My Amortization- Technique 1

Hi Prospects & Friends,

 

I wanted to quickly share one of my amortization techniques I use on some of my properties. As many of you know everyone at times faces hardship whether it's a job loss, medical crisis, loved one ill or etc these situations can sometimes cause us to be set back with in our own personal/business financial decisions if it happens sudden or unexpected. I always plan for any hardship and allow the planning in advance to assist me with bettering my decisions later down the road. One thing to address in your life is when you purchase a home if you want to pay it off sooner don't try and get a loan term that is shorter than a loan term that will benefit you better future wise, just because you feel you want to eliminate the monthly interest present wise. I say this because once you get a loan whatever term you choose you are stuck with it and will have to refinance it to get out. So to bypass all that I suggest consider choosing a term that best fits you future wise than present wise, then apply the shorter term payment to the longer term loan as please. I like to first do the amort tables for a 15yr, 20yr, and a 30yr on the choice of property I'm financing and compare the monthly payments. Next I will make sure their is no prepayment penalty on the loan I want and begin to do my technique. I create the amort tables for the 15yr, 20yr, and the 30yr, then I request the loan term that will benefit me greatly future wise, not present wise. Once I've chosen the loan term then I apply the shorter loan term to the longer loan term to cut interest for the first 2 years when I make my monthly mortgage payments. Since I have the amort tables already printed futuristically in front of me I can see many years in advance what the loan amount actually looks like. So then I apply my every 5 year rule "Technique 2" which will be eventually addressed in another blog post. See my example below of Technique 1:

I purchase a home for $215,000 and put down 20%. Loan amount will be $172,000 @ 5.5% interest. I then apply the next step to analyze the term payments. (Payments are not PITI they are only PI since I based it on 20%, if you have a PITI then just deduct everything except your PI and you can proceed) On a:

15yr payment is $1,405.38

20yr payment is $1,183.17

30yr payment is $976.60

I analyze the term payments and because the $976.60 appeals to me and I'm thinking futuristically if something happens I don't want to have to deal with being stuck with the $1,405.38 for 15 straight years and the only way to get out of the 15yr term is to refinance which is goal to avoid from beginning. So I accept the 30yr term and make sure there is no prepayment penalty and when the loan payments start coming I apply the 15yr term payment for the first 2yrs of the 30yr term. So for the first 2yrs of the new loan I apply the $1,405.38 to the 30yr term instead of paying the $976.60. Since I created the amort tables in advance for myself when the 24th month reaches I glance at the balances. I'm basing my example as if I closed in September 2009, so looking at the amort tables for September 2011 the loan amount for a 15yr will be payed down to $155,694.81, and the payed down amount for the 30yr will be $167,025.14. Remember the original loan was for a 30yr with a payment of $976.60 but I applied the $1,405.38 for the first 2yrs of the loan. Next thing I want to see is what is the price/sq.ft going for in my subdivision once I've reached the 24th month to see how much possible equity I've gained besides paying the extra payments I've already payed. If no hardship has occurred during the 24th month period paying the $1,405.38 then I glance at the amort tables for the loan amounts for the next 3yrs. So in September 2014 the loan amount will be payed down to $128,685.47 for the 15yr term and for the 30yr term for September 2014 the amount will be payed down to $158,784.33. So I go another 3 yrs paying the $1,405.38 and when September 2014 reaches my 30yr term will really be payed down to $128,685.47 since I applied the 15yr payment in advance. When September 2014 reaches I glance to see what is the price/sq.ft for my subdivision, then I proceed with technique 2 which will be discussed later. If you apply this technique 1 with the "Jewel Foreclosure", "Investment Analysis" articles in this blog you can really advance yourself with wealth/money/assets.

Post Cards "Blank Backs"

Hi Prospects & Friends,

For me marketing the right efficient way will help minimize my business cost and at the same time allow me to put more time with analyzing other business related stuff. Last week I decided to use a particular kind of post card, "blank backs". I ordered 200 post cards for $12.99, and the post cards I ordered I made sure the backs were blank. The front part of the post card had image/design of my choice from the store's selections , but the back was blank because I wanted the ability to leverage the backs with my own verbiage. I created a post card template with my software and customized it with my own verbiage about me and my company and the services I'm providing for this particular post card. When my post cards arrived I immediately starting printing the backs with my template I created. The post cards are brilliant and great, and because I customized the backs myself I was able to re-create thoughts generated as I brain stormed how I wanted the final customized verbiage to appear on the post card back before I printed them on my laser printer. Since the post cards were $12.99 for 200, and they are still $12.99 for 200, I decided to order 10,000 more post cards, which cost me a total of $649.50. So since my customized post card template is saved, all I have to do is order the post cards as I need them with blank backs and print my verbiage from my customized template I originally created. I recommend any small business or anyone in general trying to get the word out about their services leverage using post cards coupled with their brains creativeness.

Jewel Foreclosure- "Bank REO"

Hi Prospects & Friends,

I wanted to share a foreclosure with you all that just hit the market a couple of days ago. The property is a bank reo, and it is priced well below market for this subdivision. The price/sq.ft. for this subdivision is $173.24 as of 8/2009, but the property is currently being listed for $102.82/sq.ft. See data below for this foreclosure:

Listed for $940,500

Sq.ft. 9,147

Lot sq.ft. 37,608

7Br/5Ba/3half Ba

4 car garage

So for a 9,147 sq.ft. house listed for $940,500, that has a market price of $1,585,000 you can't beat that deal, the house stands with $644,500 in market equity just by being a foreclosure. Great deal for the person going to buy this house, they will be of great fortune. This is one of those deals where you have to analyze the estate tax laws also which if not renewed after 2010 will cause this house to be heavenly estate taxed on top of the capital gains and other required taxes. If I bought this house I would just never sell it and enjoy realizing someday who ever I leave the house too will be of great fortune, once the home is paid off. I would make sure I've analyzed every possible tax scenario to keep the prior wealth accumulated with this house.

Investing With Real Estate

Hi Prospects & Friends,

I wanted to share with all investing with real estate can provide valuable long term rewards, if you do your research wisely. I've been investing in real estate since 2003, but have been doing real estate since 1997. Real estate is only complicated to many when they realize the problems they run into require someone of expertise for such problems. It is always wise to learn the basics of real estate terminology first, then apply the advanced techniques afterwards, if your entering into this business as from the investment stand point. If you're just seeking real estate as a supplement to you're income, and don't want to leverage skills into your time, I would still suggest hiring a real estate professional & still learning the basics of the real estate terminology. Learning the basic terminology of real estate will lay down the foundation, and guide you to your valuable longer term rewards future wise. Once you've learned the basic terminology of real estate and characteristics, then get yourself familiar with what it is you want to invest in, will it be:

1. Condos

2. Single Family homes

3. Land

4. Multi-Family

4. High Rises

5. ?/Etc

All properties listed above come in the form of residential or commercial. Depending how you decide to structure the investment from the beginning will determine if it will be commercial or residential. Example I will note is land, will you invest in commercial land or residential land? Another example if you decide to invest in single family homes their classified as residential, but if you set them up in a corporation mortgage companies and banks will consider them commercial & treat them as commercial loans, as well as tax purposes will heavenly change also. So you can see real estate becomes more complicated as you engage in it more, but the key is continuing to learn everything it is to know that applies to your choice of investment. Feel free to navigate my websites listed on right of my blog under "April's Business Websites" to learn more about me and my real estate knowledge. As well as reading this blog, I offer posts I actually experience and apply investment techniques to help ones understand the principles needed to advance the situation.

Investment Analysis- Duplex

Hi Prospects & Friends,

 

I wanted to share with you all this duplex I drove by to see a couple of days ago. I'm waiting for the #'s to come down & will try to make an offer. If seller doesn't want to reduce listing price, then I will move on to the next property for my investment portfolio. I currently manage & own 7 investment properties & looking for 5 more to make a total of 12 to complete my investment portfolio, my deadline goal is to have the other 5 investment properties by 2014. I will starting explaining why I want this duplex to come down in price. First here are the #'s & details of the duplex:

Listing Price- $164,500

Contract Rent- $1,590/mth

Taxes- $230/mth

Maint Fee- $85/mth

Proposed Ins- $150/mth

Total Sq.ft. 2,770- Side 1 $795/mth, Side 2- $795/mth

Side 1- 3Br/2Ba- 1,385 sq.ft.

Side 2- 3Br/2Ba- 1,385 sq.ft.

After carefully applying my investment analysis I've come to the conclusion this property can still come down some more in list price to even give me a better opportunity. I will explain see below:

Rents are currently renting for $735/mth not $795 even though the current owner has signed lease contracts stating so. To apply my investment analysis rule to this property see analysis below:

Rents from owners current tenants are paying $795x2=$1,590-$465 (expenses)=$1,125

So $1,125x6.00/1000=$187,500 (6% interest rate)

$1,125x7.34/1000=$153,300 (8% interest rate).

So based on $1,590 rent ($795x2) range is $153,300-$187,500 this range is off because rents are not consumerate with the list price. This is where many people mess up I take it a step further see below:

Contract rents say $1,590, but current market rents say $1,470 ($735x2) so I will re-apply but work with my #'s see below:

Market rent is $1,470-$465=$1,005

So $1,005x6.00/1000=$167,500 (6% interest)

$1,005x7.34/1000=$$=136,900 (8% interest)

See how my range looks $136,900-$167,500? My range is saying I can offer as low as $136,500 or offer no more than $167,500. The current list price is $164,500, so it's falling in my range of $136,500-$167,500, but I like to keep watching people reduce the list price on a property that has great investment #'s like this one, because you can't loose! So fact is I based my range of $136,500-$167,500 on the market rent & not the contract rent to negotiate so I don't over pay, once property is bought it doesn't matter if rent is $1,590, why complain about someone paying you more in rent than market says? My investment analysis range of $136,500-$167,500 says two things:

1. I wont over pay for property currently listed @ $164,500

2. I based range on market rent which is $1,470/2 or $735/unit. So if tenants don't renew I know market rent is $735/unit & not $795/unit & when I list to lease I will always have enough rent to service the expenses @ the $735/unit because I made sure I didn't over pay from beginning to cause the mortgage to be over $1,005/mth.

I use my investment analysis equations on all my investment properties I analyze & if the #'s don't work I walk away & move to the next. Soon I will offer another helpful article about investment properties.

Business Text Messaging

Hi Prospects & Friends,

 

I wanted to share with you all how business texting has found it's way into my company A. Colette Harris Properties, LLC. permanently, & how valuable of a row it is to allow it. I manage tenants & with everyday company duties I handle, one would think a simple phone call would work. Well my conversing with my tenants has shifted from phone calls/emails to texting for repairs, to when was rent received & general questions about the rental property. I have adopted the texting, because many of the tenants work at companies where they can't use company email for personal use or restricted to making personal phone calls while at work. I get text messages throughout the day/night concerning questions the tenants may have or want to ask me. I reply quickly & get the needs of the tenant accomplished while their at work. For example I had a tenant text me last Friday, saying the bathroom sink has a leak & could a plumber come out to fix it? I texted tenant back asking what is causing the sink to leak, & tenant explained. I said I would have a plumber out Monday, & tenant texted back , "OK thanks". I would say about 5-8 texts were sent back & fourth with I & tenant to converse the repair problem. Another example is most of my tenants want texts with me saying "Received Rent" with the date included in text message. I get texts now from many of my tenants & have accepted it as part of my business & think it's a great business strategy to keep everyone happy I manage. This may not work for many of you who run businesses, & many of you may think I have adopted a un-professional communicating strategy. Well at first I thought I did, and wanted just the email/phone calls during normal business hours, but as I continue to grow the communicating continues to change with technology & people, & in my case I'm accepting the best strategy that works for my tenants. I always thought I would only received texts from family & friends, but now when my phone goes off, it will be a tenant texting me too. My rule for tenants is I will take texts until 10:00 p.m. Monday-Sunday after that the phone gets turned off.

Tax Forms/Service

Hi Prospects & Friends,

I wanted to share a business experience I had awhile back with one of my friends who is a CPA. As a small business owner I try to minimize my business expenses by carefully analyzing the situation/costs. I ran into a problem last year where I was emailing my CPA friend every month asking tax questions about 1099 misc forms, and other related tax forms. He told me April your a good friend, but I'm going to have to start charging you because your causing me to actually engage in consulting, than just a short email answer. So I said ok what is your consulting price, and he said $80/quarter (every three months) with unlimited email questions. So I then said ok I will send you the check, as I said that my brain started thinking there has to be a way to figure this stuff out by myself. So I started surfing the web and came across the Internal Revenue Site. After surfing the site for an hour I came across these things:

A. They offer free tax forms with maxi um of 1,000 for small businesses, and will deliver to your office or home for free.

B. They offer free samples of tax forms, so you can use that as a go-by when trying to fill in your own tax forms.

C. They have a free tax # to call for your tax form questions, and a rep will assist you

D. They offer business seminars to small businesses

E. There link is http://www.irs.gov/ favorite/save it on your computer so will have

So after analyzing after an hour of the Internal Revenue Website, I decided it didn't make sense to pay my friend who is a CPA $80/quarter for tax questions, when I could get what I needed from this site for free & talk to a rep for free. I called him back the next day and said why didn't you tell me about the Internal Revenue Website? He said April I have to make a living just like you and mentioned he was upset with me for going on my own to get my tax question stuff answered for free. I realized I wasn't wrong for what I did and realized he has to make a living just like the rest of us, but my personality trait of being a curious small business owner/entrepreneur caused me to go on my own to get my tax form solutions myself. So my summary is I've replaced my CPA friend with the Internal Revenue Website as my consultant which is free, and saved my company $80/quarter for tax form questions.

"Don't get me wrong my CPA friend was actually a great friend and allowed me to get away without paying all in 2007 and mid of early 2008, but it was around April 2008 he said the recession started to affect a bit and decided to charge me $80/quarter consulting fees. So I then thought because I never paid him anything for the consult emails I was use too getting for free, I had to think quick/fast. My idea about leveraging the Internal Revenue Website was generated the same day he said he would start charging me after I hung up. So I never ended up paying the $80/quarter consulting fee".

FYI- I only leverage this site for my free tax forms and tax related free questions with rep for those forms, because it's saving me $80/quarter than with my friend CPA. *My biggest gainer is I'm saving my business from paying unnecessary consulting money* This site allows me to get my tax questions answered for free unlimited and tax forms free also. I'm just not paying anything, and all its costing me is my time. The site will benefit each business differently, so can use however like.

Foreclosure Trip Tip

Hi Prospects & Friends,

I went by to see this foreclosure last Saturday. The house is nice in size being it is 4,654 sq.ft. & listed for $209,900. The only thing I don't like about it, is the color & design style, other than that the house is perfect, because all the #'s work. I'm on a destiny to find myself a foreclosure to fix up & live in for myself that has an elegant style & rich in taste, as well as priced right & #'s work in my equation like this house. What I mean by #'s is calculating the taxes, maintenance fees, & insurance to estimate what my p&i mortgage payment/sales price should be. See example below based on this foreclosure:

Yearly Taxes- $7,810

Annual Maintenance- $400

Proposed Yearly Insurance- $3,300

Monthly Totals- $959.16 (Taxes, maintenance fees, insurance)

Monthly rents in this subdivision are going for .52/sq.ft. So this house is @ $2420.08

Mortgage p&i payment for this foreclosure only should be no more than $1,460.92/mth., based on my analysis.

CMA Value- $73.92/sq.ft (this foreclosure's value is really worth $344,000, based on CMA in last 6 months for this subdivision)

A interest rate will make or break your situation, so let's compare 6% & 8% interest rates on my example & investment analysis equation.

**********************************************************************************

Listing Price $209,900

Interest Rate 6%

Down Payment 20%

Allowed Maximum p&i $1,460.92, expenses $959.16

.52/sq.ft. say value should be at $244,000 ($1460.92/6.00x1000)

So in this case with 6% interest your p&i is $1,007.52 which is less than the $1,460.92 I said was your maximum amount you shouldn't go over with p&i mortgage payment, add this to $959.16 & your safe @ $1,966.68, which is less than $2,420.08. #'s work @ 6% interest & in this case prospect can settle at list price of $209,900 or lower if want.

**********************************************************************************

List Price $209,900

Interest Rate 8%

Down Payment 20%

Allowed maximum p&i $1,460.92, expenses $959.16

.52/sq.ft. say value should be at $199,000 ($1460.92/7.34x1000)

So in this case with 8% interest your p&i is $1,232.53 which is less than $1,460.92 I said was your maximum amount you shouldn't go over with p&i payment, add this to $959.16 & your safe at $2,191,69, which is less than $2,420.08, but CAUTION your .52/sq.ft. says you shouldn't be paying more than $199,000 for this house!

**********************************************************************************

So conclusion is the 6% & 8% interest rates both have total monthly payments falling below threshold of $2,420.08, but both have different value analysis based on the .52/sq.ft. investment equation. 6% is safe because it says current list price is ok for this buyer & should be @ $244,000, but 8% says for this buyer list price isn't ok & should be @ $199,000. You don't want to over pay for any property, not even a foreclosure based on your interest rate. So play smart & raise your financial smarts!

I will offer a book about my investment analysis equation I use. Will offer another helpful article soon.

My First Blog

Hello Everyone,

I've decided to keep you all informed with me and my services by adding a blog to my websites for you all. I will posts regular stuff I feel will be productive to you all. Hope I make many friends and prospects with offering my information.