Business Finance Articles

Your First Financial Choice....

Denis Woods

Is There a Price Cap for Payday Lending in the US?

Last Updated:

Recently, a number of states have moved their cap for the interest rates of payday loans. This has been done in an attempt to help protect the loan’s consumers from struggling or becoming too overwhelmed with repayments – this type of lending traditionally having a bad reputation as high-cost.

There are price caps for payday lending across the US, with many Nabraska voters calling for a cap on payday loan interest rates throughout the state to 36% last November (2020), while this January, Illinois also passed a bill to cap consumer loan rates (including payday loans) at the same 36%.

However, it’s important to note that not all states cap payday loan interest rates the same. In February 2021, CNBC reported the following states as having their payday loan interest capped at 36% or lower:

  • Arkansas
  • Arizona
  • Colorado
  • Connecticut
  • Georgie
  • Maryland
  • Massachusetts
  • Montana
  • Nebraska
  • New Hampshire
  • New Jersey
  • New York
  • North Carolina
  • Pennsylvania
  • South Dakota
  • Vermont
  • West Virginia

For other states, the interest can be substantially higher than this cap.

Why Is There a Price Cap for Payday Lending Throughout the US?

Price caps have been placed on US payday loans to help prevent borrowers from becoming in over their heads with the management of such loans.

Payday loans are traditionally high-cost and have developed a bad reputation in recent years. Some claim that this is down to the lack of regulation throughout certain US states, which led to companies practicing at questionable, and incredibly poor standards – overcharging their borrowers and not being clear enough regarding loan repayment fees.

Thankfully, in 2021, this industry has undergone significant improvements, with strong regulations having been put in place in such US states as follows:

  • Alabama
  • Illinois
  • California
  • Florida
  • Iowa
  • Texas
  • And more…

Many lenders now are required to hold stricter practices when lending, helping to protect their borrowers and preventing the poor, damaging standards of the past from being repeated.

Payday Loans – What to Consider

When wanting to take out a payday loan, there are a few important things to consider – the cap on lenders’ interest rates in your state being one.

As previously mentioned, there are a few states that have introduced interest caps for payday loans at 36% or lower. However, it’s important to check the cap that applies to your state, and therefore that which will apply to any payday loan you take out in this state.

It’s also important to check that the state you are wanting to take the payday loan out in actually enables you to take out the amount of money you wish to borrow, and for the length you wish to borrow it for.

Another vital thing to consider with payday loans is whether you need to take one out. Payday loans, as their name suggests, are traditionally known for being used by those who need access to cash before their next payday arrives. They are also known to be taken out during unexpected emergencies, and should never be used as a long-term solution to deeper financial issues.

Payday loans are intended as a short-term means of borrowing money, that borrowers know they can afford before taking them out – and should be kept as such.

Financial Tips to Remember While Starting a Business

Last Updated:

Are you baffled to choose the right plan for your business success? If you’re struggling to stand up with a new business in the market, you should learn a lot before making any decision! I am sure stepping into this fast world is no less than a roller coaster where every entrepreneur is fighting for fame. Similarly, you will also see yourself spinning around different ideas and best plans to kick start your project. Know that proper financial planning will lead your initiative towards victory. So, you should grab some tips and tricks while processing, right?

This article will highlight all the essential points that count as the best to support your new business. Keep on reading the best financial tips to comprehend all of them!

Commence with Your Master Planning Skills

There is no point in investing a lot of money when you’re not starting by sketching a detailed business plan. It’s a necessity! A passionate business person should first build up master plans to fight uncertain challenges. Your work statement should be appropriate enough to present your business goals, reach your objective, accomplish project deadlines, and build financial stability, etc. The struggle doesn’t end here. If you are fully confident to commence the best plan, make up your mind to spin around if needed.

Rationally Direct the Business Revenue

Then comes the next step, where most entrepreneurs do not put effort and fail at succeeding. Investing a considerable amount isn’t sufficient to receive project outputs, but there are numerous other factors to consider too. One of them is managing the business revenue. You should always be informed of your outgoes and how your team is utilizing your project budget. It’s just like putting your company at stake if you do not direct the cash flow. Despite acquiring the best project plan, you’ll one day run short of expenses if things went on this way. So, create a money chart & carry it out.

Utilize the Best Accounting Software

Most small-scale companies find it challenging to manage a full-time auditor to deal with all project expenses. We understand that this may be out of budget for most starters. Here, one can consider this tip as a piece of superb practical advice for small business owners. If you are low at resources but want to keep your expenses under observation, grab the best accounting software. It is the most convenient way to organize your costs while keeping a check on your business revenue. Soon after you think your business is growing and becoming more complex, you can hire an expert then!

Select the Best Working Team for Your First Project

An experienced working staff has a significant role in flourishing your company. Besides interacting with top-class mentors and business planners, you should engage with finding the best working staff. Go for the people who are equally talented and passionate about running a business as you are. You will observe the apparent positive changes in your office environment by surrounding it with a determined team. Try to gather them in a friendly environment to open up themselves to offer the best ideas, thus, accelerating your organization’s growth.

Do not Quit Your Job (If Already Designated Somewhere)

Make one thing clear in your mind that success is not a night story! You can never achieve what you want in a day or two, so never stop struggling. If you are already employed in a particular company, do not quit the job there. At the same time, continue growing your business step by step with full enthusiasm. You might feel it very tough initially, but as soon as the business starts giving outcomes, it’ll motivate you to do more!

Emphasize the Customers’ Demands

There is no business success by ignoring what customers want. The quicker you’ll realize customers’ demands, the better it will be for your company. However, it isn’t easy to look after every request and fulfill it in terms of time and money. An excellent way is to pick the most-liked projects or products by the clients and build your budget to process accordingly. That’s another critical tip to stabilize your project and achieve ratings at the same time.

Set Your Economic Aim

It is necessary to set a specific economic aim. The purpose of fixing an objective is to reach the set mark with ease and determination. You can specify your daily, monthly, or even annual financial targets to stay focused and make alterations if required. It will help you hit your desired goals with efficiency.

Set a Particular Annual Budget

Some entrepreneurs who ignore annual budgets and keep on spending on goods face downfall. So, you always ensure to set a particular yearly statement to manage your overall expenses with comfort. If you know you have a specified amount to utilize for an entire year, you will limit your expenditures, resulting in an enhanced output ratio.

Improve Your Financial Status by Branding

These days, social media is playing a fundamental role in promoting brands and boosting sales. You can follow up on some of the best creative ideas and design your company logo for branding purposes. The more wisely you invest, the more you’ll receive. Another option to gain success is by spreading your business through social accounts, like Instagram, Facebook, etc. It will help you attract more customers with fabulous graphics used.

Final Words

There is no end to accomplishing business goals. You’ll see yourself reaching your financial targets and still think it’s not enough. So always work hard to attain more and more! Following all of the above financial tips along with your personal experience will help you grow your new business.

A Young Professionals Guide to Saving For Retirement

Last Updated:

The idea of retiring may seem too far away to take note of in your daily life — especially as a young professional. The reality, however, is that preparing for retirement is a long process and should be taken seriously as early as possible.

Budgeting as a whole is a challenging process for most working professionals, regardless of their age. Understanding where to invest and how to allocate expenses takes time and practice. Many are still trying to understand how to maximize their income, often looking for a payday loan in Manitoba or wherever they choose to live, to ensure current expenses and future investments are taken care of.

Planning for retirement is an essential part of this process, one that should be taken seriously from the moment you can contribute your income.

Let’s discuss the resources and benefits available to young professionals as they build their retirement plans.

Choosing the Right Account

One of the significant mistakes young people make when saving for retirement is not utilizing the correct accounts and losing out on crucial investment potential. Some investors choose to go through mutual funds, while others prefer fixed annuities. Generally, advisors will suggest a diverse portfolio — and since those funds are staying put for the next few decades, you have the time to ride the stock market’s highs and lows. In the end, you’ll have a maximized portfolio, and you can live comfortably in retirement.

Employer-Matched Contributions

If you’re working in a professional setting, your employer will likely have a program where they’ll match your pension contributions. Employers typically offer three to six percent of your current salary — although every company will differ. If you take the time to research your options, you’ll find several resources available to help put you on the path to a healthy retirement plan. Set a meeting with your superiors to discuss your options to not lose out on potential contributions.

Automated Savings & Investments

Choosing to automate your finances is, overall, a wise financial decision. If you have the income to delegate to each fixed expense, you have more freedom to focus on the other essential areas of your life. The act of automating retirement savings has been known to help young professionals save more money long-term. Without the need to contribute manually, you’re committing to a set monthly payment.

Use an App

Mobile apps are an essential part of our experience with smart devices — from games to fitness trackers, the categories are becoming more diverse with each passing year. When it comes to organizing your long-term finances, mobile financial apps can help working professionals.

Sometimes, taking control of your finances requires extra assistance. There are several budget apps on the market that users can take advantage of, especially when managing retirement contributions. The earlier you can start contributing to your retirement, the more financial freedom you’ll have to experience life. Apps offer a sense of convenience to our everyday lives. With the help of a financial app, you’ll find the motivation you need to achieve your long-term goals.

Why Should You Choose a Home Loan over a Personal Loan?

Last Updated:

People need loans for various reasons, such as debt consolidation, mortgage refinancing, home improvements, vehicle purchases, paying for weddings, medical bills, higher education, and other expenses. Ideally, one looks for a fixed low rate to navigate an unexpected financial burden or a planned purchase. There are multiple ways to obtain loans at low interest rates. Continue reading this article to find out why personal loans can be a risky option for an individual. 

Personal Loans: It is suitable when one needs a specific amount of money for a fixed interest rate to be repaid over a predetermined period. However, they have the highest interest rates amongst all types, ranging from 5.95 to 35.99% over 2-7 years.

Depending on the lender, the maximum loan amount ranges from $10,000 to $100,000. The rate depends on several factors such as debt ratios, credit score, transaction history, annual income, and so on. Hence, it is hard to qualify for this loan as one has to control so many variables. Moreover, extra fees or prepayment penalties plague the process, and origination fees are required upfront.

A personal loan is unsecured. Hence, if you default on this loan, there will be consequences such as irreparable damage to your credit score. In New Jersey, a hefty late fee is added each time a scheduled payment is not made and funds are automatically withdrawn from the linked account. As a last resort, you may be assigned a debt collector, who will make frequent calls and send collection letters. If all attempts failed, the case will be turned over to a professional debt collection law firm.

At last, a civil lawsuit is filed, and any negotiations beyond this point are impossible. This way, the creditor can ‘secure’ the loan through the court’s judgment. The court judgment, along with all negative information, can remain on the credit report for up to 7 years.

So, if not personal loans, which methods should one trust? There are multiple options to go through, but the most affordable option is Home Equity Loans.

Cash-out mortgage refinancing: When mortgage rates fall, one can take a loan higher than what he currently owes and receive a check for the difference. This way, by refinancing their mortgage, one can tap into their home equity. However, such situations occur randomly, and mortgage rates are too volatile to trust this option for large amounts.

Reverse Mortgage: Known as home equity conversion mortgages, they can be used by those aged 62 and above to turn the residential value into cash. However, this puts a burden of repayment on the heirs and puts other occupants at risk. Steep up-front costs are also required, including lender fees, mortgage insurance premiums, and settlement costs.

Get Home Equity Loan: Unlike the above alternatives, it has the advantage of a single monthly repayment at a low rate, with no hidden charges. It is a fixed-rate loan with the house as collateral. One receives the entire amount upfront and can pay it back in small monthly installments over a while. 

  • Before applying, ensure that you have a good credit score and the necessary home equity stake. Although similar to HELOCs, this is a fixed-term loan with an interest rate locked at the starting. Moreover, it does not have a set draw period ensuring maximum flexibility. On the other hand, HELOCs are restricted with spending limits and variable rates.
  • This is the easiest to qualify as it is a collateral-based loan. The higher the equity, the larger the loans one qualifies for. According to the Federal Trade Commission, one can borrow up to 85% of total home equity.
  • If you opt for a home loan, check out the specific state laws and rates regarding the loans. Homeowners in New Jersey may look for home equity loan rates in NJ for a home loan to solve financial problems.

Lenders provide competitive terms and flexibility specifically for home equity loans. Thus, compare your financial situation and the market rates to make the right decision by choosing home equity loans.

How to become a home-based Stock Trader

Last Updated:

If you’re thinking of starting to trade in stocks, but aren’t ready to give up the security of your day job just yet, here’s the good news! It’s never been easier to get started, and there are many ways you can learn how to trade successfully, without taking huge risks. Let’s take a look at some of the basics.

1. What’s your starting position?

Before you jump in, take time to really analyse why you’re interested in stock trading. What are your long-term goals – financial independence, a more comfortable lifestyle, a hobby which you can enjoy while it earns you extra cash?

How much do you have to invest? Another way to ask this question is: how much can you afford to lose without a negative impact on your life?

Next questions: how much time do you have and how much effort do you want to put in?

Are you interested in learning about the markets? Or are you willing to pay a bit more to rely on the professionals making money for you?

2. Select your online broker

There are plenty of stock trading platforms available, many of them with a very low entry point. A quick google search will identify a list of top free stock trading apps. These allow you to operate a training account, with an opening balance of several thousand ‘virtual’ dollars, so you can get a feel for how it all works, without risking your own money. Share prices rise and fall in real-time, so you start to understand the workings of the markets.  Give yourself a time limit and assess whether your starting balance has grown or if you’ve actually lost money.  

3. Start Small

The golden rule when you’re entering the world of stock trading is to start small, and, as your profits accumulate, grow your investment. Unlike higher-risk day trading, most shares take time to create returns, so you’ll need to be patient and ready to sell when the time is right. Traders typically fail because they are too reluctant to let go of shares that are losing value, for too long.

4. Diversify your Portfolio

If you’re entering the market with, say $1000, it can be hard to create a genuinely diversified portfolio, but by doing so you’ll ‘hedge your bets’ – when one stock is not performing well, others, which are doing better, can protect the overall value of your investment.

5. Are mutual funds a good idea?

If you want to invest,  but aren’t confident that you have enough knowledge to make wise decisions, mutual funds solve two problems. First, they’re managed by experienced professionals with access to a tremendous amount of data, and secondly, as they involve a ‘basket’ of investments, they spread the risk. Also, it’s sometimes possible to buy into a mutual fund with a monthly payment, rather than by investing a lump sum. So yes, in general they are a great investment option.

Investing in shares can be rewarding in many different ways – just take time to understand what you want to get out of it, and you’ll be most likely to make the right choice. Good luck!

New to Finance? Learn About Data Rooms

Last Updated:

If you are new to the world of finance then there will be much to learn about. The financial services market alone is expected to be worth $26000 billion within a year and the need for security is higher than ever before.

The internet has made business easier and faster to conduct but it has also raised the need for a new type of security. Hackers and cybercriminals make money by stealing information or extorting cash from individuals and businesses. It is this combination of new technology and modern crime that means the finance industry needs to have secure processes in place.

One of the ways that companies can keep their sensitive and important data away from hackers is to use data rooms. These secure virtual rooms allow records to be shared between clients and other authorized users while keeping the information safe.

Anyone working in finance should learn about data rooms and what their functions are.

What are virtual data rooms?

In the past when a company wanted to perform due diligence during a merger they would use a secure data room where all the necessary records would be kept. Only authorized people such as the seller, the buyer, and legal representatives would be allowed access.

The problem with these rooms is that they take up space, are costly to run, and create a lot of hard copy. The solution to this is the virtual data room.

Instead of having a physical environment where records are filed away, you can use a data room to store information in the cloud and allow it to be accessed remotely from anywhere in the world.

There are many reasons why a business should invest in cybersecurity and keeping documents out of the wrong hands is one of them. Virtual data rooms are routinely used in mergers & acquisitions where any leaks or data breaches could cause havoc with the transaction.

What are the features of a virtual data room?

A VDR will have a front end like any other piece of software and depending on which provider you choose there will be different levels of functionality. A typical data room will allow the owner to set up who can access the documents, and what rights they have, redact information, and upload records by drag n’ drag-drop.

Some features you might find on a virtual data room include the following:

  • Unique watermarks
  • Granular tracking
  • Geo or IP restrictions
  • Time controls
  • Redaction
  • Screen-only viewing
  • Access control and recording
  • 2 step verification
  • Security against camera-based attacks
  • Multilingual interface

These VDRs can track who looks at a record, when they look at it, and for how long. If they download it a unique watermark will be placed on the document so hard copies can be traced back to a particular user.

Some of the features of a virtual data room in more detail

Granular tracking

One of the main reasons to use a data room is to control who is allowed to view documents. Granular tracking lets the owner see exactly what those users are viewing.

This feature allows the owner to see what records are being looked at and for how long. The granular tracking feature lets the owner see which particular parts of a document seem to be important to the other party and can help greatly when looking to complete due diligence.

Time and IP controls

These features allow the owner to limit which IPs can access documents and also for how long. If you were controlling a data room, you may wish to limit the amount of time someone was able to view a particular document.

Screen-only viewing

With so many devices being able to access the internet these days it is important to understand the ways you can boost IoT security. One nice feature of VDRs is the ability to make the records screen-only viewable. This means that they cannot be downloaded without the correct permissions which in turn reduces the number of hard copies that can get ‘lost’ or go missing.

Multilingual interface

The finance market is a truly global industry and virtual data rooms help transactions run smoothly by being available 24/7 every single day. However, this would be of no use if no one could understand how to use them and good VDRs now come with several languages for users to change to. Common languages would include many from Europe along with Japanese, Korean, and of course, Chinese.

What is the difference between a virtual data room and a cloud storage system?

You might think that a virtual data room sounds much like cloud storage and there are some similarities.

Virtual data rooms store records and information in the cloud, however, they should not be confused with cloud storage systems themselves.

A cloud storage system might be something like DropBox, for example. These storage systems allow for quick file sharing between individuals quickly and securely. They could be used to complete due diligence during an acquisition and they are extremely inexpensive.

A virtual data room is also cloud-based but has far more in-built security and other features. Of course, which VDR you choose will make a difference but many companies will operate to international security standards. Features include granular tracking which means you can see who views your documents, how often, and when it was looked at. You can visit Firmex.com to see how comprehensive virtual data room features can be.

The cons of using a virtual data room might include ease of use. VDRs tend to have more functionality than something like DropBox and so they may seem harder to use. However, the disadvantage of using a cloud-based storage system instead of a VDR is security. DropBox itself was hacked back in 2012 and nearly 70 million passwords were stolen.

Virtual data rooms are simply more secure with more functionality than a standard cloud storage system and when you are dealing with a multi-billion dollar merger, you need full GDPR compliance.

It can also affect mergers and acquisitions…

Using a virtual data room in a merger or acquisition

Due diligence must be performed during any M&A transaction. Indeed, data rooms used to be known as due diligence rooms, although you can now see this is largely all being done virtually.

One of the most important things to look for when making an acquisition or merging is to check that company’s security. By acquiring a company that has had an unknown data breach you could be heading for huge fines, as Marriott International discovered after acquiring Starwood.

Yahoo also had hundreds of millions wiped from their valuation before being acquired by Verizon for a huge data breach that affected billions of users.

Virtual data rooms are ideal for sellers and buyers during M&A transactions. However, the buyer should also be checking what data security they have in place.

Summary

Anyone working in certain fields in the finance world should understand what a data room is and why it is used. Their main purpose may be for mergers & acquisitions but modern VDRs are now being used for much more. They can be used to help an initial public offering or IPO run smoothly or even for project management.

The main purpose of data rooms is to allow only authorized users to access controlled data and keep it safely out of the way of anyone else. Using a good VDR will boost the trust your clients have in you and avoid any nasty fines or bad PR.

Improve your Business’s Valuation in time for the Roaring Twenties

Last Updated:

With the pandemic receding and the prospect of savings-rich consumers driving business optimism to a record high, now is the time to shore up your business and get ready for what looks sure to be the roaring twenties. Gaining investment is a fine first step to doing so, but if your business is hunting for angels, it’s crucial you think smart and act fast to improve your valuation and receive even greater seed money in return. Here’s how. 

Understand your target Market 

Whether your business is being valued on its cost worth (the investment that’s gone into it), current and projected income, or market value, all these are influenced by one fundamental: understanding your customers.  

By knowing your target market inside out – their challenges, wants, needs, aspirations, personalities, and more – you can hone your offering and meet their needs, growing your customer base in kind. More customers equals greater profit, which makes you more valuable to investors. 

Invest in Processes

There are millions of businesses in the world, but the thing that holds most of them back from big, bright things is often their processes.  

If a business operates inefficiently, with few proper processes or far too many, then its growth will be hampered. Instead, analyze the way your company operates, identify areas within the business that are inefficient, the devise ways in which these inefficiencies can be tackled. 

This also demonstrates an important thing to investors: scalability. If your processes are slick and can be expanded easily, then your business is less likely to experience growing pains on receipt of the investment. A win-win for both parties! 

Gain professional advice

While you may have built your business from the ground up alone, that doesn’t mean you have to navigate the challenging task of boosting your valuation alone. By enlisting the help of a corporate finance specialist, you can gain access to helpful information and experience on how you can best improve your value. 

While their assistance will require investment, their insights can give you a competitive edge against your peers, and if you end up receiving a larger valuation, can certainly be worth the money. 

Report Everything

When applying for investment, your business must become translucent to potential investors. If you are unable to provide accurate, in-depth information about how every aspect of your business operates, you will scare away any investor worth their salt. Conversely, if your investors do not ask for this information, then you should seriously doubt their credibility.  

That means keeping full financial records, as well as records relating to the development of your products and services, your business plan, market research, and more. That way, when the daily questions of would-be investors start appearing in your inbox, you can quickly and confidently respond.

Steps for Preparing Effective Oral Presentation

Last Updated:

The essence of language lies in the living utterance. “Speaking before the people is a feat that few can play. Speaking is very often second forth of facts and principles assumed to be true.

In such a way as to best appeal (Attraction) to the listener’s living utterance.

There are two methods of appeal (attraction).

  • Appeal to the intellect
  • Appeal to the emotions

Written words can never make quite the same appeal to the hearts of men as spoken words because here the whole person is involved.

During your career in the business world, you will have to give various kinds of oral presentations. Indeed, Communication skill is Important. There are essential parts of communication in any organization.

For this purpose, you need a strategy for positive results. The upfront preparation you do increases the confidence you will have before a group.

The Steps Improve Confidence in Presentation

Determine the Purpose

We communicate to produce a result on the macro level. These overall goals are to inform, to persuade to entertain. The basic goals are to clarify and secure understanding.

Briefly, at the end of your message, you must hope that your listeners have a better understanding of an idea, issue or a process.

Going, willing acceptance of an idea is core to persuasion. Here your purpose is that after you have finished your presentation listener may accept your proposal your claim or idea. You must hope that they will do as you asked them to do.

Analyze the Audience and Occasion

Whether you speak or write the message must be adapted keeping the audience in your view. You must have some idea of the calibre and quality of your audience to whom you are going to communicate.

But it becomes difficult when you are going to speak to the people outside the organization. Even then you must think about the factors of age, group, goals, occupation and other things that and you can perceive at the occasion.

Select the Main Ideas for the Message

First of all, you must finalize the core idea of the message. You must be clear on which topic you are going to speak. All supporting material must be relevant to the core idea.

There should be no confusion about the topic and theme should be unified. Your message should be a complete whole not a disorganized and scattered matter. You can achieve it with 7 C of communication.

Research the Topic

It is understood that you have not all the necessary information related to the topic. As in writing you collect. As in writing, you collect ideas, facts, data, information then you finalize and drop some of your initial ideas.

You may add fresh ideas in your topic. Briefly speaking you must research your topic before delivering it.

Organize the Data and Write the Draft

After collecting the necessary information about the topic you must give some sequence to your ideas.

Create the Visual Aid

Sometimes presentation requires visual aids. But one should not prepare visual aids without requirement.

For example, it would not be odd to visual when speaking about the structure of an organization. Your visual aid must support your core message.

You can also use highly engaging PowerPoint Templates as powerful visual aids to create rich and impactful presentations. They save not only time but also the effort of developing visuals from scratch.

Remember: Good Speech has Three Parts

Introduction

The core motive of all presentations is to be heard by the audience. This can only be achieved if they hear something of their interest or something they can easily understand. Once, you observed the audience. You would have clearer idea.

Three Things “PAL” (Porch, Aim, Layout)
Porch

Porch means your opening remarks. These are your throat-clearing remarks or shortcut.

Aim

Your purpose, Why are giving the talk? How do you clearly express the aim of your speech?

Layout

Your agenda, It is a road map of your speech in which you tell the audience about your purpose of the speech.

The Body

Some people call it the heart of your message. It is the text or discussion you are going to deliver. It shows the central theme or data of your speech.

Briefly, the body explains the main purpose of your presentation.

Conclusion

A summary or conclusion reminds the audience of the main ideas covered in the body of the talk. Whereas the conclusion draws inference from the data. Anyway there should be closing or concluding remarks of a speech

Real Estate Notes: Is It Worth The Risks?

Last Updated:

Real estate notes are a new type of real estate investment product created when parties reach a transaction agreement, giving one party the capital to buy a house or other property. The real estate note holder receives the loan borrower’s payments regardless of who originally financed the property. But are real estate notes worth the risks? 

Real estate notes risks should be identified to find out if this investment is worth it. In this article, you’ll learn more about real estate notes, the risks involved, and the investment advantages.

What Are Real Estate Notes? 

Real estate notes pertain to the loan documents, giving the lender assurance that the borrowed money will be repaid. Investors can buy and sell real estate notes on the open market if they want to cash in on the loan repayment. 

Types Of Real Estate Notes 

Investors can sell real estate notes from the loan agreements of different real estate financing instruments. Each real estate note document covers the terms of loan repayment of a property purchase. Aside from residential properties, real estate notes are also available for commercial and industrial properties, making notes worth the risks for a diverse real estate investment portfolio. 

They are as following: 

  • Promissory Notes: A promissory note refers to a financial instrument containing a written promise by the real estate note’s issuer to pay the payee a sum of money at a specified future date or on-demand. 
  • Deeds Of Trust: It’s essentially an agreement between a borrower and a lender, giving the property to a trustee or neutral third party. The trustee holds the real estate property until the loan borrower pays off his debt. The borrower keeps the equitable or actual title to the property during the repayment period. Also, the borrower is responsible for the premises unless the Deed of Trust stated otherwise. The trustee holds the property’s legal title. 
  • Land Sale Contracts: Instead of borrowing money from a bank or a lender to buy a real estate property, a buyer makes payments to the seller or real estate owner until the total price is paid in full in a land sale contract. 
  • Contracts For Deeds: This legal agreement applies for the sale of a real estate property, wherein a buyer makes payments and takes possession while the seller holds the title until the purchase price is completed. 

Risks Of Real Estate Notes 

In real estate note investment, there’s a risk that the loan borrower will default. There’s a danger that the borrower stops paying. So, the note owner may end up suing the borrower or pursuing foreclosure. However, real estate notes can perform better than savings and certificates of deposit (CD).  

Smart investor research on each real estate note, uncovering the following: 

  • The real estate property’s value 
  • The borrower’s payment history and credit rating  
  • The complete details of loan documents 
  • A backup plan in case of default payments 

Top Reasons to Invest in Real Estate Notes 

It’s so easy to turn away with the idea of investing in real estate notes because real estate properties are tangible assets. But if you come to realize the benefits of investing in notes, your first impression can change. 

So, what are the reasons why you should consider investing in real estate notes? Here are the reasons why you should invest in real estate notes: 

  • Higher ROI: Real estate notes provide higher return rates than bank accounts and other investments, ranging from 7% to 9% for long-term loans and 12% to15% for short-term loans. Short-term loans are usually availed by investors flipping properties. 
  • Steady Passive Income: You purchase the whole mortgage amount in a real estate note, so you’ll continue to receive money (payment plus interest every month). If the property owner refinances or sells within five years, you’ll enjoy an early payoff. 
  • Guaranteed Investment: Real estate notes are backed by real property, so you can recoup your funds by pursuing a foreclosure or selling the property.  
  • Convenient Investment: Real estate notes are easier to manage as compared to rentals. You won’t need to face what landlords usually undergo, resolving all kinds of tenant issues, including eviction and tenant communication. Also, you don’t need to deal with maintenance and contractors. So, it’s worth investing in notes in which you own the loan instead of the property. 
  • Work With Investors: Real estate notes investment allows you to work with homeowners and investors, not renters. Buying notes means you’re accepting payments from a homeowner with an emotional stake and equity in the property. This connection makes real notes a safer option than rental properties. 

Important Considerations 

When making a significant real estate investment, it’s crucial to obtain multiple quotes for real estate notes before entering a transaction. Consider a red flag if the real estate note transaction involves upfront fees, or a borrower refuses to run a credit check. Ensure a written agreement for the sale transaction, stating the processing time on repayments before you agree to a sale. 

Buying and Selling Real Estate Notes 

You can invest in performing real estate notes, in which the borrower makes consistent loan payments, giving you a steady passive income stream. If you’re knowledgeable about the collections process and know effective exit options, non-performing real estate notes can give higher profits than performing notes. 

If you want to sell your real estate notes, you can promote this investment product in various investment listings with a brokerage firm or a capital financing firm. You relinquish to the buyer of the notes the rights to collect payment based on the loan agreement. 

Conclusion 

Real estate investing is promising. Instead of managing a property, you can invest in real estate notes and receive repayments as the note holder. While there’s a risk of the borrowers defaulting on their payments, you can avoid this from happening by conducting thorough checking.  

With real estate notes, you can expect higher returns than bank account savings and CD. Get the chance to own a real estate investment without worrying about landlord responsibilities. Hence, to conclude, real estate notes are worth the risks.  

5 Reasons To Open An Offshore Trust Account For Your Business

Last Updated:

Keeping your money in banks outside the country was once perceived as dubious. Usually, as seen on television or news, the ones who normally keep their money overseas are businessmen doing illegal transactions. However, opening an offshore trust account is completely legal.

There are a lot of reasons why it’s beneficial to keep your money overseas. Also, if you have a business and you’re planning to expand globally, having bank accounts in other countries will surely give you an edge.

What Is Offshore Banking?

Offshore banking refers to the act of opening a bank account outside your home country. Another way of referring to it is using international banks. Doing offshore banking seems to be daunting, knowing mostly rich people only do it. It gives people the notion of providing a huge amount of money to open an account overseas. 

However, even normal people are welcome to do it. One of the examples is American citizens who open bank accounts in Canada. 

Moreover, it’s legal to have an offshore bank if you are practicing the following:

  • Staying in a foreign country for years or months
  • Investing in a foreign country
  • Doing business overseas
  • Having required overseas documents

Reasons To Open An Offshore Account For Your Business

Having a foreign trust account could bring more benefit to your business than harm. Here are some reasons why it’s best to do offshore banking:

1. Financial Safety And Privacy

People are cautious in keeping their details private. Some even don’t want their basic information known by the public. A lot of influential people take their privacy seriously since their reputation would be at stake, especially when it comes to finances.

While offshore banking has been used by some people illegally, this should not be generalized. A lot of people are using it merely because they have a business in a foreign country or they have an investment. 

Your safety could be put at risk if banks in your home country don’t put a high premium on their client’s privacy. For instance, there are banks whose customers’ details could easily be infiltrated, leaving customers being flocked with spam messages.

Opening an offshore trust account ensures protection from potential threats in your country, and it isn’t that hard to create one. You must research first the banks that can provide the service and read their requirements. You could also hire companies that will transfer your business trust account to an offshore account like the Titanium Trust and other reputable institutions. 

You can easily keep your business trust account private and secure from creditors in case of lawsuits. Your business finances will then be safe from being examined by such.

2. Lower Your Political Risk

The government has become one of the potential risks to your savings. When the government doesn’t know how to handle finances well, people suffer. Some destructive measures are seen in several countries that the government isn’t functioning responsibly. Some of the problems are bank deposit taxes, retirement savings nationalization, and capital control.

While these may not be happening in your country, putting your money in international banks provides safety to your finances and will help you secure your finances from politicians who are taking advantage of their power.

Having offshore banks will keep you from having your assets and finances taken away. When you open an account overseas, it gives you a sense of security as you can access it anytime without worrying about authorities from your country.

3. Services

International banks also provide exceptional service to their clients as they assign you a customer representative or relationship manager to attend to your needs any time of the day.

Likewise, you can access your account all year round. Thus, you don’t have to worry about it even if you’re not visiting the physical bank. Having international clients that are wealthy and influential, offshore companies make sure their services are exceptional.

Offshore banks make sure you’re provided with the strongest financial protection as they follow anti-money-laundering protocols, especially on an international platform.

4. Tax Relief

There’s a possibility of being taxed enormously when you open an account in your country, depending on how much your transactions are. On the other hand, opening an account overseas offers a more favorable tax arrangement.

Being a foreign client, tax is charged partially only. You could have more investment freedom as the rules in your country don’t necessarily apply to them. This will provide added value for your money. You can save more in an offshore trust account and use it as an investment for other businesses.

5. Invest In Overseas Or International Markets

Saving you from potential crises or setbacks with your investment is also one of the advantages of using an international bank. When your home country declares a recession, your business funds won’t be thoroughly affected if you have an offshore bank as it is beyond your country’s sovereignty.

These international banks have portfolios spread across the region, and they make sure every investment is balanced. This becomes an advantage when one area suffers from financial instability. However, there are still other markets for your investments that may not be directly affected, enabling you to still operate your business even when your home country is in an economic crisis. For established offshore institutions, their transactions are usually stable.

Conclusion

Keeping an offshore trust account for your business can be one way to manage your business finances better as it has certainly a lot of advantages. While it may seem intimidating to open an offshore bank account, having your hard-earned money safe from being taken away or stolen will put you at ease. 

Likewise, the money you put as an investment in offshore banks will provide you a greater return of income. This will add to your finances aside from getting an income in your business. Also, it provides you further opportunities when it comes to your transactions. Expanding your business’s reach through opening an offshore trust account is a great way to start investing internationally.