admin / April 13, 2023

Car Insurance Terms and Glossary

No car insurance resource would be complete without a comprehensive glossary of car insurance terms. We’ve compiled a list of terms and their definitions to better help you navigate the sometimes confusing world of insuranceAccident – This is an unexpected sudden event that causes property damage to an automobile or bodily injury to a person. The event may be an at-fault or not-at fault and it may be report or unreported. An accident involving two vehicles may be termed a collision.Accident report form – This is the report filed by police, often called the police report, containing the important information regarding the vehicle collision. This report will include the names of all individuals involved, vehicles involved, property damaged and citations that were issued.Adjuster – This is the person who will evaluate the actual loss reported on the policy after an accident or other incident. They will make the determination on how much will be paid on the auto insurance policy by the Insurer.Agent – This is a licensed and trained individual who is authorized to sell and to service insurance policies for the auto insurance company.At Fault – This is the amount that you, the policy holder, contributed or caused the auto collision. This determines which insurance agency pays which portion of the losses.Auto Insurance Score – This is a score similar to credit score that evaluates the information in your consumer credit report. These scores are used when determining pricing for your auto insurance policy. Negative marks on your credit report can increase your auto insurance premiums. The use of this information to determine policy pricing does vary from state to state.Automobile Insurance – This is a type of insurance policy that covers and protect against losses involving automobiles. Auto Insurance policies include a wide range of coverage’s depending on the policy holders needs. Liability for property damage and bodily injury, uninsured motorist, medical payments, comprehensive, and collision are some of the common coverage’s offered under an auto insurance policy.Binder – This is a temporary short-term policy agreement put in place while a formal permanent policy is put into place or delivered.Bodily Injury Liability – This is the section of an insurance policy that covers the cost to anyone you may injure. It can include lost wages and medical expenses.Broker – This is a licensed individual who on your behalf sells and services various insurance policies.Claim – This is a formal notice made to your insurance company that a loss has occurred which may be covered under the terms of the auto insurance policy.Claims Adjuster – This person employed by the insurance agency will investigate and settle all claims and losses. A representative for the insurance agency to verify and ensure all parties involved with the loss, get compensated fairly and correctly.Collision – The portion of the insurance policy that covers damage to your vehicle from hitting another object. Objects can include but are not limited to; another vehicle, a building, curbs, guard rail, tree, telephone pole or fence. A deductible will apply. Your insurance company will go after the other parties insurance policy for these cost should they be at fault.Commission – This is the portion of the auto insurance policy that is paid to the insurance agent for selling and servicing the policy on behalf of the company.Comprehensive – This is a portion of the insurance policy that covers loss caused by anything other than a collision or running into another object. A deductible will apply. This includes but is not limited to vandalism, storm damage, fire, theft, etc.Covered loss – This is the damage to yourself, other people or property or your vehicle that is covered under the auto insurance policy.Declarations Page – This is the part of the insurance policy that includes the entire legal name of your insurance company, your full legal name, complete car information including vehicle identification numbers or VIN, policy information, policy number, deductible amounts. This page is usually the front page of the insurance policy.Deductible Amount – This is the portion of the auto insurance policy that is the amount the policy holder must pay up front before the Insurance Company contributes and is required to pay any benefits. This amount can be within a wide range in price and varies from approximately $100 – $1000. The larger amount you pay in a deductible the lower your normal monthly/yearly policy will cost. This is the portion of the auto insurance policy that would be applicable only to comprehensive or collision coverage.Discount – This is a reduction in the overall cost of your insurance policy. Deductions can be given for a variety of different reasons including a good driving record, grades, age, marital status, specific features and safety equipment on the automobile.Emergency Road Service – This is the part of an auto insurance policy that covers the cost of emergency services such as flat tires, keys locked in the car and towing services.Endorsement – This is any written change that is made to the auto insurance policy that is adding or removing coverage on the policy.Exclusion – This is the portion of the auto Insurance policy that includes any provision including people, places or things that are not covered under the insurance policy.First Party – This is the policyholder, the insured in an insurance policy.Gap Insurance – This is a type of auto insurance provided to people who lease or own a vehicle that is worth less than the amount of the loan. Gap auto Insurance will cover the amount between the actual cash value of the vehicle and the amount left on loan should the care be stolen or destroyed.High-Risk Driver – If you have a variety of negative marks on your insurance record including driving under the Influences, several traffic violations, etc. you may be labeled as a risk to the insurance company. This will increase your insurance policy or may make you ineligible for coverage.Insured – The policyholder (s) who are covered by the policy benefits in case of a loss or accident.Insurer – Is the Auto Insurance company who promises to pay the policy holder in case of loss or accident.Liability insurance – This part of an auto insurance policy which legally covers the damage and injuries you cause to other drivers and their vehicles when you are at fault in an accident. If you are sued and taken to court, liability coverage will apply to your legal costs that you incur. Most states will require drivers to carry some variation of liability coverage Insurance and this amount will vary state by state.Limits – This is the portion of the auto insurance policy that explains and lists the monetary limits the insurance company will pay out. In the situation you reach these limits the policy holder will be responsible for all other expenses.Medical Payments Coverage – This is the portion of an auto insurance policy that pays for medical expenses and lost wages to you and any passengers in your vehicle after an accident. It is also known as personal injury protection or PIP.Motor Vehicle Report – The motor vehicle report or MVR is a record issued by the state in which the policy holder resides in that will list the licensing status, any traffic violations, various suspensions and./ or refractions on your record. This is one of the tools used in determining the premium prices offered by the insurance agency. This is also used to determine the probability of you having a claim during your policy period.No-Fault Insurance – If you reside within a state with no-fault insurance laws and regulations, your auto insurance policy pays for your injuries no matter who caused the accident. No-fault insurance states include; Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah and Washington, DC..Non-Renewal – This is the termination of an auto insurance policy on the given expiration date. All coverage will cease as of this date and insurer will be released of promised coverage.Personal Property Liability – This is the portion of the auto insurance policy that covers any damage or loss you cause to another person’s personal property.Personal Injury Protection or PIP – This portion of an auto insurance policy pays for any lost wages or medical expenses to you and any passengers in your vehicle following an accident. PIP is also known as medical payments coverage.Premium – This is the amount charged to you monthly, yearly or any other duration agreed upon by insurance company and policy holder and paid directly to the auto insurance company. A premium is based on the type and amount of coverage you choose for your vehicle(s) and yourself. Other factors that will affect your insurance premium prices include your age, marital status, you’re driving and credit report, the type of car you drive and whether you live in an urban or rural area. Premiums vary by insurance company and the location you live.Quotation – This is the amount or estimated amount the insurance will cost based on the information provided to the agent, broker or auto insurance company.Rescission.- This is the cancellation of the insurance policy dated back to its effective date. This would result in the full premium that was charged being returned.Rental Reimbursement – This is the portion of the auto insurance policy that covers the cost of an automobile rental of similar size should the covered vehicle be in repair from a reported incident.Replacement Cost – This is the amount of money it would cost to replace a lost or damaged item at it is actually new replacement value. This monetary amount would be based on a new identical item in the current local market.Salvage – This is the auto insurance policy holders property that is turned over tot eh insurance agency in a loss final settlement. Insurance companies will sell the salvage property in hopes to recoup some of its monetary loss due to the loss and settlement.Second Party – this is the actual insurance company in the auto insurance policy.Surcharge – This is the amount added to your auto insurance policy premium after a traffic violation or an accident in which you were found to be at fault.Third Party – This is another person other than the policy holder and auto insurance company who has faced a loss and may be able to collect and be compensated on behalf of the policy holder’s negligence.Total Loss – This is complete destruction to the insured property of a policy holder. It has been determined that it would be a great sum of money to repair the item rather than replace the insured piece of property to its state prior to the loss.Towing Coverage – This is the portion of the auto insurance policy that covers a specified amount for towing services and related labor costs.Under insured Driver – This is the portion of an auto insurance policy which covers injuries to you caused by a driver without enough insurance to pay for the medical expenses you have incurred from the accident. This is portion of the policy can vary state by state as some states include damage to the car in this section.Uninsured Driver or Motorist – This is the portion of the auto insurance policy which covers injuries to you caused by a driver who was without liability insurance at the time of the accident. Uninsured driver or motorist coverage comes in two different sections; uninsured motorist bodily injury and uninsured motorist property damage. Uninsured motorist bodily injury coverage covers the injuries to you or any passenger in your vehicle when there is an accident with an uninsured driver. Uninsured motorist property damage coverage covers the cost for the property damage to your vehicle when there is an accident with an identified uninsured driver. Uninsured driver or motorist coverage must be offered when you purchase the required liability coverage for your vehicle. You must sign a declination waiver if you decline Uninsured driver or motorist coverage. The majority of states require drivers to carry some form of uninsured motorist coverage. Some states include damages to your car in this coverage.Vehicle Identification Number or VIN – A VIN is a 17 letter and number combination that is the identification of the specific vehicle. It will identify the make, modem and year of the automobile. This number is typically located on the driver’s side window on the dash. It can also be found on the vehicles registration and title.

admin / April 13, 2023

A New Way to Invest in Property

The two most frequently asked questions by investors are:What investment should I buy?
Is now the right time to buy it?Most people want to know how to spot the right investment at the right time, because they believe that is the key to successful investing. Let me tell you that is far from the truth: even if you could get the answers to those questions right, you would only have a 50% chance to make your investment successful. Let me explain.There are two key influencers that can lead to the success or failure of any investment:External factors: these are the markets and investment performance in general. For example:
The likely performance of that particular investment over time;
Whether that market will go up or down, and when it will change from one direction to another.
Internal factors: these are the investor’s own preference, experience and capacity. For example:
Which investment you have more affinity with and have a track record of making good money in;
What capacity you have to hold on to an investment during bad times;
What tax advantages do you have which can help manage cash flow;
What level of risk you can tolerate without tending to make panic decisions.When we are looking at any particular investment, we can’t simply look at the charts or research reports to decide what to invest and when to invest, we need to look at ourselves and find out what works for us as an individual.Let’s look at a few examples to demonstrate my viewpoint here. These can show you why investment theories often don’t work in real life because they are an analysis of the external factors, and investors can usually make or break these theories themselves due to their individual differences (i.e. internal factors).Example 1: Pick the best investment at the time.Most investment advisors I have seen make an assumption that if the investment performs well, then any investor can definitely make good money out of it. In other words, the external factors alone determine the return.I beg to differ. Consider these for example:Have you ever heard of an instance where two property investors bought identical properties side by side in the same street at the same time? One makes good money in rent with a good tenant and sells it at a good profit later; the other has much lower rent with a bad tenant and sells it at a loss later. They can be both using the same property management agent, the same selling agent, the same bank for finance, and getting the same advice from the same investment advisor.
You may have also seen share investors who bought the same shares at the same time, one is forced to sell theirs at a loss due to personal circumstances and the other sells them for a profit at a better time.
I have even seen the same builder building 5 identical houses side by side for 5 investors. One took 6 months longer to build than the other 4, and he ended up having to sell it at the wrong time due to personal cash flow pressures whereas others are doing much better financially.What is the sole difference in the above cases? The investors themselves (i.e. the internal factors).Over the years I have reviewed the financial positions of a few thousand investors personally. When people ask me what investment they should get into at any particular moment, they expect me to compare shares, properties, and other asset classes to advise them how to allocate their money.My answer to them is to always ask them to go back over their track record first. I would ask them to list down all the investments they have ever made: cash, shares, options, futures, properties, property development, property renovation, etc. and ask them to tell me which one made them the most money and which one didn’t. Then I suggest to them to stick to the winners and cut the losers. In other words, I tell them to invest more in what has made them good money in the past and stop investing in what has not made them any money in the past (assuming their money will get a 5% return per year sitting in the bank, they need to at least beat that when doing the comparison).If you take time to do that exercise for yourself, you will very quickly discover your favourite investment to invest in, so that you can concentrate your resources on getting the best return rather than allocating any of them to the losers.You may ask for my rationale in choosing investments this way rather than looking at the theories of diversification or portfolio management, like most others do. I simply believe the law of nature governs many things beyond our scientific understanding; and it is not smart to go against the law of nature.For example, have you ever noticed that sardines swim together in the ocean? And similarly so do the sharks. In a natural forest, similar trees grow together too. This is the idea that similar things attract each other as they have affinity with each other.You can look around at the people you know. The people you like to spend more time with are probably people who are in some ways similar to you.It seems that there is a law of affinity at work that says that similar things beget similar things; whether they are animals, trees, rocks or humans. Why do you think there would be any difference between an investor and their investments?So in my opinion, the question is not necessarily about which investment works. Rather it is about which investment works for you.If you have affinity with properties, properties are likely to be attracted to you. If you have affinity with shares, shares are likely to be attracted to you. If you have affinity with good cash flow, good cash flow is likely to be attracted to you. If you have affinity with good capital gain, good capital growth is likely to be attracted to you (but not necessary good cash flow ).You can improve your affinity with anything to a degree by spending more time and effort on it, but there are things that you naturally have affinity with. These are the things you should go with as they are effortless for you. Can you imagine the effort required for a shark to work on himself to become sardine-like or vice versa?One of the reasons why our company has spent a lot of time lately to work on our client’s cash flow management, is because if our clients have low affinity with their own family cash flow, they are unlikely to have good cash flow with their investment properties. Remember, it is a natural law that similar things beget similar things. Investors who have poor cash flow management at home, usually end up with investments (or businesses) with poor cash flow.Have you ever wondered why the world’s greatest investors, such as Warren Buffet, tend only to invest in a few very concentrated areas they have great affinity with? While he has more money than most of us and could afford to diversify into many different things, he sticks to only the few things that he has successfully made his money from in the past and cut off the ones which didn’t (such as the airline business).What if you haven’t done any investing and you have no track record to go by? In this case I would suggest you first look at your parents’ track record in investing. The chances are you are somehow similar to your parents (even when you don’t like to admit it ). If you think your parents never invested in anything successfully, then look at whether they have done well with their family home. Alternatively you will need to do your own testing to find out what works for you.Obviously there will be exceptions to this rule. Ultimately your results will be the only judge for what investment works for you.Example 2: Picking the bottom of the market to invest.When the news in any market is not positive, many investors automatically go into a “waiting mode”. What are they waiting for? The market to bottom out! This is because they believe investing is about buying low and selling high – pretty simple right? But why do most people fail to do even that?Here are a few reasons:When investors have the money to invest safely in a market, that market may not be at its bottom yet, so they choose to wait. By the time the market hits the bottom; their money has already been taken up by other things, as money rarely sits still. If it is not going to some sort of investment, it will tend to go to expenses or other silly things such as get-rich-quick scheme, repairs and other “life dramas”.
Investors who are used to waiting for when the market is not very positive before they act are usually driven either by a fear of losing money or the greed of gaining more. Let’s look at the impact of each of them:
If their behaviour was due to the fear of losing money, they are less likely to get into the market when it hits rock bottom as you can imagine how bad the news would be then. If they couldn’t act when the news was less negative, how do you expect them to have the courage to act when it is really negative? So usually they miss out on the bottom anyway.
If their behaviour was driven by the greed of hoping to make more money on the way up when it reaches the bottom, they are more likely to find other “get-rich-quick schemes” to put their money in before the market hits the bottom, by the time the market hits the bottom, their money won’t be around to invest. Hence you would notice that the get-rich-quick schemes are usually heavily promoted during a time of negative market sentiment as they can easily capture money from this type of investor.
Very often, something negative begets something else negative. People who are fearful to get into the market when their capacity allows them to do so, will spend most of their time looking at all the bad news to confirm their decision. Not only they will miss the bottom, but they are likely to also miss the opportunities on the way up as well, because they see any market upward movement as a preparation for a further and bigger dive the next day.Hence it is my observation that most people who are too fearful or too greedy to get into the market during a slow market have rarely been able to benefit financially from waiting. They usually end up getting into the market after it has had its bull run for far too long when there is very little negative news left. But that is actually often the time when things are over-valued, so they get into the market then, and get slaughtered on the way down.So my advice to our clients is to first start from your internal factors, check your own track records and financial viability to invest. Decide whether you are in a position to invest safely, regardless of the external factors (i.e. the market):If the answer is yes, then go to the market and find the best value you can find at that time;
If the answer is no, then wait.Unfortunately, most investors do it the other way around. They tend to let the market (an external factor) decide what they should do, regardless of their own situation, and they end up wasting time and resources within their capacity.I hope, from the above 2 examples, that you can see that investing is not necessarily about picking the right investment and the right market timing, but it is more about picking the investment that works for you and sticking to your own investment timetable, within your own capacity.A new way to invest in propertiesDuring a consultation last month with a client who has been with us for 6 years, I suddenly realised they didn’t know anything about our Property Advisory Service which has been around since April 2010. I thought I’d better fix this oversight and explain what it is and why it is unique and unprecedented in Australia.But before I do, I would like to give you some data you simply don’t get from investment books and seminars, so you can see where I am coming from.Over the last 10 years of running a mortgage business for property investors:We have executed more than 7,000 individual investment mortgages with around 60 different lenders;
Myself and our mortgage team have reviewed the financial positions of approximately 6,000 individual property investors and developers;
I have enjoyed privileged access to vital data including the original purchase price, value of property improvements and the current valuation of close to 30,000 individual investment properties all around Australia from our considerable client base.When you have such a large sample size to do your research on and make observations, you are bound to discover something unknown to most people.I have discovered many things that may surprise you as much as they surprised me, some of which are against conventional wisdom:Paying more tax can be financially good for you.This one took me years to swallow, but I can’t deny the facts. The clients who have managed to get into a positive cashflow position have paid a lot of tax and will continue to pay a lot of tax, whether it is capital gains, income tax or stamp duty. They don’t have an issue with the tax man making some money as long as they continue to make more themselves! They regularly cash in the profits from their properties and reduce their debt, but always continue to invest and park their money where the return is best. In fact, I can almost say that the only people who enjoy positive cashflow from their investment properties are the people who have little concern about paying taxes as they treat them as the cost of doing business.Just about every property strategy works. It just depends on who does it, how it is done, when it is done and where it is done.When I first started investing, I went and read many property investment books and attended many investment educational seminars. Just about every one of them was convincing and this confused the hell out of me. Just when I was about to form an opinion against a particular property strategy, someone would show up in one of my client consultations and prove that it worked for them!After testing many of these strategies myself, I came to realise that it is not about the strategy,(which is only a tool) but rather it is about whether the person is using the tool appropriately at the right time, in the right place and in the right way.There is no such thing as the best suburb to invest in, forever.If you randomly pick a particular property in what you think is the best suburb over a 30 year window, you will find that there are periods during which this property will outperform the market average, and there are periods when this property will underperform the market average.Many property investors find themselves jumping into historically high growth suburbs at the end of the period when it is outperforming the average, and then stay there for 5-7 years during the underperforming period. (Naturally this can taint their view of property investing as a whole!)There is no such thing as the worst suburb to invest in, forever.If you pick a property in the worst suburb you can think of from 40 years ago, and pitch that against the best suburb you can think of over the same period of time, you will find they both grew at about 7-9% a year on average over the long-term.Hence in the 1960s, a median house in Melbourne and Sydney was valued at $10k. The worst property around that time may have been 30% of the median price for then, which was say about $3k. Today, the median house price in these cities is about $600k. The worst suburb you can find is still around 30% of that price which is say $200k a house. If you believe a bad suburb will never grow, then show me where you can find a house today in these cities, that is still worth around $3k.Median Price growth is very misleading.Many beginner property investors look at median price growth as the guidance for suburb selection. A few points worth mentioning on median price are:We understand the way median price is calculated as the middle price point based on the number of sales during a period. We can talk about the median price for a particular suburb on a particular day, week, month, year, or even longer. So an influx of new stocks or low sales volume can severely distort the median price.In an older suburb, median price growth tends to be higher than it really is. This is because it does not reflect the large sum of money people put into renovating their properties nor does it reflect the subdivision of large blocks of land into multiple dwellings which can be a substantial percentage of the entire suburb.In a newer suburb, median price growth tend to be lower than it really is. This is because it does not reflect the fact that the land and buildings are both getting smaller. For example, you could buy a block of land of 650 square metres for $120k in 2006 in a newer suburb of Melbourne, but 5 years later, half the size block (i.e.325 square metres) will cost you $260k. That’s a whopping 34% annual growth rate per year for 5 years, but median price growth will never reflect that, as median prices today are calculated on much smaller properties.Median price growth takes away people’s focus from looking at the cost of carrying the property. When you have a net 2-3% rental yield against interest rates of 7-8%, you are out-of-pocket by 5% a year. This is not including the money you have to put in to fix and maintain your property from time to time.Buying and holding the same property forever doesn’t give you the best returns on your money.The longer you hold a property, the more likely you will achieve an average growth of 7-9%. But you will be bound to hit periods where your property outperforms the 7-9% growth and periods where it under performs the 7-9% growth.The longer you hold a property, if its growth is at or above average, the lower its rental yields will become.The longer you hold a property, the higher the capital gains tax you will need to pay when you sell, and the less likely you will be able to sell it.The longer you hold a property, the more likely there will be a need for an expensive upgrade of the property.The longer you hold a property, the more likely you will forget which part of the equity actually belongs to the tax man, AND the more likely you will be to try to leverage the equity that doesn’t belong to you. This can get you into a negative equity position with a negative cashflow forever, unless you have proper financial guidance.

admin / April 13, 2023

The 11 Forgotten Laws – Powerful Principles to Change Your Life

Bob Proctor is a highly reputable personal development and professional coach who has helped numerous people to achieve great success in life. His books have reached worldwide, extending the knowledge of the law of attraction and mind power for achieving great success to millions of people. In Bob Proctor’s recent work, he has asserted that besides the law of attraction, there are additional laws that exist in the universe, which he calls ‘The 11 forgotten laws’. In order to embrace a life of success and happiness, these 11 forgotten laws need to be understood. These laws work the same for everyone, at anytime and at everywhere. People can live a fulfilling life achieving what they want to achieve if they live in harmony with these laws.Law 1: The Law of ThinkingThe law of thinking dictates that we can only attract what we think. By changing your conscious thought patterns, which is your ruling state, you will allow yourself to effectively change the result to what you want. How far a person can go or how great the success a person can have, depends on the thinking. In order to achieve big success, a person has to think big. When you think success, you will attract success.Law 2: The Law of SupplyThe law of supply depicts that the universe is a source of unlimited supply. It is enough for everyone. If we focus on abundance, our feeling, emotions and actions eventually attract abundance into our live. It is possible to achieve success in any area you are doing if you release yourself from the belief of scarcity. The universe does not restrict or limit on what we could achieve, but we do if we allow it.Law 3: The Law of AttractionThe law of attraction essentially is about what we focus, we will attract. Everything we experience in our life is dictated by our own mindset. If you’re a positive thinker, the universe will respond in harmony with you and you will get what you desire. So, it is important to just focus on thinking about what you want and get emotionally involved to attract it into your life.Law 4: The Law of ReceivingThe law of receiving works hand in hand with giving. We must give in order to receive. However, we need to let go and not being attached to what we want to receive too obsessively. We need to trust the universe will somehow give us what we want and all we need to do is to be ready to receive it. How much we receive will be limited by how much we allow it.Law 5: The Law of IncreaseThe law of increase is about being happy and being grateful for what we have now. At the same time, we need to have faith that we can grow and have more of it. The key to this law is to feel grateful, to praise for the good things and amplify the positive things that we have in life. The more you appreciate and look at the good sides of things, the more you will reap. This is because as you are appreciating the good things, you build yourself the momentum to move ahead to get more and more in life.Law 6: The Law of CompensationThis law is all about space or vacuum. According to Bob Proctor, universe fills up the empty space or vacuum with the things that we desire, but first we will need to create a space for it to happen. We need to constantly focus and energize the good things in order to get the outcome that we want to achieve. The invisible energy of the thinking substance that we radiate will be heard and we will get what we want.Law 7: The Law of Non-ResistanceEvery thought has a frequency. The less you resist on something, the less it will exist. By devoting less attention towards fighting the unwanted thoughts and conditions, you will find that the problems that you face become less and less pervasive. In pursuing success, you’ll encounter resistance along the way. By not focusing on the resistance, you’ll eventually achieve the success that you want.Law 8: The Law of ForgivenessThe law of forgiveness states that we must learn to accept our own mistakes and letting go of it completely. We’ve got to realize that even if we did something wrong or someone had done something bad to us, we can’t always hold to it. We need to learn to forgive ourselves and others because we will not be able to move into a good direction if we are holding back to these bad thoughts.Law 9: The Law of SacrificeThe law of sacrifice is to give up something that is of a lower nature for something of a higher nature. For example, in order to enjoy extraordinary success in life, we have to sacrifice our time, put in the effort and be disciplined to work for what we want to achieve. We have to be persistent and persevere to work on what we want in order to achieve it.Law 10: The Law of ObedienceWhen we understand the laws and live in harmony with the laws in our daily life, we could achieve great success. When we obey to the laws, we are governed by the nature order which automatically removes all the challenges and obstacles for us along the way. With the nature order, universe will answer to us, for every need that we want.Law 11: The Law of SuccessThe law of success states that everyone is born to succeed. We have the power and capacity in each of us to be great and to achieve massive success. We need to properly develop it from our inner world in order to have it in our outer world. We need to work from our spiritual thoughts, work on the non-visible energy to see the manifestation happen in our physical life.In conclusion, it is important to live in harmony with the universal laws so as to ensure that we are governed to achieve great success and happiness in life.

admin / April 13, 2023

Lifestyle Options

It seems like now more than ever there are hundreds of different lifestyle choices a person can make. It is a good thing there are so many options because a person’s lifestyle choice has a direct bearing on the things they do, the people they hang out with, the clothes they wear, and the things they consume.Lifestyle choices also happen to be incredibly diverse in that they can range from choosing to be healthy to choosing to pledge allegiance to a certain type of music, to even deciding on a lifestyle devoted to religion. With so many lifestyle choices, it is no surprise that people devote themselves to actual lifestyles on various degrees.For instance, a teenager might become infatuated with punk rock and decide to devote themselves to that style. At this stage they can choose to simply listen to the music and wear the clothes, or they can embrace the lifestyle wholeheartedly by also dropping out of school, living on the streets, and stealing to survive. This may seem like an extreme example, but they can be found in just about every lifestyle choice.Retracting back to the healthy lifestyle decision, some people may devote themselves to this lifestyle by simply eating better, while others might decide it entails running ten miles a day, lifting weights, and practicing yoga. Every single person has subscribed to one lifestyle or another at one point of their life, and most people generally touch upon quite a few lifestyles.Therein lies the beauty of having so many lifestyle choices. Anyone can decide how consigned they want to be to a particular lifestyle, and how many different lifestyles they want to affiliate with.

admin / April 13, 2023

Nine Questions to Ask Before Committing to a New Commercial Real Estate Loan or Multifamily Loan

Property owners sometimes focus almost exclusively on the interest rate and the period for which it is fixed when choosing a new commercial real estate loan or multifamily loan. However, other factors have a significant impact on the “total cost of capital” and can limit or expand owner options later on. Before signing on the dotted line, be sure you have answered these nine questions.1. What are your plans for the property and your objectives in refinancing?Choosing the most advantageous financing solution for your apartment or commercial property involves weighing tradeoffs between the terms and conditions of alternative loan options. Making sound choices begins with a clear understanding or your plans for the property and objectives in refinancing. Is it likely that the property will be sold in the future and if so when? Are you reliant on income generated from the property now or are you looking to maximize income from the property in the future, perhaps after retirement? Is there deferred maintenance that needs to be addressed now or in the near future? Is remodeling or other major upgrades or repairs expected in the next 5 to 10 years? Will you need to access the equity in your property for other investments, for example, to purchase another property?2. What happens after the fixed period?Some commercial property or multifamily loans become due and payable at the end of the fixed period and others. These are often called “hybrid” loans and they convert to variable rate loans after the fixed period. A commercial real estate loan or multifamily loan that becomes due after the 5, 7 or 10 year fixed period may force refinancing at an unfavorable time. Financial markets may be such that refinancing options are expensive or unavailable. Or local market conditions may have resulted in increased vacancies or reduced rents, making your property less attractive to lenders. Frequently the lowest interest rate deals are for loans that become due at the end of the fixed period and include more restrictive pre-payment penalties (see question #4). Hybrid loans convert to an adjustable rate loan with the new rate being based on a spread over either LIBOR or the prime rate and adjusting every 6 months.3. What is the term of the loan and the amortization period?The term of the loan refers to when the loan becomes due and payable. The amortization period refers to the period of time over which the principal payments are amortized for the purpose of computing the monthly payment. The longer the amortization period the lower the monthly payment will be, all other things being equal. For apartment or multifamily properties, 30 year amortizations are generally available. For commercial properties, 30 year amortizations are more difficult to come by, with many lenders going no longer than 25 years. A loan with a 30 year amortization may have a lower payment than a loan with a 25 year amortization even if it carries a slightly higher interest rate. In most cases the term of the loan is shorter than the amortization period. For example, the loan may be due and payable in ten years, but amortized over 25 years.4. If loan converts to a variable rate after the fixed period, how is the variable rate determined?The variable rate is determined based upon a spread or margin over an index rate. The index rate is generally the six-month LIBOR or, less often, the prime rate. The interest rate is computed by adding the spread to the index rate. The spread varies but is most often between 2.5% and 3.5%. The rate adjustment most often occurs every 6 months until the loan becomes due. There is generally a cap on how much the rate can move at an adjustment point. However, some lenders have no cap on the first adjustment. This leaves the owner open to a large payment increase if rates have moved significantly.5. What are the prepayment penalties?Almost all fixed rate commercial property loans and apartment loans contain some form of pre-payment penalty, meaning there is an additional cost to you if you pay off the loan early, which may occur if you want to refinance or you are selling the property or if you want to make payments greater than the scheduled monthly payments. Prepayment penalties generally take the form of a set prepayment schedule, a yield maintenance agreement or, defeasance. A set prepayment schedule predetermines the penalty expressed as a percentage of the loan balance at payoff and declines as the loan ages. For example, the prepayment schedule for a 5 year fixed loan might be quoted as “4,3,2,1” meaning the penalty to pay off the loan is 4% of the balance in year 1, 3% in year 2, etc. A yield maintenance agreement requires a penalty computed using a formula designed to compensate the lender for the lost interest revenue for the remaining term of the loan over a risk-free rate and discounted to a present value. The formula can be complex, but the result is almost always a more punitive penalty than a set prepayment schedule and will generally make early pay-off financially unviable. The third type of penalty, defeasance, is used less often. It works like a yield maintenance agreement in that its intent is to keep the lender whole for the lost interest revenue but it accomplishes that by requiring the borrower to substitute other securities that would replace the lost revenue instead of making cash payment. Often the most attractive interest rates offered are associated with loans with either a yield maintenance agreement or defeasance. There is generally a window starting 180 to 90 days before the loan is due when the penalty expires to allow time to arrange refinancing. These loans generally become due at the end of the fixed period.6. What are all the fees and charges associated with closing the new loan?Refinancing can be costly and knowing all the costs is essential to evaluating if refinancing is the right choice. The biggest costs are for appraisals, title insurance, escrow fees, environmental review, points, and processing and/or loan fees. Appraisal fees will run $2,000 and up. Phase I Environmental Assessment cost $1,000 and up. Processing and/or loan fees charged by the lender begin about $1,500 and rise from there. Points may or may not be charged by the lender. Some lenders, particularly on apartment or multifamily loans, will cap the expenses at $2,500 to $3,000, excluding title and escrow. It is important understand the total costs in comparison to the monthly savings in debt service resulting from refinancing. How many months will it take to recoup the costs of refinancing?7. Is the loan assumable and at what cost?Many, but not all, commercial real estate loans are assumable. There is generally a fee, often 1% of the balance, and the assuming party must be approved by the lender. Assumability is critical for loans with significant pre-payment penalties, like those with yield maintenance or defeasance clauses, if there is some chance you will sell the commercial or apartment property during the life of the loan.8. Are there impounds and if so what are they?Some commercial real estate loans and apartment loans will require impounds for property taxes or for insurance. A monthly amount is determined and then collected in addition to each principal and interest payment sufficient to cover the property tax and insurance bills as they come due. Such impounds will affect your cash flow from the property because monies for property taxes and/or insurance are collected in advance of when they are actually due. Impounds increase the effective interest rate on the loan because they amount to an interest free loan the owner is making to the lender.9. Does the lender allow secondary financing?Finding secondary or second lien financing has become quite difficult and many lenders do not allow it under the terms of the loan. However, market conditions may change, making this type of lending more available. If you have a relatively low loan to value and there is a chance you might want to access the equity in your property to pay for major repairs or remodeling, to acquire additional properties, or for other purposes, a loan that allows secondary financing can be beneficial.Securing a letter of interest from a lender can be time consuming. Many owners approach only their existing lender or a well-known commercial bank lender in their area and assume that the offer they get is the best available. This is not always the case. In many cases, smaller or lesser known lenders offer the most aggressive or flexible terms. There is no way of knowing without getting multiple quotes. A good commercial loan broker can be very beneficial in securing for you multiple letters of interest and helping you compare the terms and conditions of each and select the solution that best meets your goals and plans.