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The Three Big Mistakes of Getting a Debt Reduction Loan (and How Not to Make These Mistakes)

November 4th, 2018 Comments off

If you’re in debt up to your eyeballs, you’re probably on the telemarketers’ list. They call, offering to give you a debt reduction loan. At first, this kind of loan sounds like a dream come true. After all, why wouldn’t you want to lump all your smaller debts into one easy-to-pay loan with a low interest rate?

Any wise man will tell you that you can’t get something for nothing. This is absolutely true when it comes to debt consolidation loans. Although they look good, these loans can be full of traps to snare the unsuspecting person, getting you in more trouble than you already were in. Here are the worst of the traps of getting a debt reduction loan:

Trap #1: You’re treating the symptom, not curing the problem.

The worst aspect of debt reduction loans is that they don’t fix the problems that caused you to be in debt. Instead, they treat the “symptom” of having debt. When you get one of these loans, you just end up with a large loan that you have to make payments on…but you will also acquire new debts when you eventually start to, once again, spend more money than you have.

Any statistician can tell you that the likelihood is high that someone who gets a consolidation loan will wind up with the same amount of debt, or more, in two years or less. And remember, they’re still making payments on their new debt consolidation loan.

Trap #2: Making your unsecured debts into secured debts.

If you have credit card debt, you should know that it is what is called “unsecured debt”. This means that the loan is not backed up by a tangible object, such as your home. Most consolidation loans are what is known as “secured debt”, or debt that is backed up by something valuable, most often the house that you live in.

The main problem with this is that when you can’t pay off your loan (and this is not uncommon), the creditor has the ability to foreclose on your home. On the original debt, the only thing the creditor could do was sue you in a court of law. They couldn’t take your home from you.

What you’ve done to yourself by taking out a secured loan (also known as a “home equity loan”) is to make your home vulnerable to foreclosure. Not too smart of you, was it?

Trap #3: Higher interest rates, not lower.

Even if you dodge the bullet of getting a secured loan by getting an unsecured loan, you’re still gonna get smacked with higher interest rates. This is because your inability to pay off your current debts makes you a credit risk, meaning that anyone who is willing to give you credit is going to charge you a higher interest rate to offset the additional risk.

They may change the loan in different ways, including a longer loan term, in order to offer you lower monthly payments than you’re making right now. However, this means that you will still pay more in the long run for your debts. As somebody who is already in debt, you probably can’t afford to do this.

So, how do you avoid these traps?

You can steer clear of all of these traps by deciding to manage your own debt. Unless you’re already filing bankruptcy, you still have the capability of getting out of debt without resorting to the help of some new lender or a so-called credit counselor. You’ll have to make some drastic changes to your lifestyle, but after you change your lifestyle, you’ll be well on your way to changing the behaviors that got you into debt in the first place.

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What Do I Need To Take Care Of After Bankruptcy?

October 30th, 2018 Comments off

After bankruptcy nothing feels better than being given a second chance however before you call it a day there are some things that you have to take care of. Most people who file tend to believe that they do not have to worry about anything after wards; however I am here to tell you that there are several things you should be concerned with.

In fact some people would say that “after bankruptcy” is more important than getting ready for it. In my personal opinion I tend to believe that what you do after bankruptcy will determine whether you ever file again or not.

This article was written in hopes of begin able to provide you with some proven tips and advice that has helped people get back on the right path after bankruptcy. The purpose was to make these tips as helpful as possible so that you can overcome this financial experience.

1. Monthly Payments: Now is the time to sit down and decide how you are going to start paying all your bills without having to worry about struggling financially. We know that some people tend to retain some of their bills because they do not want to get rid of certain items; however if you do this then you are negating the purpose of getting a fresh start.

You never want to hold onto a house, car or anything else if you can not really afford it. I know that it will be difficult to start over; however as long as you believe that you can do it then chances are you will realize that you will not have a lot of issues.

2. Credit Score: Your debt is gone the thing that you should be focusing on is how to rebuild your credit and make it strong. You will notice that some people tend to neglect this part; it is very important that you learn what it takes to get the credit score back up so you can get on with your life.

3. Support: Never stop being around people who are supportive of you and will treat you normally. We have found that when you surround yourself with people who are supportive of your decisions then it is a lot easier to get over these issues.

Our site below has some great information on what needs to be taken care of after bankruptcy. When you browse it you will also find some great tips and advice that you can use to avoid filing as well and how to get out of debt.

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The Seven Habits of Highly Effective Real Estate Investors

April 21st, 2018 Comments off

Sometimes a search through your bookshelf is like a treasure hunt. As I plucked Stephen Covey’s 1989 Seven Habits of Highly Effective People from my shelf, I believe I found some long lost gold. Flipping through the yellowed pages, I soaked in some of the long forgotten golden nuggets the book contains, and I pondered what the seven habits of a highly effective real estate investor would be.

I personally believe that the habits of a successful real estate investor are not particularly exceptional. I think that any person that wants to become a highly effective real estate investor can become one if they set their mind to it. Here is what I think the seven habits would be:

Habit One: Know Your Goals

The majority of the real estate investors I know set out with a goal in mind. I know a man that started investing by selling his house to buy two lots, on which he built a townhouse complex that had 8 units. Since then, he has started his own company and is building and selling hundreds of homes in Toronto every year. So, in this case, it shows how some goals may be simple, but can lead to much bigger things. Or, if goals are large they should be broken down into numerous shorter term goals.

Habit Two: Make Your Money when you Buy

It’s very risky to pay over market value for a property in the hopes that the rent will go up, the area will improve, and/or the property’s value will increase. The simple formula for long term success in real estate is to buy a desirable property below market value, in an area with a lot of potential for future growth.

Habit Three: Hire Help

Unless you want to take on a few extra jobs when you buy a property, I suggest that you think about hiring a property manager, an accountant and a real estate agent. The property manager can do repairs to the property and collect rent. The accountant can do your bookkeeping and yearly taxes, and the real estate agent can work with you to find more real estate investment properties. Just make sure that the people that you hire are trustworthy and will help you achieve your goals.

Habit Four: Use Just the Right Amount of Leverage

Serious real estate investors use leverage to get what they want. If you keep buying property with cash every single time, even the richest person in the world will soon run out of money. Leverage is when you invest a small amount on a much bigger amount. In other words, it’s possible to put $10,000 down on $100,000 house. If that house makes $5,000 a year, then you ROI ( return on investment) would be 50%. If you had paid for the whole $100,000 up front, then the return would still only be 5%. However, the downside of putting a small amount down is that it does not protect you from fluctuations in the market. If that same house drops to $90,000, you can wind up owing more on that home than the property is worth.

Habit Five: Find Good Partners

If you are starting out in the world of real estate investing without a lot of money, it’s hard to reach your financial goals if you aren’t willing to enter into partnerships with others. Your partners could be a family members, friends, colleagues, or even companies. I enjoy hearing success stories where someone with no money of their own enters into a contract on a property, but know they can make it happen by partnering up with another investor. My husband and I are millionaires from our real estate investing, thanks in great part to some of the partners that contributed equity to our investments along the way. Without them, we would likely only own half of the properties that we currently own today.

Habit Six: Be Persistent

When starting out in real estate (or even when you’re established) you’re going to hear the word “no” a lot, so make sure you don’t stray from your goals. Some of the people you could hear “no” from are as follows:

– Potential partners that are not able or not willing to get involved with a deal,

– The banks – on just about every deal we had trouble getting financing and had to deal with multiple lending issues,

– Family- we’ve asked numerous family members to become our investment partners and are more often than not turned down. But it never hurts to ask, as family members will give better interest rates than the banks,

– Insurance companies – if you don’t live in the same province as the property you are trying to insure, most insurance companies don’t want to do business with you. We have approached and been turned down by numerous insurance companies that won’t insure our Ontario properties because we live in British Columbia,

– Property Management Companies – it’s possible that the property management company that you would like to hire doesn’t want to manage your property.

But even when we’ve been turned down by all of the above at some point or another, we don’t lose sight of our goals and keep pushing forward.

Habit Seven: Research – Always be learning

– The best investors are the ones that ask a lot of questions, keep their eyes open for new opportunities and do a lot of research. Many get right into the details of a city. They go to the municipal offices and pull the official plan. They get zoning details and applications. They talk to the city councilors about plans, they attend city council meetings and know everything that is happening in an area.

Not every good investor I know possesses every one of these habits. And I know there are habits that many good investors have that I haven’t covered. But as I thought about the most effective and successful investors that I have met or read about, I realized that almost all of them did possess each of the above habits. And, that anyone could really do what they did if they set out to establish these habits and practices in their real estate investing.

Learn How to Retire a wealthy real estate investor with Julie’s free Real Estate Investing Starter Tips Guide. Learn how to create financial freedom, positive cashflow and massive wealth with tips like: How to find quality investment properties, finding and keeping great tenants, and easy ways to make investment property recordkeeping simple and more profitable.

Finding and Screening Tenants for Your Rental Property

February 7th, 2018 Comments off

Picture this: that property you bought isn’t renting like you thought it would. You don’t really know anything about renting property, so you decided to rent it out to the first person who showed you some money. You didn’t check with their other landlords, or even follow through with a credit check. After all, most people are honest and what could possibly go wrong?

What could go wrong? This lovely new tenant could be unstable and pull a knife on her roommate. Yes – it happened to us at 3am on a Wednesday night several years ago. We had to call the police and have them separate the two tenants. The innocent roommate moved out the next morning and we were left with the knife wielding tenant who then stopped paying rent and refused to move out. It took us three months to evict her. We had to send a collection agency after her for the rent money. We never received a dime.

Now, of course, we are very picky when it comes to finding a good renter. We follow these 5 straightforward steps and they’ve never let us down:

– Step 1: Prepare the unit for showing

– Step 2: Get your paperwork in order

– Step 3: Research the market rents and place your ad

– Step 4: Show your space

– Step 5: Choose your new tenant.

Step 1: Prepare the property for viewing by prospective tenants

The better it looks the more likely you’ll find a good tenant for the space. Make it easy for someone to visualize themselves living happily in that space.

Easy fixes for your property include:

– repair any cracks or holes and apply a new coat of paint on all walls

– make sure all the little things like lights, appliances, doorknobs and sockets work the way they’re supposed to

– create a checklist to use when the tenant moves in and out. Inventory everything and their condition- doors, windows, drapes/blinds/shutters, plugs and light switches, shelving, appliances etc. from every room

– make sure the unit smells fresh. Open up the doors and windows to let fresh clean air in.

Step 2: Make sure you have your paperwork ready

Nothing inspires confidence and prevents headaches later like being a good landlord. And good landlords always have their paperwork in order. If you’re not sure that you do, you need to contact your government’s local residential housing branch. You could also go online to find the following forms:

– applications for tenants

– leases

– eviction notices and similar forms that you may need in the future. It’s best to have them right away so you don’t have to scramble to get them in the future if you really need them.

Each state or province has different requirements, so ensure you’ve got documents that are legal for your area.

Step 3: Research the rent rates and place your ad

Make sure the Price is Right!

Research similar units online to make sure you’re not asking too much for your unit. Its better to price just below the market. You will rent your unit faster, have a larger tenant base to pick from, and you will have a better chance of retaining a tenant for a longer period of time.

Get the word out! We’ve found tenants through all of these methods:

– e-mail all your friends and family and let them know about the property that you have that available to rent. They might know someone who knows someone who is looking for a new place to live

– use online advertising

– make a sign with a phone number and put it in the yard or in the window of the property

– local newspapers can be a fairly inexpensive way to advertise. Ask the classifieds agent what day is the best for advertising to ensure that you have the most eyeballs seeing your ad

– colleges or universities in the area; students are always looking for a place to live.

Step 4: How to show the space

Open houses are still the best way to show off your property. The best thing to do is decide on a two hour block during an evening or weekend, and then have a back up time for a second viewing (if you don’t find a good tenant after the first viewing). When someone wants to see it, you can tell them about the viewing times. This way you’re not spending all your time showing the unit.

When greeting tenants for open houses, be dressed “business casual” and have the tenant application forms ready.

Open houses are great, as they can create an atmosphere of demand. Knowing another person may want to rent the apartment makes others feel that they should want it too. Urge people to complete an application form before they leave so that you can write your impression about the prospective tenant right on their form.

Step 5: How to select your new tenant

– study applications carefully, looking for conflicting information or any kind of gaps in time pertaining to where the applicant was living

– always run a credit check. In this day and age it’s not enough for people just to have a good job or for you to have a good feeling about them. Verify it.

– reference checks. Call their references and ask simple questions like “How long have you known the applicant?”, “What’s your current relationship with them?” and “Would you rent to them again?”.

– listen to your gut. Do you have a good feeling about them? Despite everything else looking great for a tenant, you can usually trust your gut to indicate if you feel that something is wrong. If nothing feels wrong then you might have found your new tenant.

Once you are sure about your choice and you have deposited taken a rent cheque from your chosen tenant to the bank , make sure you let all the other possible tenants know that the unit is rented. If they ask why they weren’t chosen, never indicate that it was because of race, religion, age or social status- regardless of how you actually made your choice. It’s far better to say “the other tenant had a very strong application”.

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You Need To Check Your Emotions At The Door Before You Invest In The Stock Market

December 3rd, 2017 Comments off

We have all been victims of other people’s stock advice. “This stock is a sure-fire winner!” Sometimes the advice comes from a neighbor, or a close friend. Many times it comes from our trusted investment advisor.

Human nature gets us thinking. Do I want to risk losing out on these supposed gains? Without batting a rational eye, we invest. The end result isn’t usually pretty. However, we continue on and repeat this cycle over and over again.

What is wrong with our thinking? The answer is, for many of us, that emotions rule the day. They are so powerful that we often ignore our rational, logical thoughts. The hope for a quick buck or opportunity to “get rich quick” gets those emotional juices flowing. You must realize that it is not the rational side of our brain that is tripping us up, but the emotional side.

Many sound investment plans get ignored due to emotions. If you work at it, you will be able to quiet that emotional side that is prone to ignore your well thought out investing strategy. More importantly, you’ll be able to stick to your plan through both good and bad times.

Casual investors make the same mistakes over and over again because they cannot shake the demons that compel them. It is this type of trader that cannot overcome emotions while investing. They usually lack the ability to treat investing like a business and instead treat it like a game of poker.

The main driving emotion for many investors is the fear of losing money. Making a quick buck is the next one. Don’t forget about the king of all emotions, greed. All of these cloud judgment and prevent you from thinking clearly about how an action affects your portfolio. When this type of thinking is in play, disaster can strike rather quickly.

My emotions were extremely difficult to get under control when investing. I managed to finally tame that beast and let my rational side control my investing decisions. In order to do this, I developed a system that I use to invest with consistent success. I have set parameters to follow that guide me to the right kinds of investments. It is a logical system in black and white. Sure, the emotional beast tries to rear its ugly head from time to time, but I remain diligent and stick to my strategy.

There is no shame in making poor investment decisions over and over. There is good news, you can change things starting now! I made that change and as a result I have been more successful than I ever have been investing in the stock market. I also managed to do this when the stock market was in a sharp decline! I promise you, to be a successful investor all you need is a solid investment strategy and the ability to keep your emotions checked at the door. Take the advise of someone that did that very thing!

Marc Abrams is a CPA with over 15 years experience in financing and investing. Visit Marc’s website to learn more about successful stock market and option trading strategies that can teach you to invest for the future.