Entries Tagged as 'Investing'

Leveraging Commercial Property Investment – Mezzanine Financing

Investing in property is a common way people secure their hard-earned money in a profitable way. Along with having their earnings saved, they also have the opportunity to earn more on it when property rates rise. This is why some investors choose to purchase or put money in commercial property.

But due to the perceived high-risk nature of commercial property, many are skeptical of investing in it when compared to investing in residential projects. The reality is far from this as commercial properties offer significant cash flow benefits, fewer ongoing expenses and a better rent certainty in the longer run.

Leveraging Commercial Property Investment – Mezzanine Financing

If you want to take advantage of these benefits and invest in commercial properties, there are several ways you can secure financing to begin the process. The main thing to understand here is how to leverage your investment and raise debt in a way that your risk is managed practically.

Leveraging is basically the amount of debt borrowed from lenders for a project to strategically increase wealth and improve cash flow. You can receive positive leverage when the cost of the loan is less than the return the commercial property makes. This way the investor adds to their wealth from the debt, making a profit on the overall project specifically when the property appreciates.

To gain this positive leverage the investor needs a well-placed capital at a fixed rate with long –payment terms and equal monthly payments. While these terms might not always be offered, there are several public and private lenders who will agree to negotiations.

But when you are able to receive capital that amortizes at these terms, you will have time to pay off the loan while earning from the property. Your loan and interest will be paid off from these earnings, also maximizing your returns on investment.

While receiving a loan from a bank is the most traditional way to leverage debt, it only covers a part of the total debt you require. Another way investors leverage their investment is by obtaining the ‘middle slice’ of the debt through mezzanine investment. If you don’t know what mezzanine debt financing is, here is a brief explanation:

Mezzanine Debt Financing

Mezzanine debt financing involves an investor receiving additional fixed-rate capital on top of their already secured mortgage to increase the total amount of investment for a commercial property or any other project. Another factor about mezzanine financing is that it is subordinated debt, meaning that the lender agrees to be paid as second priority to the bank.

Companies and investors seek this source of financing to leverage their returns while still raising debt from non-bank lenders through financing agencies such as Stamford Capital. They receive the first part of the investment as a mortgage from a bank, put a portion of money from their own pocket for buyout and receive the other part from mezzanine sourcing. This also helps an investor diversify their equity over multiple projects.

By leveraging your property in the beginning, you ensure that you make a profit on your investment and have the opportunity to work on other projects.

Key Points On Bitcoin Investment

Key Points On Bitcoin Investment

Key Points On Bitcoin Investment

If the idea of investing in cryptocurrency didn’t excite you before 2017, there’s a good chance it caught your attention last year. Bitcoin, in particular, had a sensational year, starting right around $1,000 in early January and skyrocketing to nearly $20,000 toward the end of the year. It would be easy to look at the cryptocurrency market and groan at the idea of having missed the train; then again, plenty of people are even now looking to hop aboard in the hopes that these bizarre digital currency alternatives just keep climbing.

I can’t tell you whether or not that’s a good idea. Frankly, no one can. Bitcoin and its fellow digital currencies are operating in uncharted territory, and while people can draw comparisons to the currency trade or to other valuable commodities, there’s not really any exact parallel that informs us as to where bitcoin will go from here. What I can do, however, is lay out some of the key points that should go into any decision or analysis of this kind of investment.

The 2017 Surge Is Over

The 2017 surge in bitcoin was quite something to behold, even if you aren’t really interested in investment patterns, cryptocurrency, or finance. It just isn’t the sort of thing that happens very often, and those who played it correctly were surely able to make a lot of money. However, it’s important not to get caught up now in what happened a few months ago. In late January bitcoin slipped below $11,000 with all major cryptocurrencies feeling the pressure. While it may yet start climbing again as it did before, this proves beyond doubt that bitcoin is volatile if nothing else.

The Spectrum Of Predictions Is Wide

Without touching on any specific advice from high profile people in the cryptocurrency and financial investment worlds, it’s important to point out that the spectrum of predictions for 2018 and beyond has been wide. Some would have you believe bitcoin is about to crash to the point that it’s essentially worthless; others see 2017 as nothing but a tease for far greater climbs to come. Seeking advice on this sort of thing is important, but be careful not to buy into the most outlandish predictions you see in either direction just yet, because there is bound to be a credible expert making the exact opposite prediction.

The Wallet You Choose Is Important

For those who haven’t bought bitcoin before, the idea of a wallet might seem like a secondary concern. In fact, it’s an extremely important aspect of the process. Bitcoin wallets store the digital keys you use to access your store of bitcoin online (because there’s no such thing as actually possessing physical bitcoins). It helps to think of them as bank accounts or investment portfolios full of cryptocurrency. These wallets come in five forms, and analyzing those forms (desktop, mobile, web, hardware, and paper) is as important as analyzing when to buy and sell. The different types of wallets offer different security perks, different levels of convenience and ease of use, and in some cases different fees for transactions.

Regulatory News Matters

People who are looking into investments like to research the different things that might influence what happens to those investments. It’s the only appropriate way to approach things, but it’s particularly tricky where bitcoin is concerned. Because cryptocurrency is new and to some degree experimental – not to mention fully digital and fully decentralized – it would almost seem to be free from influence. What we’re learning more and more, however, is that regulatory news matters. Bitcoin is for the most part not regulated around the world, but when news breaks of a major economy (such as Japan, recently) trying to restrict bitcoin in any way, prices can drop. It’s just something to keep in mind.

Bitcoin Has No Comparison

People seem to be very eager to compare bitcoin to other lucrative commodities from the past – most typically oil and gold. However, comparisons like these tend to be simplistic and ignore the reality that bitcoin is unlike anything we’ve ever seen before. As The Telegraph put it bluntly, bitcoin is not the new gold despite its “glittering” run to close out 2017. Oil has a practical use, and gold is a tangible resource that has literally been used to back currency. Bitcoin, by contrast, is entirely made up, with its value backed by little more than its own potential. It’s a brand new concept, and one without a comparison – for better or worse.

We Have Seen This Before

We Have Seen This Before

We Have Seen This Before

We Have Seen This Before! The Fuse on the Subprime 2.0 Debt Bomb is About to Ignite, says Graham Summers, Chief Market Strategist Phoenix Capital Research:

The Subprime 2.0 story is now gaining traction in the financial media.

By way of brief review, here is the template for Subprime 1.0 (the mortgage meltdown).

1)   Banks, hungry for profits, began issuing mortgages to sub-prime borrowers (people who couldn’t possibly pay the loans back).

2)   Housing prices and sales began to fall.

3)   Subprime borrowers began defaulting on their mortgage.

4)   Subprime mortgage lenders began to collapse.

5)   A crisis unfolds as the issue spreads throughout the banks.

Subprime 2.0 is following the exact same pattern. Just replace the words “housing” with “automobiles” and “mortgages” with “auto-loans.” As the Wall Street Journal  notes…

We Have Seen This Before! Banks Pull Back on Car Loans as Used-Auto Prices Plummet

Car loans have been among the fastest growing consumer lending categories since the last recession. Banks and other lenders began increasing originations about seven years ago in search of more revenue as the mortgage market slumped.

As competition intensified, lenders loosened underwriting standards by courting borrowers with lower credit scores and extending repayment periods on loans. Small nonbank lenders also jumped in, relying on the bond market as an outlet to sell their loans.

But increasing losses have sapped some banks’ enthusiasm. Annualized net losses on securitized subprime auto loans increased to more than 10% late last year, the highest level since February 2009, according to Fitch Ratings. The figure slipped back to 9% in March, but that was the highest loss reading for that month since at least 2001.

Source: WSJ

In terms of the above template Subprime Template, we’re currently at #3 and on our way to #4.

All we need now is some auto-lenders to start blowing up, and the fuse on the Subprime 2.0 Debt Bomb will have been lit.

Keep an eye on Ally Financial (ALLY) and Capital One (COF). Both have large auto-loan exposure.

When Subprime 2.0 ignites the markets will move into crisis mode.


3 Ways to Vet an Investment Opportunity

3 Ways to Vet an Investment Opportunity

There are 3 ways to vet an investment opportunity. From time to time, we all get the “hot tip” about an investment opportunity or new business venture. These “can’t miss opportunities” are often fast moving, and you need to make quick decisions.  Whether it’s a real estate purchase, a niche investment opportunity or a start-up business, there are general guidelines that may be helpful to consider when deciding how and if to proceed.

3 Ways to Vet an Investment Opportunity

  • Management team:

Whether it is real estate, investments or a new business venture maybe you should ask:  Who is behind the opportunity and what is their experience? While we all know to be wary of a proposal or return that sounds too good to be true, knowing who you are dealing with, their track record and experience in this particular field may go a long way to get you comfortable that this venture has a chance for success.

  • Other Investors:

Check out the other investors when you are approached about an investment opportunity. You might want to wait to see the size of their investment. That could give you comfort that you are not throwing your money away investing in a project that may never get off the ground. Yes, the first-in are promised a greater return,  but it is safer to wait until the group is closer to its ultimate goal.  It is also important to know the relationship between those seeking the money and the investors that have already infused the group with cash. While a third party investor with experience can add credibility, money from “Aunt Sally” should give you know comfort.

  • History:

A group seeking your investment has been in business for a while. If they are looking to expand, they should be able to show you their history. Any existing company worth investing in should have clean books and records. It may not be a bad idea to also speak to their bookkeeper or accountant. These financial professionals can provide you just insight into the cash flow of the business.

Remember:

If a group or individual is approaching you to invest in a rehab project, rental properties, start-up ventures, secondary market structured settlements, franchises, or any of the myriad of legitimate opportunities, They should bend over backwards to give you what you need to invest your hard earned money. If they can’t provide you with the comfort, move on- you aren’t missing any opportunity you are avoiding a mistake.

About the Author:

Kathy Manson is a Finance Coach and Blogger. Currently, she is working on cash for structured settlements at www.catalinastructuredfunding.com. She is very proactive and aware about each and every update of financial changes in the industry.

Useless Advice

Useless Advice

Useless Advice

To see how misleading the Fed’s interest rate hike projections have been in recent years, have a look at the chart below.
As you can see, projected interest rate hikes compared to actual rate hikes differ drastically.

I don’t know what’s worse… the Fed’s forward guidance track record or the people who actually trade on that guidance.

Yet there I was on Wednesday night watching a Harvard-educated “analyst” on Fox News telling “Special Report” anchor Brett Baier that the most important thing investors needed to be concerned with was the Fed’s plan to raise rates three times in 2017.

That’s utterly worthless advice.

Hold on. I am being kind.

That’s moronic advice.

The data clearly shows that the Fed doesn’t do what is says it’s going to do.

Look, does anyone not sniffing bath salts believe the Fed is going to continue raising rates on schedule if the U.S. stock market craters… or if Europe implodes… or if China’s credit bubble bursts?

Please.

There are countless Fed “variables” it will use to justify altering its plan… as it has in years past.

The bottom line is the only thing of value we learned from the Fed this week is they raised rates on Wednesday.

That’s it.

What it does in 2017 has no relation to its stated projections, just as was the case in 2013, 2014, 2015 and 2016.

Worrying about the implications of the Fed’s rate hike timetable is a time-sucking charade designed to bleed you dry. The Fed and the media are never on your side.

Focus on the only truth you know, and that is the price action of all markets.

Let the price action dictate your actions, your buys and sells. That’s what winners do.

Please send me your comments to coveluncensored@agorafinancial.com. Let me know what you think of today’s issue.

Regards,

Michael Covel
Editor, Covel Uncensored

The Fed’s “Debt Monster” Is Calling the Shots

The Fed’s “Debt Monster”

Bill Bonner calls our attention to the danger:

You know our prediction: The Fed will never willingly lead interest rates to a neutral position.

It can’t. The FED  has created a debt monster. It must feed this Frankenstein with easy credit.

This time last year, the Fed began its “rate-tightening cycle.” That is, it began raising short-term interest rates.

It pledged to continue to do so in 2016. But then it diddled and dawdled, fiddled and fawdled… claiming to be on top of the situation… watching its “data” come in like a fisherman’s wife waiting for the return of the fleet… and not wanting to admit she was already a widow.

What it was really waiting for was a place to hide.

The Fed can raise short-term rates. But it will have to follow, not lead. It will have to hide in the shadow of rising consumer prices, staying “behind the curve” of inflation expectations.

That way, the expected real interest rate – the rate of return on your money above the rate of consumer price inflation – never really returns to neutral.

Already, the price of a barrel of crude oil – a key input into prices across the economy – is twice what it was 10 months ago. Leading business-cycle research firm the Economic Cycle Research Institute says the inflation cycle has turned positive.

And already, foreign nations are talking about retaliating against Team Trump by canceling orders and imposing new tariffs in their own versions of “better trade deals.”

This, too, is bound to raise prices.

Forget speculating on stocks, options, or other risky, low-probability moneymaking schemes. This wealth-building formula is the most reliable way to make seven figures in seven years or less in today’s uncertain economy…

Funny Money Antics

But if consumer price inflation were really a concern, the bond market would race ahead of the Fed, imposing its own regimen of rising yields.

The Fed’s increases would be too little and too late to have any real effect on the outcome.

Bondholders don’t care much about nominal rates. If consumer price inflation were to rise to the Fed’s 2% target, for example, bondholders might clamor for a 4% yield to give them a positive 2%.

That is a big increase over the 52-week low of 1.32% the yield on the 10-year Treasury note hit on July 4.

But you don’t get that kind of seismic shift without cracking some flower pots.

Much of the world’s $225 trillion in debt is calibrated to borrowers who will have a hard time surviving a 3% interest rate world, let alone a 4% one.

This is an economy that can stand a lot of grotesque and absurd “funny money” antics. It can survive a bizarre financial world; it can’t survive a normal one.

As inflation expectations increase, investors do not sit still and watch their retirements, their savings, and their fortunes get broken by inflation.

They don’t wait for the Fed’s policy-setting committee to meet. They don’t reflect calmly as the Fed’s wonks collect their “data” and create their “dot plots.”

Instead, they act out. The monster gets mad and starts throwing things.

First through the window are the bonds. They get chucked out before inflation manifests itself fully… and long before the Fed increases its key short-term rate.

Then, the “boom” turns quickly into stagflation… as higher borrowing costs pinch off growth even as consumer prices continue to rise.

But more likely, inflation is not really surging… Not yet.

And most likely, it will be the painfully apparent when the U.S. economy goes into recession next year.

Then, it will be stocks’ turn to get tossed out, while bonds sneak back in through the side door.

It will also be apparent that the Fed has taken another false step… that the recovery was a sham… and that it’s the debt monster calling the shots, not Janet Yellen.

Regards,

Bill Bonner

The Retirement Savings Crisis: What Will Fix It?

The Retirement Savings Crisis: What Will Fix It?

The Retirement Savings Crisis: What Will Fix It?

The numbers are staggering. An astounding $14 trillion retirement crisis is looming for millions of Americans. Nearly a third of the workforce does not own a single retirement account – not a 401(k), not an individual retirement account (IRA). Of those who do own a retirement account, the median account balance is a mere $3,000. Rising costs, longer lives and the very human tendency to not worry about it because it’ll all turn out OK in the end is driving the numbers. There are ways to fix the retirement savings crisis before it’s too late. Here’s how.

No Retirement Plan? Get One

If you think your Social Security check will be enough to live on during retirement, think again. The Social Security board of trustees anticipates that by the year 2035, all excess cash reserves will be gone. Benefits could be cut as well. Even if neither of these events occur, Social Security benefits will barely touch your living expenses. You need more.

If you don’t participate in an employer-sponsored IRA or 401(k)plan, sign up if your company offers one. You have to start somewhere and automatic contributions are a great way to do just that.

Consult a Professional Retirement Planner – Now

One 401(k) or IRA is not enough to live a comfortable retirement. Investment portfolio management, retirement savings management and strategy development are all services a professional provides to help you achieve your financial goals. A professional looks at where you are now, what you have to do to live a comfortable retirement and develops a plan to get you there. Professionals recommend the investments that work best for you, no matter what your age or financial picture. A retirement manager creates a customized solution that may include mutual funds, ETFs, annuities and other types of investments. If you’re older and starting to save late in the game, you may be reluctant to seek the help of a professional. You may feel embarrassed or ashamed, but there’s no need. Retirement planners are there to help and many have successfully helped clients in your situation – or, at least the financial planner you work with should be experienced in helping others in your situation. In fact, if you’re starting late, you need the expert advice a professional retirement planner brings to the table.

Living Longer Means Working Longer

One of the biggest reasons for the retirement savings crisis is the longer and overall healthier lives of today’s population. The amount of savings needed now far outpaces what used to be the norm. What’s a great way to improve your own retirement outlook? By working longer. There are potential problems with working harder, however. Economist David Neumark’s research indicates that employers tend to discriminate against older workers. And, there’s the problem of health issues as people age. Still, if at all possible, working longer ensures a more comfortable retirement when the time comes.

Don’t Wait

It’s much easier to do nothing and hope it all comes together in the end. But, the longer you put off, the less you’ll have later on. If you take steps now to increase your savings and reduce spending, you can avoid becoming part of the retirement savings crisis.

Gabby Revel, Founder, writer, editor & administrator at Fertile Content, is a freelance writer who specializes in lifestyle topics, as well as science and technology, investing, and personal finance. She also has a passion for adorable dogs of all kinds. She currently lives in the San Francisco Bay Area.

There is A Place for Precious Metals

Rosland Capital, a premier precious metals asset firm, is your go-to gold, silver, platinum and palladium resource. Founded on honesty, high-quality customer service and public education, Rosland Capital exists to educate you on the benefits of strengthening your assets and diversifying your portfolio.

Whether you are looking to safeguard your retirement savings, hedge against inflation or against potential stock market volatility, Rosland Capital offers precious metals in physical form, precious metal-backed IRAs, and the knowledge base you need to realize the benefits of precious metals.

The graphic below is an additional resource developed to help guide those who are seeking insight on the various savings and investment options for retirement.”

rosland_capital_avenuetoretire_v05

Unusual Meeting Today

USD 4-11-16

 

Quite the day so far. Janet Yellen calls a special meeting, the President and Joe Biden will have unusual meeting today, Gold is up fifteen dollars and the dollar is at the bottom of its range. What will happen next?

What does the new frontier of negative interest rates in the global arena mean for investors?

What does the new frontier of negative interest rates in the global arena mean for investors?

What does the new frontier of negative interest rates in the global arena mean for investors?

 

Cindy Yeap / The Edge Malaysia discusses “What does the new frontier of negative interest rates in the global arena mean for investors?”

“For RHB Research Institute executive chairman and chief economist Lim Chee Sing, NIRP “can only be seen as a temporary expedient to hold up financial markets”, albeit one that has little room to push for more economic growth in this relatively mature stage of the growth cycle.

“That means rising investment premiums and heightened market volatility will likely be the order of the day in the days ahead. Portfolio investors may have no choice but to build some degree of defensiveness into their portfolios to balance out the risks. This implies rising appetite for high-yield stocks,” Lim says.

“Even dividend stocks have caveats in the days ahead, largely due to their rich valuations vis-à-vis tougher conditions to grow at the same rate as before. For example, sin stocks might have to contend with higher taxes; the fees for telecommunications spectrum refarming have yet to be revealed; and consumer stocks have to contend with the possibility of a further tightening of consumer spending. Then, there is the higher labour cost.

“The focus should be on stocks with an improved business model, reasonable earnings visibility, strong cash flow, a dividend policy and, thus, sustainable dividend payments. Of course, one cannot ignore valuations but rich valuation stocks are still susceptible to a selldown should the global economy take a turn for the worse,” Lim adds.

“Gerald Ambrose, CEO of Aberdeen Islamic Asset Management Sdn Bhd, too, noted expensive valuations after a good run in recent years.

“We are keeping a close eye on notable high-yield companies, like the cellular phone companies, the brewers, tobacco companies and the REITs (real estate investment trusts). We’re currently about halfway though the 4Q2015 results season and to be honest, a lot of the better-managed companies have been able to find efficiencies to enable dividend payout to remain high. However, after outperforming for over a year, a lot of the high dividend yield companies are hardly cheap,” he says.”

BOTTOM LINE: Focus your strategy on yield and gold. Gold is an alternative when interest rates are negative adjusted for taxes and inflation.

Copyright © 2007 Mover Mike. Design by Anthony Baggett.


Fatal error: Call to undefined function is_sidebar1_page() in /homepages/7/d182093141/htdocs/movermike/wp-content/themes/networker-10/footer.php on line 13