SDB Finance Information

Finance information for you

Posts Tagged economics

The Rent Apartments Business In Mississauga And Their relationship With The Mortgages

Apr 8

Posted by admin in Credit

What points you must consider when choosing a mortgage to get into this business?

The elements to get a mortgage are analyzed in this document, in order to get a better understanding of them.

The amount to be lend.

Banks usually granted without additional guarantees, up to 80% of the appraised value of the property. If with your current savings, you reach the 20% left, you are in the profile that banks consider affordable, otherwise you will need very high mortgage rates or additional guarantees.

The mortgage interest rates.

The banks rates are divided most of the times in 3 different groups: variable, fixed and mixed. With the variable rates one of the benefits is that when the rates are low you will pay a cheaper fee, but in the same way when rates are high you will pay more. The fixed rates most of the times are more expensive than the previous ones, but this will give you the confidence to pay the same amount of money all the time. The mixed rates usually will be fixed in the first two to five years of the loan and after that time there will change to a variable interest rate.

The amortization of the mortgage.

The increase of interest over time comes when you chose longer repayment periods (as you can imagine the rise of the final mortgage amount grows as well), nevertheless on the contrary if you chose a shorter repayment period of time the interest will be less since the main amount is returning to the original lender faster (furthermore the total cost of the mortgage decreases); from this perspective a higher quota has to be expected since more capital is amortized in less time.

Other related products

Some banks offer other products that can improve the general conditions of your mortgage; this products are credit cards, insurance (multi-risk and life); do not forget to ask for the cost of each one of these products and compare them with other similar opportunities in the market because some times they add extra expenses to the package and the benefits are not easy to see.

The bank part: commissions.

Commissions are like any other factor in business, negotiable, because some banks can charge more than others, remember that there are just five types of commissions. Opening and study, partial redemption, cancellation, subrogation (change of entity) and modification (novation in financial terms), always try to negotiate this commissions because many people I know have had some commissions reduced to zero.

Tags: , , , , , , , , , , , , ,

No Comments

A Look At The World Of Economics

Jan 21

Posted by admin in Finance, Stocks Mutual Funds

The subject of economics is one of the most important, but it is also one of the least understood. It has been said that getting a roomful of economists to agree on anything is an exercise in futility, and this has led many people to assume that the world of economics is too difficult for the lay person to understand.

While the world of economics can be intimidating and difficult to understand, simple economics as it applies to real people is quite a bit more straightforward. After all, when you set a family budget for the month, you are engaging in economics. When you shop around for the best price on that plasma TV or laptop computer, you are engaging in economics. When you study the stock market to choose the best mutual fund, you are using economics to guide your decision making.

Fortunately for all of us, it is not necessary to hold a masters degree in economics in order to make sound economic decisions. A careful study of the market around you and a good understanding of the business world you are in can be your guide when it comes to economics. Starting with a business you know can be a good way to make sound economic and investment decisions, and a great way to start building your financial future.

Learning how to save and invest has always been important, but it is perhaps more important today than ever before. There is no doubt that the economic landscape has been changing, Those traditional defined benefit pension plans that protected our parents are fast disappearing, and today every worker needs to have a good understanding of economics and the stock market in order to effectively invest his or her 401(k) to save for retirement. It is important to begin a comprehensive economics savings plan as soon as possible, since time can help savings grow and accumulate for the future.

Many people think that the study of world economies is a dry and boring pursuit, but in fact this is not the case. The world of economics affects all aspects of our daily lives, from how much we pay for a gallon of gas to how much we pay for that morning cup of coffee. Learning how the economies of the world work can have a great affect on your own economy, so it makes sense to learn at least a little bit about this seemingly esoteric science.

Tags: , , , , ,

No Comments

How To Sell Your Home in a Down Economy

Jan 4

Posted by admin in Real Estate

Okay, so, the economy’s down and you’re feeling down because of it. You had planned on putting your home up for sale by now. You’re discouraged, though, because on your street alone you see three other homes for sale. How can you compete, you wonder, with so many other homes on the market? Don’t lose heart, you’re about to learn how. Stand Out. The challenge you have ahead of you is how to make your home stand out from the rest. The way you do that may not be in the way you think, though.

Before you contact a realtor to put your home up for sale, there are several things you’re going to have to take care of. The first is to sit back and take a breather. Now, grab a tablet and a pen.

You’re going to need to walk through your home from one end to the other. Your mission is to make note of every little thing that needs to be repaired or completed. You need to note absolutely everything. Only note projects you’ve started or items that are in obvious need of repair. Do not note anything that you would like to get done on the home, but never started.

Organize your list according to room. After you’ve walked through each room of your home, walk outside and take more notes. What about your yard? Are there any bare spots you need to fix, plants that are dying or dead, stones or yard bricks out of place? How about the exterior of your home? Any repairs needed there? Also, the color. Is it neutral, or did you paint it that bright blue to match the color of your spouse’s eyes?

Make note of it all
Next, you’ll need to make a plan as to how you’re going to get it all done. Assess how much time you think all of it will take, and make a schedule as to what days and times you’ll commit to work on it. Set goals as to when you want to have each room finished. Set a final goal for the date you want to have the house ready for market.

Get your spouse and children involved in the project. You can create some memories. Your family will always remember how you all worked together to get that home sold. Ask extended family and friends to help out, if you need it. Try to keep on task and complete your repairs by your due dates. You’ll be glad you did.

All repairs are finally done and everything’s checked off your list? Then, there’s one more thing you need to consider. Once you contact a realtor, you’ll be provided an estimate as to how much your home is worth in the market. Want to be an aggressive seller? List it for a percentage less than the market value of your home. Use the percentages as follows:
- Up to $150,000 = 10%
- $150k to $500k = 8%
- $500k to $1m = 5%
- $1m and up = 2%

You have to keep in mind that new home listings get the largest viewing audience. If you don’t price it right going into the listing, you’ll miss out on major opportunities to sell your home to the right audience. Your home will get less viewing after it’s been on the market after a few weeks. Even if you lower the price several weeks after you’ve listed it, the home has lost some significant value and luster in the eyes of the buyer. You probably won’t get what you’re asking for. Some other considerations you might include are incentives for an agent to sell your home, or incentives for a buyer to buy your home. Offer to pay half of the closing costs.

Now that you’ve given it much thought and decided on a competitive sale price, it’s time to call your realtor. Interview several in your area before you decide on one. Call the actual realtor office and find out who the top sellers are. These people are the ones you want listing your home. Find the right realtor, and have your home listed for sale.

You are now equipped and empowered to put your home on the market and watch it sell itself. If you follow through with all that’s needed, you’ll be hugely successful in the sale of your home.

Tags: , , , , , , , ,

No Comments

The Capital Gains Tax Scourge

Dec 28

Posted by admin in Real Estate

The combination of an ailing economy and a struggling housing market during an election year has created the perfect storm to once again bring issues concerning the federal capital gains tax rate to the forefront of the public’s attention. As our nation’s government continues to further empty its coffers in an attempt to protect and stimulate the economy, many political figures and members of the media are forcefully asserting that an increase in the capital gains tax rate is needed to offset the government’s proposed massive expenditures. Unfortunately, this theory is fatally flawed according to both economic principle and common sense. In fact, an increase in the capital gains tax rate during these difficult times will likely enhance the need for further government intervention and expenditures to remedy the damage that a rate increase would generate.

For clarification, the current federal capital gains tax rate of 15% does not pertain to ordinary income, but instead is applied against gains achieved through investments in real estate and securities such as stocks & bonds. Additionally, the state governments typically tack on additional capital gains taxes for their respective residents. Also understand that national residential real estate values have dropped by more than 35% over the past few years with an unprecedented amount of inventory still on the market for sale. The Dow Jones Industrial Average, our nation’s key stock index, decreased by more than 40% in the year 2008 alone.

By applying the fundamental economic principle of supply and demand it is easy to see that the supply of real estate and securities for sale drastically exceeds the consumer’s current demand to purchase. The inevitable result from such an unbalanced relationship between supply and the corresponding demand is a decrease in the perceived value of real estate, stocks and bonds. This is precisely why the federal government, economists and prominent members of the business world are constantly attempting to increase demand by acting to encourage the public to once again muster the confidence to invest in real estate and securities.

It is therefore unfathomable to suggest that the United States’ economy will be better served by increasing the capital gains tax rate for those that courageously make these investments. This is especially true at a time when confidence in investment is more direly needed than it has been for generations. The way to our economic salvation is undisputedly through reducing supply, so it is important that we don’t punish those individuals that could represent the much needed demand.

The very existence of a capital gains tax surely has Alexander Hamilton continuously turning in his grave. Our country’s founding fathers were generally of the mindset to tax primarily those activities that the public and the government wanted to discourage. Taxing the purchase or sale of foreign made goods, tobacco, luxury items and alcohol made sense to these brilliant architects of a new nation. However, the imposition of taxes on activities that directly promote the interests of the nation as a whole was certainly not what they had in mind.

Tags: , , , , , , , , ,

No Comments

Real Estate Investment in a Recession

Dec 23

Posted by admin in Real Estate

Have you ever noticed how buyers flock to purchase property in droves when real estate prices are at their peak, yet buyers are relatively scarce when prices are most affordable? Notwithstanding the fact that this occurrence defies the generally accepted investment strategy to “buy low and sell high”, one can’t help but wonder why attending social gatherings during the real estate boom years of 2005 and 2006 would inevitably lead to engaging in a conversation about someone’s real estate investment and the promise of future profits to be derived from the venture. It’s not all that surprising that many of those recently boasting about their real estate exploits have softened their tone while seasoned investors, dormant for the past six or seven years, have begun to once again start purchasing lucrative investment property. Despite news about the recent real estate and financial industry tribulations that the public is seemingly bombarded with every day, the last few months of 2008 provided a relatively quiet, yet dramatic, surge in real estate sales.

The National Association of REALTORS® (NAR) has reported that residential home sales have increased by an astonishing 115% when the last quarter of 2007 is compared against the same period for 2008. Have the experienced investors purchasing all of this property been ignorant to the steady stream of media reports warning of declines in real estate values? The answer is no, they have simply been waiting for the right time to emerge like a small swarm of locusts to steadily reap houses for sale like crop. In fact, their buying presence has been so prominent that national housing inventories of homes for sale have significantly decreased during 2008’s final quarter, a reliable sign that demand is beginning to once again catch up with supply.

But how do these brave souls know precisely when they are buying at the bottom of the market? Do they throw caution to the wind and simply force themselves to muster the courage to purchase property despite the fact that values may continue to decline in the future? The simple answer is that savvy real estate investors do not purchase property with the expectation of immediate appreciation in value. Rather, investment real estate should be purchased based on the property’s potential for positive cash-flow. Positive cash-flow occurs when a property’s rental income exceeds the owner’s costs to maintain the property. Consequently, when a property provides a positive cash-flow, a decline in real estate prices is of little concern since the owner can simply enjoy the income his property generates until the market revives and the property can be sold for further profit.

During the real estate boom years our nation became blindly infatuated with the appreciation of real estate prices, which represents the amount of value that a property will gain over time. So called house “flippers” brazenly leveraged money to buy numerous properties with the expectation that their values would increase, thus enabling them to sell the properties for handsome profits in a short period of time. These novice real estate quasi-moguls, often addicted to HGTV and other television shows created to promote the industry like Flipping Out and Flip This House, regularly failed to consider property cash-flows prior to making their purchases. Why bother when real estate values will always continue to appreciate, thereby alleviating the need to hold properties for long? After the housing bubble burst, many of these speculators realized that they shouldn’t have built their investment houses out of sticks, and social gatherings became pleasant once again.

Seasoned investors build their investments out of bricks by carefully and conservatively analyzing a property’s cash flow potential prior to purchasing. The primary reason that these investors have been sitting on the sidelines for many years is that most real estate prices have been far too high to generate positive cash-flows and a reasonable return on investment. It hasn’t been until recently that both residential and multi-family housing prices have retreated to levels where rental income will cover monthly mortgage payments and other operating costs. Further, with the construction of new housing and apartments decreasing to a virtual halt, a still rapidly growing local population, and many families displaced from foreclosed properties, an investment property’s owner is free to choose from a tenant base that is now stronger than ever. One can clearly see why a decline in real estate sales prices typically accompanies an increase in monthly rental prices.

No matter what the year 2009 holds in store for real estate investing, it is essential to remember that investing in real estate should always be considered over a long term. Although the opportunity for a “quick flip” may present itself, the distinguishing benefit to sound real estate investments is their ability to provide income no matter what the economy throws your way.

Tags: , , , , , , , ,

No Comments

A New Direction for Senior Housing

Dec 21

Posted by admin in Real Estate

Home builders are currently facing a rapidly emerging demographic that has forced the housing industry to begin shifting away from traditional forms of real estate development into methods that cater specifically to the needs of seniors. According to the United States Census Bureau, 100 million U.S. citizens, or a third of the country’s population, will be 50 years or older by the year 2010. Many of these seniors and retiring Baby Boomers are now starting to transition from larger homes in which they have resided for years into more manageable accommodations. Consequently, real estate developers are currently scrambling to provide housing that meets the need of the Baby Boomer generation.

Home builders are not only adjusting due to the massive size of the senior population on the horizon, but also because of the significant purchasing power of this blossoming demographic. The younger generations that the housing industry has focused its efforts on in recent years have been relatively poor in saving their earnings and liberal with financing their homes. Conversely, seniors generally maintain strict personal finance principals whereby wages are saved and any debt is paid down as quickly as possible. Therefore, while many younger homeowners are using the bulk of their earnings to pay heavily leveraged home mortgages, many Baby Boomers are preparing to utilize their savings and the equity in their current homes to purchase the residences in which they plan to retire.

The housing industry is also embracing a shift away from the traditional assisted-living facilities into communities that offer seniors more independence and freedom. Boomers are frequently relocating into planned-unit developments (PUDs) and gated communities where regular dues are paid to a governing Homeowner’s Association (HOA) that provides for many of the amenities that they require. HOA’s will often maintain a homeowner’s yard, roof, and home exterior, while also providing for utilities, security and common areas that can include pools, clubhouses, golf courses, tennis courts, walking trails and community activities.

Other developments address many seniors’ desire to live near people with similar interests at a comparable stage in life by limiting homeownership to those over a certain age. These retirement communities also often offer a neighborhood grocery store, a pharmacy, restaurants, and more community involvement and activities that can help with the eventual transition to assisted-living facilities. Seniors have become increasingly attracted to communities that offer the convenience, mobility, amenities and freedom to maintain rich and active lifestyles as opposed to the institutional and more sterile environments provided by the more traditional models of senior housing facilities.

In terms of home features, a recent survey conducted by the Internet Home Alliance Research Council revealed that 63% of seniors have home offices in their new homes, while an amazing 70% have broadband internet access at home. The days of studio apartment-style senior living are on the wane as the vast majority of our aging population is looking to the increased square footage offered in homes with at least two bedrooms and full-sized kitchens. These findings clearly evidence the desire of seniors to maintain their connection with the world and further prolong their preferred lifestyles.

It is clear that seniors and Baby Boomers are expecting longer lives and better health and mobility than previous generations. As a result, the housing industry will need to continue to adapt in order to provide these very important segments of the population with housing that will foster the environments and lifestyles these groups require.

Tags: , , , , , , , ,

No Comments

Wall Street Snake Oil

Sep 27

Posted by admin in Stocks Mutual Funds

If you are the average American investor it means you have no idea what or when you should be buying and selling. Stocks? Bonds? Mutual Funds? Limited partnerships? ETFs (Exchange Trader Funds)? Money Markets?

Any broker is ready and willing to prescribe his brand of snake oil. Notice I left out \’able\’. The brokerage houses require their \”experts\” to stick with the party line and to recommend only what the house wants sold. It might be a new issue or some excess inventory they want to move.

Brokerage houses to this day do not want their brokers to think for themselves or to come up with any creative method to help the customer make or preserve his money. No, that is not what they say, but it is what they do.

History has proven that a knowledge of technical analysis is far superior to fundamental analysis. The fundamentalist studies corporate sales, P/E ratios, gross margins, cash flows, earnings, growth, management\’s background and economic data. When most of these factors look their best is when the market is at the top and gives fundamental buy signals. When they look the worst is at the bottom and that is when these companies are the best buy – sometimes.

The best signals are given by technical analysis. With today\’s computers it is relatively easy to follow hundreds of stocks or funds by setting up specialized programs to alert the investor when certain technical indicators are aligning to give investment signals. These parameters are not subjective, but mathematical. One large portion of technical analysis is based upon charting which is very subjective and requires a great deal of applied apprenticeship.

The greatest amount of customer snake oil is made from fundamentals as corporate \”facts\” are most easily distorted from huge sources of information. It is somewhat more difficult to hide empirical facts especially when placed on charts.

Snake oil comes in many forms, but mostly in beautiful color brochures about their projected performance. Pictures of their offices and equipment. On CNBC-TV there will be interviews with the company CEO who will paint a glowing picture of anticipated performance and profits. Fingers are twitching as the investor wants to write a check to buy some of these magnificent shares. Never listen to the company CEO. Do you expect him to tell you any bad news?

It takes a while to develop a story and have it seep into the pores of broker/salesmen. They are the targets of many snake oil presentations as these are the people who then sell it to you. There is one way to check out the story\’s facts. Put up a chart on your computer screen that is from one to three years and if it has a price appreciation that is slowly ascending at about a 30 degree angle this one might be a good buy. If it is declining look no further. Pass or sell out if you own any.

Always be cautious. What you might be getting is a big expensive bottle of snake oil.

Al Thomas\’ book, \”If It Doesn\’t Go Up, Don\’t Buy
It!\” has helped thousands of people make money
and keep their profits with his simple 2-step
method. Read the first chapter at
http://www.mutualfundmagic.com
and discover why he\’s the man that Wall Street
does not want you to know.

Copyright 2005

Writen By : Al Thomas

Tags: , , , , , ,

No Comments