Financing Your Way To Retirement

Rest assured, there are more people just like you. Financing can be frightening.The goal of this article is to show you some real life examples of people just like you who found the success they dreamed of, by selecting the financing option best for them.

All of the following are true stories.

A HELOC is a mortgage loan, usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion up to an amount that represents a specified percentage of the borrower’s equity in a property.

Owning your own home provides you with your first source of creative financing via a home equity line of credit.

Case Study

When Greg first thought of investing in real estate, his first order of business was to buy a home. Greg knew that this was a huge first step in unlocking his investment potential. He found a home that he knew had great rental cash flow potential. Because he intended to use this home as his primary residence until he found the next one, Greg was able to lock in a great financing rate. He then took out a home equity line of credit for $10,000 and used that money as a down payment on his next real estate investment. He moved into the new one and then rented his original home. Greg continued this process over and over, and in two short years, his rentals were cash flowing over $2,800 a month.

Even though traditional lenders disapprove of using Borrowed Funds as down payments, using credit card funds works well with seller financing or lease options.

Case Study

Liz found a home for sale with an asking price of $60,000. The seller was willing to carry the financing with only $3,000 down. After analyzing the property’s expenses and potential income, Liz knew that the home would produce a $200 per month positive cash flow. She wanted to take advantage of the easy seller financing, but she did not have $3,000 saved up for the down payment. She was about to give up on the deal when she remembered the Visa card that she kept for emergencies. It had a credit limit of $4,000, but the cash advance limit was only $2,000. She decided to be assertive and call the Visa company to see if there was anything else she could do. She told them that she needed a $3,000 cash advance and requested a limit increase. They sent her a check for $3,000, which she used as the down payment to purchase the property.

A Lease Option agreement can give you the option to sublet the property and realize instant cash flow. When you sign a lease option agreement for this purpose, make sure that the contract doesn’t restrict you from subletting the property. Because you have signed the lease, you are the lessee or the renter. By re-renting the property, you are subletting.

Case Study

Terry was unable to obtain bank financing due to the unpaid credit obligations that appeared on his credit report. He was determined to not let his poor credit stop him from investing in real estate. Instead of offering to purchase a seller’s property right away, he asked the sellers to agree to a lease option. He was able to obtain lease options on five properties in the course of two years. It was a good deal for the sellers of the property because they didn’t have to worry about the costs to own the homes, and they knew that at the end of the agreed term, they would have a buyer for the property. It was a good deal for Terry because he was able to cash flow $200 per month from each property. He applied this money to his unpaid credit obligations until they were paid in full. By the end of the lease option term, Terry’s credit was in good standing. He purchased the properties with bank financing for the amounts he had previously agreed upon. The real estate market had risen since he first initiated the lease options, so he also earned some additional equity due to the appreciation.

Seller financing is a great way for someone to sell their property if they do not need a lump sum of cash, are not interested in using the profit to purchase more real estate investments and want to avoid large capital gains tax. When you are out there buying real estate and making a name for yourself as an investor, deals will come to you whether you are looking or not. It is not uncommon for an investor to purchase more properties from a previous seller.

Case Study

Luke saved up $5,000 that he used as a down payment to purchase one of Don’s rental properties. Don seller financed the remainder at a 7 percent interest rate. Luke ran the property well and cash flowed $300 per month from it. Because Don did not realize all of his profit from the sale immediately, his capital gains tax burden was lessened. He also enjoyed the monthly cash flow the properties still produced for him without the obligations of ownership. Don owned 10 other rental properties that he wanted to sell with seller financing as well. Because his experience selling to Luke had been a positive one, he offered the properties to her first. He was interested in purchasing all of the properties but he did not have an additional $5,000 per property for a down payment. Because Luke had already established a track record with Don, he decided to sell the properties to her with no down payment and seller financing at 7 percent. Luke averaged another $300 per property per month in positive cash flow.

Not all loans permit a seller to sell his property without paying off the existing financing. Most loans have a Due on Sale Clause that gives the lender the right to call the loan due if the seller sells his property. Be careful that you understand the terms of the existing financing when buying a property “subject to” the current liens. If the lender calls the property due, you usually have 30 days to obtain new financing. You want to make sure that you would be prepared if this were to happen.

Case Study

Todd was interested in purchasing a property, but the current interest rates were so high that after analyzing the property’s expenses and income, he realized that the property would produce a negative cash flow. Todd knew that the seller had a loan on the property with an interest rate of only 6 percent. With a rate this low, the property would produce a positive cash flow of $300 per month. He made an offer to the seller to purchase the property subject to the existing financing. The balance on the loan was $20,000 less than what the seller was asking for and Todd only had $10,000 cash that he got from an equity loan on his primary residence. He also offered to use this $10,000 as a down payment and for the seller to carry a second mortgage on the property for the remaining $10,000 at 6 percent interest. The seller preferred to sell his home outright, but he knew that due to the current interest rates it would be a hard sale. He agreed to Todd’s offer for a term of 10 years. This gave Todd ten years to obtain new financing that would pay off the first and second mortgages. Three years later, interest rates had decreased dramatically. Todd refinanced his property, and the seller was paid off in full.

One-hundred-percent financing can easily be obtained when you combine two loans to purchase a primary residence. However, lenders usually want to see at least 5 percent of the investor’s own funds used when purchasing a non-owner-occupied property. An investor’s own funds do not need to be cash savings; it can come from an equity loan on another property of the investor’s.

Case Study

Gary wanted to get started investing in real estate by purchasing his first home. He had good credit but no cash for a down payment. Gary’s loan officer helped him find 100 percent financing without private mortgage insurance obligations. The loan officer combined an 80 percent LTV first mortgage with a 20 percent LTV second mortgage. Because neither of the loans was solely above 80 percent LTV, their lenders did not require Gary to take out private mortgage insurance. He was also able to avoid coming into close with extra cash for the bank fees and closing costs by negotiating these fees with the seller through the sales contract.

Principal is not being paid off with interest-only loans. However, the investor may still be building equity due to appreciation

Case Study

Sam owned 10 rentals that produced $2,000 in cash flow. His goal was to retire from his 60-hour-a-week job and start spending time with his family. He needed a total monthly cash flow of $6,000 to retire. The interest rates had gone down since he had purchased his properties, so he hoped that by refinancing them he would be much closer to his goal. After meeting with his loan officer, they determined that the new rates with a fixed 30-year amortized loan would increase his monthly cash flow by another $2,000. This was exciting to Sam, but it still would not be enough income to retire. His loan officer then ran the numbers using an interest-only loan and was able to increase the monthly cash flow to a total of $6,500. Because Sam was more interested in creating cash flow than equity, he decided to refinance his properties with the interest only loan and retire from his exhausting job. The smaller payments of the interest only loan helped Sam reach his goal of financial freedom more quickly.

Raising Finance – Dos And Don’ts Explained

At the moment finance is relatively easy to obtain but this will not always be the case. So many lenders are advertising their services that it can be quite confusing. To find the best offers it is always good practice to shop around and compare them. Competition in the finance market is huge. Many different rates, conditions and deals are available therefore it can be most difficult to choose the one most suited to your needs. Obtaining professional advice is not always easy. Many financial advisers and managers have a vested interest in arranging a particular loan in order to obtain a commission from that lender. To some extent the same thing can be said about banks. Each branch is rated on its loans and non-banking product sales.

If you are having serious doubts about which loan to apply for see your accountant and ask for his unbiased recommendation. No matter where you go for finance the lender will need a lot of information to help decide if it will be possible to grant a loan. If you apply to your bank they will already have considerable information about your business affairs but will still require detailed information concerning the purpose of the loan.

If you need a loan to finance a temporary cash flow problem, carry out improvements to premises, purchase new equipment or for any other business reason, the lender will require information on how this money is to be spent and what benefits it will bring to your business. More importantly, the lender will need assurance that you are in a position to repay the loan over the agreed period at the agreed terms. There is no point in going to a lender, cap in hand, with no preparation to secure an advance. You will not be successful.

You will have to provide detailed information to the lender that gives a true picture of the viability and financial state of your business. This will enable the lender to assess your request, analyse the proposal and to discuss the matter with you. The following information is the minimum that will be required by the lender:-

The reason for the requested loan.

How you think the loan will improve your business.

A copy of your Business Plan.

How you propose to repay the loan.

The period for which you require the loan.

Details of any other loans or overdrafts.

The historical profitability of the business.

Copy of your latest Year End Accounts.

The lender will most likely require some kind of security against the loan. Other questions about the business may be asked. For instance, is the loan really necessary? Is your historical percentage of profit acceptable? Plus other searching questions. You must be fully prepared for these questions and have all the information available.

When applying for finance, or, for that matter, any other dealings with financial institutions it is always good policy to be confident, in control and fully conversant with all the details. Always make sure you know all the terms of the loan agreement before you finally commit to it. If in doubt, question the terms and conditions to see if they can be changed or amended. Another important point when applying for a loan is to constructively and critically analyse why you need the money. The questions to ask yourself are:-

Can I manage to do what I want without having to increase my borrowings?

Do I really need to carry out the plans at this time?

Is there an alternative I can use?

Will it be better to wait until I am in a more secure financial position?

Will a reorganisation of the business enable me to carry out my plans without further borrowing?

When you borrow money, as everyone knows, it costs you money, even if you pay it back fairly quickly. It is obviously more sensible to avoid applying for a loan if all the above parameters cannot be met when you’re considering the possibility of business loan.

There are times where loans can be extremely valuable and useful, especially in the case of large businesses. A small business is quite different and extra caution should be used before going along that route. Paying interest to a lender decreases your profits and could be better used to build up your business, at the same time reducing your overheads.

People in small businesses rarely have time to carry out such detailed work in preparing documentation for a loan application due to other pressures. If you feel that a loan is the only way forward you need to have all the information at your finger tips when you first apply. It may be possible for your accountant or some other qualified person to do it for you, but this is not always practical.

Re-creating a New You Through Cosmetic Surgery Loan

The desire to look beautiful and attractive is strong in all of us, leaving no exceptions. Beauty is not about how other people look at you; it is about how you perceive yourself. And, if you desire to change certain features in your face, then cosmetic surgery is there. It is not surprising that cosmetic surgery is one of the fastest growing segments of the healthcare industry. Cosmetic surgery industry is growing strong with a significant growth rate for last few years.

Cosmetic surgery has been accepted now as an established norm, which can be seen from the fact that over 8 million of such procedures were performed in 2003 only. Initially developed as a privilege only for the rich and famous, plastic surgery procedures are now widely accessible to everybody; thanks to cosmetic surgery loans. However, even after such wide use, plastic surgery, like any other medical procedure, is still a very costly affair.

To add to the already expensive budget, (normally) insurance companies do not cover the costs of plastic surgery for cosmetic purposes unless the procedure is performed for a medical purpose to restore some type of functional aspect. Therefore it is important to consult your insurance company to see if there is any coverage. It is often necessary to submit a letter from your general practitioner and plastic surgeon, stating the medical need for the operation.

Irrespective of its cost and no insurance coverage, there are a number of ways to pay for plastic surgery cost(s). The way comes in the form of cosmetic surgery loan. Cosmetic surgery loans finance all kind of cosmetic surgeries is available. The images of well toned, perfect body of celebrities everywhere has added to already increasing desire of common public to opt for cosmetic surgery. Every man wants to look his best. Every woman wants to look beautiful, attractive. Cosmetic surgery loans can finance your endeavour to look better. Cosmetic surgery loans are available to cover the related expenses also, which may include dentistry, liposuction, breast lift, tattoo removal, reconstructive surgery, wrinkle removal, laser hair removal, etc. These are only some of the processes that are financed by cosmetic surgery loans.

Cost of Cosmetic Surgery/Loan amount and other terms:

Any Cosmetic Surgery Financing offers loans for all cosmetic, plastic, dental, laser, gastric bypass and infertility surgery. You may use any doctor of your choice. You are under no obligation or incur any cost by applying for surgery financing.

However, never choose a doctor only on the basis of lower cost. You should visit a certified surgeon, who is preferably certified by the national or international Plastic Surgery Board. These surgeons are those who have gone through vigorous training and testing.

You should start your initiative with a search for a surgeon whom you can trust. This is done through referrals. There are few cosmetic surgery loan provider who advice their borrowers on selection of right surgeon.

A prior consultation with your chosen surgeon would enable you to know how much you want to borrow. Clarify, the services included in surgeon’s fee. Whether post operative visits, post operative garments, post operative medication are included in the fee structure. Then approach the finance company for the cosmetic surgery loans. When applying for cosmetic surgery loans always read the minute details.

Though the amount in cosmetic surgery loan varies from lender to lender and borrower to borrower, normally it covers majority portion of total expenses involved in surgery. Loan amounts goes up to £25,000.