margin must be large enough to accommodate errors in calculating intrinsic value. In particular, purchasing a company that is trading at a discount to its asset value gives an adequate margin of safety. The theory is that, worst case scenario, if the company fails and is liquidated, the assets will at least be worth the price paid.

A second essential element of the margin of safety concept is the principal of diversification. Graham recognized that no investor is perfect in his or her decision making, and unforeseeable market forces can cause unfavorable market turns for an investment even with a margin of safety. Proper diversification of a portfolio offers additional protection against these events.

The margin of safety concept popularized by Benjamin Graham is the cornerstone of value investing. Buying investments that trade at a significant discount to their book value, in a diversified portfolio, is what the margin of safety theory is all about.

http://www.Value-Investing-Center.com

In Value-Investing-Center we believe in sharing responsible investing education to people who wants to learn.

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by Chad Surges
How dare the stock market take any money from you!

One of the hardest things to control when you first start investing are your emotions. Revenge trading results when you let your emotions control your trading decisions instead of common sense. When you start trying to hard to get back losses you have incurred while trading by rushing into wild random trades you will have fallen victim to revenge trading.

In my opinion, the easiest way to avoid falling victim to revenge trading is to set some solid guidelines that you will stick to without hesitation.

As soon as you make a trade put in a stop-loss order. Do not rely on yourself to control your losses let a stop-loss order do it for you. To many people fall victim to the old methodology that when a stock is going down it will eventually have to come back up. So they hang to a stock that simply keeps going down and down and down. A stop-loss order prevents this from happening and keeps your losses small so you can use your money to invest in more winners than losers.

When you have a trade that does not go well STOP! To many people, including myself when I first started, feel they have to get right back in the game to make up the losses. Just remember the stock market will be there tomorrow and so will another great stock pick. Take a look at the factors that caused your stock pick to go bad and learn from them before jumping into another bad stock pick. Never let your emotions or anything else make you feel like you have to make a stock trade right away.

When trading stocks you have to not become emotional and be willing to accept that not every stock you pick is going to be a winner. So the trick is to control your emotions and get rid of the losers with small losses and then move on without regret.

For more information please visit: www.lucky-dog-investing.com
Author: Chad Surges
Degree: Bachelor of Science (Business)
Career: Logistics Executive

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by Chris Johnson, IDE
Those who know anything about me know that my approach to forecasting market moves is detecting when expectations are out of alignment with the underlying fundamental and technical pictures. I follow these expectations by watching investor behavior via a number of quantified measures. The result is the ability to detect when investors are likely to move money in and out of the market to reach an equilibrium or balance between their expectations and stock prices.

Those who know me are also aware that I love earnings season. Nothing gets the juices flowing every day more than a healthy dose of earnings reports. Each contains the “seeds of opportunity” that I talked about last week.

The best part is that earnings season has a ways to go. And that means there are plenty of opportunities remaining to take advantage of surprises and disappointments. And as I’ve said many times, knowing the expectations beforehand can go a long way to being positioned properly before the earnings number hits the tape.

Last week’s earnings focus was on the 40 percent of Dow stocks scheduled to report quarterly results. This week, we enter a more robust period of announcements that favors the S&P 500 Index. To put this into perspective, around 250 companies announced earnings last week. This week holds more than 800 reports.

At this point, the implications of a heavier flow of earnings should be a positive as the market moves toward new highs. Barring a sudden shift in the trend of earnings surprises, the market should continue its run based on the unwinding of investor fear and the positive catalyst of earnings reports that outpace expectations (69 percent of the reporting S&P companies have beaten estimates so far).

While the S&P 500 has the highest percentage of companies reporting, the Nasdaq 100 Index (NDX) has a larger number of high-profile companies entering the earnings confessional. The tech-heavy index boasts earnings from the likes of Amazon (huge upside surprise on Tuesday), Sun Microsystems (disappointing forecast), Microsoft, Apple, Qualcomm, and Texas Instruments (bullish forecast boosted the stock). These earnings create volatility and movement. And that creates opportunity.

Given the high-profile nature of the NDX companies reporting this week, I expected to see higher volatility play into the bulls’ hand. And that’s what’s happened. As I put pen to paper (or, more accurately, finger to keyboard), the NDX is up 1.4 percent this week to the Dow’s 0.4 percent, even though the buzz is around the Dow taking out the 13k mark.

Equally as important is the NDX leaving the 1,845 level in its wake. That’s rarified air for the NDX, which hasn’t seen these numbers since July 2001. This breakout should cause those who had been holding out for such a break to capitulate and pour more of their money into the market.

Last week, of course, the tables were turned, with the Dow turning in a 2.5-percent gain compared to the NDX’s 1.5 percent. Just goes to show you what a slate of good earnings results can do for you.

So how is the market positioned as we make our way through the heart of earnings season? My model continues to signal that the market should move higher. Investors now appear to be rushing to buy stocks to avoid feeling left out of the rally. Like auction buyers who realized that they don’t want to let a good opportunity slip away, they’re bidding up prices. That means that there’s an increased chance that we’ll see the market’s rally take stocks to the next level.

Many investors and traders have noted the market’s recent resilience. The number of days that the Dow and other indices have moved lower through the day, only to close in positive territory, is impressive. I refer to this situation as the market having a “built-in bid” on stocks. The term refers to the fact that there are investors willing to step up and buy on a small drop in prices. This is bullish for the intermediate term since it indicates that the demand for stock is greater than the supply.

Looking at sentiment, I’m seeing what is referred to as “unwinding pessimism,” which means that traders are becoming more bullish by moving money back into the market. There’s solid technical support and apprehensions about weak earnings growth is melting away with each new report hitting the wires. Those who anticipated this scenario by noting the high level of pessimism heading into earnings are already in the market. They’re watching their portfolios benefit from those who are rushing back in after staying on the sidelines.

If you haven’t jumped on board the earnings rally, it’s not too late. Plenty of companies have yet to report (more than half, in fact), meaning that profits will be available for the taking.

Earnings season is a great opportunity. So are low expectations and unwinding pessimism. Combining these elements could make the next few weeks the best trading environment in 2007. Don’t let it pass you by.

Investor’s Daily Edge (www.investorsdailyedge.com) is a free investment newsletter that’s delivered by email before the market opens. In each weekday issue you’ll receive clear recommendations and practical.

Before starting Johnson Research Group LLC (JRG), Chris worked in the financial services industry as a broker for 11 years and eight years as Director of Quantitative Analysis and Market Strategist with Schaeffer’s Investment Research. Through this work, Chris became an expert at quantifying and studying the behavior of investors and financial markets, market sectors, and indices.

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by Chad Surges
The most well-known investment strategy in the world is the buy-and-hold strategy. The thought is that if you buy stock in a fundamentally sound company, then overtime that stock should be worth more than what you paid for it to begin with. One of the advantages of the buy-and-hold strategy is that the investor does not have to constantly watch his or her stocks. Investors who bought into companies such as IBM and GE in the early days saw their investments rise dramatically year after year without much effort. Another benefit of this strategy is that you will not be paying a lot in commission cost, because you are not constantly buying and selling stocks. This strategy works very well as long as there are more bull markets than bear markets.

Buy-and-hold investors try to hang on to a stock as long as a company remains fundamentally sound. They do not tend to chase stock charts or news. They simply look at the bottom line of the company itself. One of the most successful buy-and-hold investors in the world is Warren Buffett. If you look at many of his investments they tend to be in boring companies as opposed to high-flying technology stocks.

The main problem with the buy-and-hold strategy is it fails miserably in bear markets. Individual investors who hold onto stocks no matter what may find themselves losing everything they have gained if they can not recognize the signs of a bear market. This is brought on by the belief that eventually all stocks they own will have to return back to their original price. The truth is though that many stocks may never return to their past glory thus leaving the buy-and-hold investors hanging onto a huge loss year after year.

I personally have never been a big fan of this strategy, and feel it holds back potential huge gains that can be made with a little more hands on involvement with your portfolio. If you are someone that prefers the hands off buy-and-hold strategy, I still believe it is a must to use stop-loss orders to protect your investments when bear markets occur.

For more information please visit: www.lucky-dog-investing.com
Author: Chad Surges
Degree: Bachelor of Science (Business)
Career: Logistics Executive

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by stephenmorgan
There’s nothing quite as safe as houses — or so they say, but in this climate of the various stock exchanges going up and down is this totally true? Sure, the news about surging housing prices and rising interest rates is never out of the news.

Loads of Home and Property programmes swamp our daytime (and our night time) viewing on the TV schedules and where does this all lead us?

Well it’s a well known fact that most of us have thought that we can all climb onto the property ladder at some time or improve our bricks and mortar assets to realise those ridiculous price levels that seem to be occurring time and time again.

Now they say it’s official. Property is now more reliable than our pension provision (though with the performance of a certain Mr G Brown at 11 Downing street this does not say much) and apparently it is also more reliable than Gold and yes we all knew this last fact that it can be more profitable than working for a living if you are lucky.

The trouble with all of this massive growth in the domestic market for refurbishment and spiralling prices of reselling homes etc is it any wonder that the intelligent and smart property investor is starting to look elsewhere other than good old Britain to make smart gains and returns. But where?

Well there are a whole plethora of reports that say that house prices and property in places like Bulgaria, Croatia, Estonia and even Hungary are returning vast sums of profits for property developers so it would appear that the smart investor is indeed spoilt for choice.

Well if we take a look at how the global property market performed in 2006 we can see where it would appear to be safe making an investment and where it might be unwise.

In 2006 the country that lead the way in the growth of domestic property prices was Denmark with an average appreciation of 23.61% throughout the year. The worst performer was Japan where property prices stagnated and overall the market shrank by 3.88%.

In between the leading contenders for growth prices in Europe were Ireland and France on 15.54% and 14.31% respectively. Elsewhere, in the southern hemisphere, South Africa has lost part of its shine as the growth in the property market slowed slightly to 13.54% (down from 20.62% the year before) whilst Australia and New Zealand had a growth rate of 7.18% and 12.28% respectively.

In Asia, Singapore lead the way with 6.08% growth whilst Hong Kong saw its property surge crash from a growth rate of 23.9% in 2005 to a decline of 3.73% in 2006.

As far as the western economies are concerned the “sleeping elephant in the room that no one wishes to acknowledge” so to speak is the USA. In the USA, where the housing market has been on a “bull run” since 1995 the market is starting to soften and how this affects the rest of us remains to be seen.

So to sum up it would appear that yes there are bargains and profits to be made still in property but you need to know where to look and when to move.

Stephen Morgan writes about a number of Internet based issues such as Real Estate Investment and Real Estate Marketing. A keen proponent of all aspects of free and independent services available, he advises clients to look at the whole mix of online services available.

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by Praveen Ortec
Day trading is regarded as the most vigorous trading practice. It is the buying and selling of financial instruments within a day so that at the closing of the market the trader have no open positions. Day traders by virtue of their trading practice are free from overnight risks and also benefit from not paying any margin interest (normally margin interest applies to trades having open overnight positions). Day trading is a risky practice where traders trade financial instruments for very small price differences and require substantial concentration and mental strength.

Day trading can be scalping or momentum trading. Scalping is the practice of buying and selling of any type of financial instrument in large quantities with in seconds. Scalpers are generally institutional traders or mutual finds who trades for minute price differences. Their profit mainly depends on the quantity of the trades done each day. Momentum trading is the practice of trading according to the market trend. Momentum traders are the normal individual traders looking to profit by buying when the market goes down and selling when the market goes up. Some other popular day trading strategies include rebate trading, range trading and news playing, etc.

The popularity of the day trading now a days comes from the electronic boom, which made market data and market access available to all one around the world. Today, most day trades trade their choice of market from their own home using a direct access trading platform, the trading system, installed on their computer. They are affiliates to specific day trading brokers who provide them the software and a trading account that qualify them to trade on respective markets. The broker collects margin from traders and deposits on financial market and also keep record of the trader’s trading activity and account details.

Real-time market information is the lifeline of day traders; any small delay can cause them huge loss. They get those through their trading platform, as graphs or tables. Many trading systems will have customizable alerts and triggers to notify trader about a major change and automate the trading practice according to the change. These trading systems also will have many technical analysis tools and market indicators to help traders in picking suitable stock, options, futures or currencies for trading. Remember that there are web-based trading platforms, mostly free, are available for trading, but only stand alone (direct access) systems are recommended for day trading.

Praveen Ortec works for NobleTrading.com, a discount broker providing online stock day trading on 4 different online day trading systems . Checkout this online broker comparison table.

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by William Jones
A High-risk merchant account is a merchant account service provided to internet merchants that have been declared “high-risk” by Visa and MasterCard. This is owing to the nature of their businesses, that have a high credit rate or a high turnover but also, an increased risk of fraud and chargebacks.

Characteristically, it’s very hard for high risk and non-US businesses to obtain a merchant account. High risk merchant accounts offered by different service providers allow International Merchants to privately process their credit card transactions and have the proceeds sent to an offshore bank account. The fees are higher for offshore/high risk credit card processing.

Credit card processors are likely to reject you if your business is considered high-risk. The aim is to locate a credit card processor that gets you approved and has you up and accepting credit cards quickly and efficiently, with either a high risk merchant account or an international merchant account.

Examples of high risk merchant accounts include pharmaceuticals, telemarketing, infomercials, travel industries, online dating, replica, gaming etc. Some of these are considered more high risk than others.

High risk merchant accounts are available with international banks. A merchant has to do the following to obtain a direct account if their merchant account is considered high risk:

1. Incorporated in the bank’s jurisdictions (this requirement is based on credit card operating regulations)
2. Have 6 months of existing processing history (preferable the last 6 months)
3. Chargebacks in the last 6 months must be less than 1 %.
4. Pay the required set up fees
5. Provide principal’s passport, business incorporation documents - some jurisdictions require a local nominee director’s passport and a utility bill of the nominee director. This is done to avoid cross border issues.
6. The merchant website has to be in compliance to Visa and MasterCard requirements

These merchant accounts can also be classified as offshore high risk merchant accounts, international merchant accounts, and high volume merchant accounts.

The other option if you do not have processing history and you do not want pay the expensive of incorporation in the bank’s jurisdiction, you can always get a third party merchant account. A third party merchant account’s underwriting is less stringent and is set up much faster than a direct account.

William Jones is the author of this article on high risk merchant account.If you are having challenges obtaining an international merchant account for Internet or mail/phone order transactions, we can help. Our address: 5715 Will Clayton, Suite 3136, Humble, Texas, 77338, U.S.A.

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