Found this on the net, looks good. Situated well above sea level, our lots are the best Central Florida Real Estate has to offer, completely developed and ready to build on. Many portions of the property have maple, oak, pine and cypress trees. Although this community is constantly growing there are still choice lots available. No over crowded streets, no traffic jams and no parking lots, this is a place where you can really get away from it all. Located in the Northern portion of Highlands County, Florida is Avon Park , a rapidly growing residential community. Avon Park, although a modest city, is a place where you can live the American Dream now. Central Florida for 27 years. Weaning money in this industry takes lots of training and lots of commitment. If you need a referral for Central Florida, email me the City or County, and Ill send you a contact that can help you. If its a FLorida related real estate question, feel free to email me and Ill try to help you. Florida is a BIG place so it is hard to give a reasonable price in general because that really depends on the neighborhood and how much you have to spend. You should rent for a year and see how you like it before buying anything. Prices on all central fla real estate are in flux right now and the trend is downward in most places.

As for house or condo, I prefer a house as there is more of a distance between neighbors and therefore more privacy. 30 years ago, while I was in college. Its unlikely that your customers will ask about insurance and bonding for this business type. It might be better to start operating the business and if anyone ever ask for insurance and bonding, decide then if that account is worth the expense. If your business is setup as a corporation or LLC, you would be protected from most liability yourself anyway. Make sure that your contract holds the doctors office or restaurant where the aquariums are located responsible for any damages that may occur. Their employees and customers are more likely to damage the aquarium and spill the water than you are. Try to keep the business small enough to handle the accounts yourself. Having employees is where most of your business troubles will start. More help available if you need it. Central Florida after 27 years. For the past two years I have been offering free business mentoring services to young entrepreneurs.

There is a certified property manager designation offered by the Insitute for Real Estate Management. You do have to obtain a real estate license prior to getting this designation. Wikipedia says about it: Certified Property Manager The designation is awarded by the Institute of Real Estate Management to the top professionals in the real estate management industry. The Institute offers the only comprehensive program exclusively developed for property and asset managers working with large portfolios of all property types.

The CPM designation is considered to be the industrys premier real estate management credential. There are over 8,600 professional real estate managers who hold this distinguished designation worldwide. CPM members manage approximately 900 billion dollars in real estate assets. Also, many Universities, community colleges and business schools offer courses in property management.

Indiana and took a graduate course in property management as an elective. There are numerous courses out there that can help you. Some times local investors are competitors so find one that isnt in your city if possible. Or maybe attend a local real estate investment club for net working. Rules in books in library as well as your state statute books that are in reference in most libraries as well. Having a team with a title company pro a , realtor, cpa, attorney,appraisers all can help.

Be very careful while these people are professionals they may not have your best interest in mind as they usually only make money when you buy real estate. Ron Legrand and Dave Lindahl and Carlton Sheets.

IREM Institute of Real Estate Management. They have a nice course on real estate management. To become a CPM Certified Property Manager. While non of these designators are nessesary to become a good investor they certainly are schooling to help the people that would like to know more about this industry. Well this is if you dont have time for a good degree in real estate from Wharton college lol. However if you are like me and didnt have time to get to a nice school like that then school of hard knocks is another route. Look for professional real estate journals as well. National Association of Real Estate Boards.

As far as becoming a real estate sales person is concerned: Each state is different. In some states you can simply study for and take a state exam. In other states a sales person must be sponsored by a licensed real estate broker. The person who wants to be a sales person takes classes, accumulates credits, takes an exam. In other states it is imperative for a licensed sales person to continue learning about the real estate business, accumulating additional credits and taking additional tests. The opportunities are virtually endless.

After a period of time AND with a proven track record, the sales person studies for, takes classes for and takes a state prepared exam. If this person met the employers requirements there probably are no legal prohibitions. If you believe that this person poses a threat to your personal safety or the safety of your domicile, you may be able to get out of your lease. Pros and Cons for having one. They can also check on your property when there is a severe storm. Most will take care of basic maintance items, change the furnace filters, smoke detector batteries.

You have the peace of mind knowing that someone is there looking after your place, in your absence. Dont be afraid to ask questions when you meet with them, and make sure you have it in writing as to what they will do. You will also want to look into getting an H06 insurance policy to protect yourself and your investment.

Numbers are simple and they dont lie. First of all, I am a mortgage planner with Chase. Though I am well trained, I am not a financial planner or a CPA so please double check with a licensed expert to verify what I say here. You mentioned that its a line of credit, so im going to assume that its a Home Equity Line of Credit. If this is the case, you more than likely get a tax benefit from the interest you pay on it. 2112 on that line of credit. These facts alone are a good reason not to payoff your line of credit. 10,000 a year to put into retirement. Im going to use a more conservative number. 10,000 to pay down debt, it has to be taxed first. 7500 a year to pay down your credit line. 33 years to pay the account in full. 775 a month that you were paying over the 5 year period to begin applying towards your 401k. 10,000 a year before you taxing it and invested in your 401k and continued to make the minimum payment on your line of credit over the 5 year period. 50,000 in your 401k in 5 years. Lets look at what happens five years after this. 774 a month since you dont have to pay on that loan anymore. 12,384 you can begin to contribute to your 401k. 61,920 you paid to get there. 10,000 a year for the next 5 years to your 401k.

40,000 you still owe on the credit line. Compare this scenario with the scenario where you payoff your debt. 2nd mortgage divided by the home value. You should first check to see if the company that has your 1st mortgage, will do an equity line for you.

But if you need a conventional lender, Chase Home Mortgage, might be one to call. You need a Business Plan and a Projected Income Balance Sheet. The Small Business Development Center points potential small business owners to various Websites as avenues for ready cash.

Youll find tips on how to formulate and implement a bold and cogent plan. However, these personal savings wont appear overnight. This arrangement allows the business owner more time on the front end of the cash flow cycle, prior to payment from customers. These firms are often willing to extend 30, 60, or 90 days of payment terms to you as your exclusive industry supplier. Bancorp to name five of the top 50. If your fledgling business has neither sufficient assets nor a proven customer base to warrant serious consideration for a bank loan, a home equity loan is an alternative. When the business begins to achieve sales benchmarks and a regular cash flow, the loan can be converted to a more competitive rate business loan.

The advantages of these angels is that they can typically provide more than credit card financing, but less than a venture capitalist.

They would be stupid to do so. It would also look bad and create negative view of the community. If you are current on your mortgage, you will want to notify your mortgage company ASAP.

Real property in most jurisdictions is conveyed from the seller to the buyer through a real estate contract. The point in time at which the contract is actually executed and the title to the property is conveyed to the buyer is known as the closing. It is common for a variety of costs associated with the transaction above and beyond the price of the property itself to be incurred by either the buyer or the seller. These costs are typically paid at the closing, and are known as closing costs. Examples of typical closing costs might include.

Estimates of common closing costs The cost of your loan will not include every item listed and your costs may be lower. Charges vary depending on your property location, lender and loan program. Loan Fees When you send your application to the lender, they review and process it. To learn more about getting the seller to pay your closing costs, ask us or your real estate agent.

50 Title fees You wont be able to get a mortgage unless you can prove that the seller owns the property and has a good and marketable title.

This is done by a title company checking the history of the house, and then insuring the results of that search. 200 Prepaid Amounts Lenders want the initial hazard insurance premium and the expense of odd days interest paid at closing. Prepaid Amounts Based on Paid to Approximate cost Hazard insurance loan amount insurance co.

Escrow accounts Its in most peoples best interest to make as large a down payment as possible. Your bills are then paid from this account and you are required to continue to pay these bills through this account rather than at your discretion. Escrow accounts Based on Paid to Approximate cost Hazard insurance loan amount insurance co. Mortgage insurance loan amount insurance co. Definitions of common fees Administrative fee Most lenders roll administrative fees into the Lenders processing fee, but some charge for it separately for internal accounting reasons. It is not directly tied to any service that they provide or cost that they incur. Application fee Lenders and Brokers may charge an application fee, it covers the costs associated with the initial processing of your loan package. The lender will sometimes physically pay the appraiser at the time of the service, and then bill you for it at closing. Broker fee This is the primary way that a broker charges for their service. Traditional brokers charge between one and three percent of the loan amount. Broker processing fee to compensate. Broker processing fee Brokers charge a processing fee to cover the cost to package the file, submit it to the lender, and help coordinate the closing of your loan. This cost covers the expense of processing the file internally or the cost of outsourced processing.

This fee may already be included in the Lender administration fee or Processing fee. Credit report fee Lenders require credit reports to determine how well you have been able to handle financial obligations in the past. Lenders often get credit reports from more than one bureau, or get a report from a company that combines credit bureau reports.

75 to look into your credit history. Flood Certification fee The lender requires an investigation to determine if the house is on a flood plain. If your property is in a flood zone, you will be required to buy flood insurance. 300, but yours will depend on the value of the home. Lender documentation preparation fee Once a mortgage is approved by the underwriter, a mortgage agreement and other documents must be drafted for closing. Lenders often have these prepared by an outside firm.

Lender origination fee The lender may charge an origination fee. Origination fees are sometimes rolled into the discount points. The typical origination fee is one point, or one percent of the loan amount. Lender processing fee When you send your application to the lender, they review and process it. Lender underwriting fee Underwriting is the process of evaluating your application to determine your ability to pay your loan back. Tax service fee To make sure your property taxes are paid on time, the lender hires a tax service company to monitor your tax payments.

This is how your lender makes sure the government doesnt sell your home to pay back taxes. Escrow fees Depending on what state, and even what county you are buying in, there are different services that help manage the process. Youll be charged a fee for these services, it may be called an escrow fee, a settlement fee or a closing fee it is basically the same thing. 500, depending on the sales price of the home.

Escrow instructions In areas without standard escrow instructions or sales contracts that include instructions, a lawyer does it. The lawyers fee is similar to the escrow fee. The lawyer or escrow officer details who receives what, when, and in what sequence. These instructions must be signed by both the buyer and the seller. Lenders title insurance To insure that the seller has a clear title, a search is done of the offices of the recorder of deeds, county clerk, tax assessor and surveyor. There is also a search of legal rulings concerning the property and prior owners. Title search Many counties have computerized this process, in some areas it is still done by hand. As a result, costs can vary depending on a propertys location. Owners title insurance In addition to the lenders title insurance policy, you are also required to get your own insurance policy. Recording fees This pays for recording documents at the county clerks office. 200 fee to process and prepare your paperwork. Prepaid hazard insurance The good news is that you wont have any hazard insurance bills for a while. The bad news is that this is because lenders usually requires you to pay your hazard insurance at closing. Prepaid interest In the time between the closing date and your first mortgage payment, you will accrue as much as 30 days of interest on your loan. This interest must be paid at closing. Hazard insurance impound account With an impound account, you put an additional 2 months premiums on deposit. Addie Mae does not require impound accounts on most loans. Mortgage insurance impound account Mortgage insurance protects the lender should you default on your loan. Addie Mae does not require PMI on many loans. Mortgage insurance You have to deposit between 2 and 12 months worth of mortgage insurance into an impound account.

Property tax impound account If required, youll need to put between 2 and 8 months property taxes in an impound account. The property tax rate varies, not only from city to city, but often from street to street. If youre purchasing a home, you can deduct the points from your taxes in the year you buy the house.

That means money in your pocket this year, rather than spread out over the next 5 to 30 years.

USA are sold from one bank to another bank, a servicer or even to Wall Street investors within the first few years of origination. This is so the lender can get more money to write more loans. They dont have them long enough to make back the costs of closing. Once youve reviewed the typical closing costs associated with a mortgage, its time to consider how to pay for them. Benefit Analysis Finally, we can turn to the benefits of refinancing and weigh them against the costs. Once youve decided what your goals are, the reasons you wish to refinance, then its time to weigh them against the costs.

Many borrowers try to compare closing costs alone, however as we know that closing costs can be packaged in many different ways, this is generally ineffective. Conclusion: All loans costs money to originate and refinance, even if its not always clear how you may be paying for them.

My recommendation is to speak with as many people as you can, but evaluate them on the basis of trust. You may find that the person who gives you the highest quote may be the only one telling you the truth. No closing costs is a scam that loan officers use to make a deal appear better than it actually is. Any loan officer can offer you a no closing costs loan, but the interest rate will be higher than a loan with closing costs. The reason for this is because loan officers are paid a comission from a bank based on which rate they sell you. Therefore, if a loan officer sells you a higher rate, he will recieve a greater comission check from the bank and pay the closing costs himself.

You cant have a market in your house like you can in most countries. It sounds like you want to have a classic latin mini mercado. Commercial real estate is a whole different ballgame. You need to know someone who knows what they are doing. The best advice you will get is contact a local COMMERCIAL real estate agent. Make sure he does ONLY commercial. Agents who claim to do both really are residential agents that do commercial every once in while usually. The agent will search MUCH more efficiently than you could. The only issue with that is he may not show you as many properties that the commission is not as high. OR Contact a large commercial property manager and see what they have available.

The problem with this is that they will pro Commercial real estate is a whole different ballgame. You will probably not find any site that your looking for because of the nature of commercial property.

You need to know someone who knows what they are doing. The best advice you will get is contact a local COMMERCIAL real estate agent. Make sure he does ONLY commercial. Agents who claim to do both really are residential agents that do commercial every once in while usually.

The agent will search MUCH more efficiently than you could. The only issue with that is he may not show you as many properties that the commission is not as high. With commercial there is not perfect world which is why residential agents often are unprepared to fully help you. The best way is to cruise around the areas you would like to be in then you can see vacant signs.

None of these jobs is easy, and its very unlikely that you can just walk into a job like this. 20 units or less, and live on site. That might enable you to work flex hours, but nothing else will. Those are all factors in judging your salary.

First the most important numbers must be from current tax year. Validate these from either the propertys schedule C or have the owners accountant sign off on the numbers. You dont want falsified numbers. You want current expenses, vacancies and rent roll. Last years and any speculative numbers are irrelevant.

Find more info at book stores and libraries. Locate a good attorney and accountant, making sure they know all tax codes, local, state and federal laws, and are assisting other investors such as you.

There will also be investment clubs and groups that you can find in your area that are very willing to help and will probably even know the property. This may be your best source of info. It may be best to stay away from the top residential home sellers in your area. Most dont know anything about investment real estate. CCIM or other commercial real estate designations. Residential agents work with one person usually only once to find a house. You may be able to find an agent who has a management company. She will also be able to tell you what the Gross Rent Multiplier in your area is and help fill vacancies. Cash Flow Before Tax This is what the property is currently producing.

This number should also be postive or it is losing money. These are two good number evaluators to start with and should give you the basic knowledge to understanding more. Make sure your tax preparer knows how to depreciate. Some will erroneously depreciate the property as a whole with one rate.

The building, personal property, and land improvements must be depreciated seperately using different tables. This is where you benefit from your taxes so much. Sometimes I also must advise my clients regarding taxes so they can talk to an accountant or attorney and know what to ask or say. If you transfer it and she goes to a govt nursing home wihtin 3 yrs the transfer will be held against her as I understand the law.

11K on a Seller note sale.

22K, but if she may have to pay a small income tax on the forgiven tax. Your accountant can set this up for you and give you expert advice. Moms her purchase price and the costs to sell, improvements she made, maybe few more.

250K in profits and pay no tax on that. If she passes away before the note is paid then the note goes away.

There is a name for that I forget but this is legal. Each is its own legal entity with its own specific purpose. The second company is more of my long term cash cow. Profits from the consulting group get plowed into my commercial real estate investment group. Ive managed to piggyback on a few deals from my former university roomies father. You need to pull in volume and draw a crowd. Business to Business is the way to go. Theres higher price tags and margin on each sale. The first step in creating the Family Limited Partnership is the preparation and filing of the Certificate of Limited Partnership with the Secretary of State. The form asks for the name of the limited partnership. Any family member residing in the state can be designated as the agent. There are also companies that will, for a modest fee, act as the designated agent for these purposes.

The form also asks for the names and addresses of all general partners of the partnership. The names of the limited partners are not required. Since this document is a matter of public record, the names of the general partners will be publicly available but not the names of the limited partners. At this point, the partnership will be legally formed. You should request that a certified copy of the Certificate of Limited Partnership be returned to you, and your copy should be stamped with the filing date. The Partnership Agreement Concurrently with the filing of the Certificate of Limited Partnership, a written partnership agreement must be prepared. This is the document that governs the affairs of the partnership.

When creating a Family Limited Partnership for estate planning and asset protection purposes, the partnership agreement must also contain certain key provisions designed to accomplish your objectives. Husband and Wife, as general partners, always maintain absolute control over the assets of the partnership. These provisions are unique and essential to a properly structured Family Limited Partnership. Overview In making the decision about funding the partnership, it is important that you understand the distinction between Safe Assets and Dangerous Assets. Safe Assets are those which do not, by themselves, produce a high degree of lawsuit risk. For instance, if you own investment securities such as stocks, bonds, or mutual funds, it is unlikely that these assets will cause you to be sued. Mere ownership of investment assets, without some active involvement in the underlying business, would probably not cause a significant degree of lawsuit exposure.

Dangerous Assets, on the other hand, are those which, by their nature, create a substantial risk of liability. These are generally active business type assets, rental real estate, or motor vehicle ownership, any of which may cause you to be sued. Safe Assets and Dangerous Assets is that you do not wish to have the FLP incur liability because of its ownership of a Dangerous Asset. This is exactly the situation you are trying to avoid.

Dangerous Assets must either be left outside of the partnership or must be placed in one or more separate entities. Dangerous Assets must be isolated from each other and from Safe Assets, in order to avoid contaminating the Safe Assets. Dangerous Assets An example of a Dangerous Asset is an apartment building.

The liability potential of apartment houses is particularly high. Although liability insurance coverage is usually available, the amount of coverage may not be sufficient. The potential liability for such a tragedy could easily reach into the millions of dollars, exceeding by far the amount of your insurance coverage.

Apartment owners can also be held responsible for the acts of the resident managers. Acts such as these may not be covered under your standard insurance coverage. Instead, the best approach for a Dangerous Asset such as an apartment building is to transfer that property to its own separate entity. Generally the Limited Liability Company is the proper way to hold Dangerous Assets.

Since no individual member of an LLC can be sued for an LLC related obligation, the liability associated with the Dangerous Asset can be contained and insulated in the LLC. If a number of Dangerous Assets are owned, each should be placed in a separate entity. LLCs for a client, each holding one apartment building. If a disaster occurred, only the LLC which owned that property would be sued. The other properties and family assets were safely insulated and shielded from liability under this arrangement.

Some types of commercial real estate may also constitute Dangerous Assets. His medical practice and the property were both Dangerous Assets and a liability produced by either would jeopardize the other. For example, a problem arising from the building would produce a claim against the equipment, accounts receivable, and cash in the corporation. The office building should have been separated from the medical practice by holding it in a separate LLC. Dangerous Assets must be kept separate from each other asset.

We will discuss details about the use and operation of the LLC. Safe Assets Safe Assets with a low probability of creating lawsuit liability can be maintained in a single Family Limited Partnership. The first problem concerns the availability of the income tax deduction for home mortgage interest. Based upon the language of the statute, the deduction for mortgage interest would, therefore, not seem to be adversely affected by a transfer into the Family Limited Partnership.

However, until the law on this issue has been conclusively decided you should not risk the consequences of a disallowance of your mortgage interest deduction.

500,000 of the gain from the sale of your home. It is likely that a transfer of your residence into the FLP would cause you to lose this tax advantage. For these reasons, we do not recommend using the FLP to hold the family residence. An alternative is to use a specially designed trust to own the home. All of the tax benefits will be preserved and the highest level of protection can be maintained.

Bank and Brokerage Accounts These types of accounts do not create any potential liability and can be transferred into the Family Limited Partnership. In order to open these accounts in the name of the partnership, you will present the financial institution with a certified copy of the Certificate of Limited Partnership. The institution will also require the Taxpayer Identification Number issued to the partnership by the Internal Revenue Service. Interest in Other Entities The Family Limited Partnership is an excellent vehicle for holding interests in other business entities. The reason that we mention these other business entities is that the Family Limited Partnership must not ever be engaged in any business activities. You do not want the partnership to buy or sell property or goods or to enter into contracts.

If the partnership does business, then the partnership can get sued. And if the partnership gets sued and loses, all of the assets that it holds can be lost. Interest in Other Entities The Family Limited Partnership is an excellent vehicle for holding interests in other business entities. The reason that we mention these other business entities is that the Family Limited Partnership must not ever be engaged in any business activities. You do not want the partnership to buy or sell property or goods or to enter into contracts. If the partnership does business, then the partnership can get sued. And if the partnership gets sued and loses, all of the assets that it holds can be lost. Case Example For example, a client of ours entered into a contract to purchase a shopping center. Previously, we had set up a Family Limited Partnership for him. The seller sued the partnership because the partnership was the named party to the contract. This transaction should not have been handled in this manner. The proper way to conduct this type of business activity is through a separate LLC or partnership arrangement. By using the proper planning techniques, potential liability can be significantly reduced and valuable personal assets can be protected from a dangerous lawsuit. This example illustrates the necessity for conducting business activities through an entity other than the Family Limited Partnership so that family assets are not exposed to the risk of liability. The proper role of the Family Limited Partnership in this context is to hold the interests in the business entities that are themselves subject to risk. The FLP can hold these interests, providing asset protection and estate planning advantages in a single integrated package. Summary The Family Limited Partnership offers a unique capability to realize a variety of planning goals. Assets held in the FLP are effectively shielded from potential claims. Income taxes can be shifted to lower bracket family members or entities such as corporations and trusts to take advantage of deferral and savings techniques. Estate taxes on accumulated wealth and future appreciation can be minimized or eliminated by gifting discounted interests in the FLP to children or trusts established for their benefit. The FLP provides a convenient and flexible format as the cornerstone of your overall plan. In the succeeding sections we will see how Limited Liability Companies and trusts can provide additional opportunities to create asset protection and tax savings strategies. The LLC is the most versatile and convenient strategy for owning rental property, insulating Dangerous Assets, operating a business, and achieving an excellent level of financial privacy. The LLC is a relatively new legal entity created by statute and recognized in all fifty states.

The adoption of the LLC format began in Wyoming and Florida in the 1970s with approval in most other states only within the last ten years. The purpose of the legislation is to allow individuals to create a legal entity that avoids many of the tax and business problems inherent in the corporate and partnership structure. More particularly, the LLC provides the protection from liability of a corporation without the formalities of corporate minutes, bylaws, directors, and shareholders. LLC law specifically bars a lawsuit against a member for the liabilities of the LLC. That is an important distinction which you should understand. LLC legislation was to change this result by clearly stating that the members and managers of the LLC could not be named in a lawsuit against the company. The LLC is also convenient to maintain. The owners are permitted to adopt flexible rules regarding the administration and operation of the business.

For tax purposes, it is treated like a partnership. That means the LLC itself pays no income tax.

All of the income and deductions flow through directly to the members and is reported on their personal tax returns. The LLC is formed by filing Articles of Organization with the Secretary of States office. Unlike the FLP, which requires the names of the general partners, the disclosure of the names of the principals can be avoided. The name of either the member or the manager must be provided in the articles. Also, many states, including Nevada and Delaware, permit a single member LLC to be formed. We will see that these provisions open the door for a variety of financial privacy strategies. Anonymous ownership of financial accounts, business interests, and real estate can be achieved with an LLC as an important component of the plan. The bad news, for physicians and some other professionals, is that state law generally does not allow these practices to be operated as an LLC. Although the LLC may be useful in protecting accumulated assets from lawsuits, it will not insulate the individual from the liability associated with a medical practice. Inside and Outside Liability To understand the benefits available from the LLC, lets look at a typical example. We know that holding the property, as they do now, exposes them to great danger. Ownership of rental property creates more uncontrolled liability and lawsuit risk than any other business or profession we have seen. And because this potential liability usually cannot be covered by insurance, a single unpredictable event, a mistake, or just bad luck can wipe out everything built up over the years. John and Mary own to potential liabilities from the property. John and Mary need to be protected from inside liability. John or Mary from a matter not related to the building exposes the equity in the apartment property to seizure in satisfaction of that claim. We call this type of liability outside liability. John and Marys interest in the property must be protected from outside liability.

If one of them is involved in an auto accident causing serious injury, they do not want to lose the property because of this outside liability. Clearly, owning the apartment building in the current manner is not sound business planning.

LLC Versus Corporation John and Mary could transfer the property to a corporation. Each would own 50 percent of the stock in the company.

John and Marys personal assets to danger. The problem is that this protection against liability is only available if all of the corporate formalities are carefully followed. Since most people do not maintain proper corporate records and documentation, corporations often do not provide the intended level of protection.

Further, corporations are subject to complex tax rules, which can cause severe and unintended consequences.

John or Mary unrelated to the property. For these reasons, it is generally not advisable to hold investment real estate in a corporation. LLC Versus Limited Partnership If John and Mary form a limited partnership to hold the property, one or both of them will serve as general partner. The major problem with the limited partnership format is this unlimited liability of the general partner.

John or Mary for an outside liability would be limited to a charging order, which would not affect the property in the partnership. By forming an LLC, John and Mary can accomplish all of their objectives. Inside Liability Protection A member of an LLC is not responsible for claims or judgments against the company. When we are dealing with a rental property or an active business, the potential liability associated with the business is a primary concern. But as we have stated, the law specifically provides that the members of the LLC cannot be sued. In our previous case study, John and Mary transfer their apartment building to an LLC. If a tenant is injured in an accident, John and Mary, as members of the company, would be protected from any claim relating to the property. Outside Liability Protection Property held in an LLC cannot be seized by a creditor of a member.

If there is a judgment or claim against John or Mary, the creditor cannot reach the property held in the LLC. As is the case with the Family Limited Partnership, assets of the LLC are protected from potential claims against a member. The creditor is limited to the ineffective charging order remedy. LLC is only permitted to take whatever actual cash distributions are made by the company. The creditor cannot force a distribution or demand any portion of the assets of the company. No Formalities An LLC is not required to maintain formal minutes and resolutions. Record keeping requirements can be minimized without a threat that the members will be sued individually for a liability of the company.

Contrast this treatment with that of a corporation.

If the proper formalities are not followed, the corporate protection will be pierced and the owners will have liability for company obligations.

The more money you request for your business, the more your lenders or prospective investors are going to want to know about you, your planning, and your business.

Its just that simple at the bottom line. Do this without fail because prospective lenders or investors will definitely check your credit history. Almost all franchisers offer help in setting up with one of their franchises.

Most will go out of their way to assist you in getting the financing you need. Some will lend you the entire amount; with payments coming out of the income, they expect you to make from their franchise operation. Many will carry this loan themselves, while others will carry part of it and find you a lender to finance the remainder. They are trying to expand their operation, thus increasing their profit, and they are trying to raise capital for themselves. Keep this in mind the next time you see an advertisement for a promising franchise opportunity requiring a substantial amount of cash outlay. You do not necessarily have to have all the money.

Nothing could be farther from the truth. Just a quick bit of research will show that 999 out of every 1,000 businesses were begun on borrowed money. Look to your family and friends for financial help. Agree to sign a formal statement to pay them back in three, five or ten years, with interest.

When you have your proposal assembled, you might even want to think of a limited partnership or even a general partnership arrangement as a way to finance your project. Another common method of obtaining business financing is through second mortgage loans on a home or existing piece of property. In many instances, this is the easiest and surest way of getting the money needed for franchise or other business investment. Take this equity and invest it in a worthwhile business, and you could double or triple your net worth each year for the rest of your life. You could incorporate yourself, borrow money from your family through a second mortgage on your home, and protect against the loss of your home through the Federal Homestead Act. The important point here is that all business opportunities involve risk and sacrifice. Its up to you to determine the feasibility of your success with your proposed venture, then decide on the best way possible to proceed. You can have the franchiser sign with you, or one of your suppliers, a business associate or even a friend. Still another possibility might be to get a bank or a firm that has loaned you money in the past to guarantee your loan. They simply guarantee that they will lend you money in the future if ever the nee should arise. Going straight to your neighborhood bank, applying for a business loan and walking out with the money are just about the most unlikely of all your possibilities. In addition, it would be a good idea to take along your accountant just to assure the banker that your plan is verifiable. In the end, you will find that it all boils down to whether or not the bank officer studying your application is sold on you as a good credit risk. In dealing with bankers, never show an attitude of doubt or apology. Always be positive and sure of yourself. However, dont come on so strong to them that youre either demanding or overbearing. Just look good, know your stuff, and project an attitude of determination to succeed. Your best bet, in attempting to get a business loan from a bank, is to deal with commercial banks. These are the banks that specialize in investment loans for going businesses, real estate construction, and even venture programs. Many commercial banks stage investment lectures and seminars for the public.

If you find one that does, attend. You will meet many local business people, some of who may be able to and interested in helping you with your business plans. When you are looking for money to move on a business deal, it does not really matter where the money comes from, or how it all comes about. It is important that you get the money, and at terms that are suitable to you. Thus, do not overlook the possibilities of an advertisement for a lender or investor in your local papers. Place your ad as well in national publications reaching people looking for investments. It is not a good idea to go to a finance company or other commercial lender of this type for a business loan. The most obvious reason is the high interest creates you have to pay.

These companies borrow money from larger moneylenders, and then turn around and lend it to you at a higher interest rate than they pay. Herein lies the means by which they make money from granting loans to you. The more it costs them to provide the money for you, the more its going to cost you to borrow their money. The only element in your favor when borrowing from one of these agencies is that most will generally lend you money against collateral other lenders just will not accept. They will also pretty much require that your business proposal be backed by the best possible plan. Actually, the different ways of financing a franchise opportunity are as many and varied as your own creativity. The sources of obtaining money are virtually limitless, and available to anyone with an idea. The price you pay to participate in a franchise operation is not always the total cost involved in getting the business off the ground.

Above all else, before you get involved in a franchise or any business venture for that matter, make sure youve conducted a complete and thorough investigation of the opportunity presented. There are a lot of good franchise opportunities, and some not so good. It is important that you be sure of what youre investing in, and that you can make money with it. From there, preparing the proper business plan and the necessary financing, while not always a snap, can be done.

Most commercial lenders will accept the URLA as the initial loan application, but it really is not suited for commercial real estate. Most commercial lenders have their own forms that must be used or the loan will not be funded. There is not a universal commercial loan application used as is the URAL the name of the form tells you the primary use of the form Uniform Residential Loan Application.

When I have done or need to do a commercial loan I have grown accustom to asking if their is an additional form the commercial lender use. Most will say yeah, I then ask them to fax me a copy. Fannie Mae normally dont purchase commercial real estate loans, so there is not a requirement to comply with any Fannie Mae requirements. As far as DRE compliance, most lenders will send you a complete loan application package for your clients to sign. Even though a commercial mortgage company do the loans for commercial real estate they are primarily sold to private investors.

There is not one single form in use that covers all 50 states for commercial loans. Each lender will have its own unique forms, so you will have to have a folder for that lender. If you are talking about apartments, those are considered commercial properties. You are now talking about a business.

This is what the lender is looking at when they want to see income and reserves. They will also want to know if you have any experience at managing a commercial unit. You might want to start out with a duplex, qualify for a mortgage, live in one and rent the other side out.

This gives you two things a rental property as well as the expeerience at renting a commercial property.

You have now got your net worth up, you should have kept some of your money in the bank for potential repairs to your rentals, so now you have reserves.

You have everything a lender is looking for. That is sorta like going to Mcdonalds asking to be given a franchise without putting some money down. The real estate industry is the same way.

Because most people cannot afford to buy real estate with cash, nearly every real estate transaction involves a mortgage. The lender was entitled not only to payments of interest on the debt but also to the rents and profits of the real estate. The mortgage must be executed according to the formalities required by the laws of the state where the property is located. It must describe the real estate and be signed by all owners, including nonowner spouses if the property is a homestead. Some states require witnesses as well as acknowledgement before a notary public. In California a deed of trust to a trustee who holds title for the lender is the preferred security instrument. This form of relief is known as the equity of redemption. Now nearly all states have enacted statutes incorporating the equity of redemption, and many have also enacted periods of redemption, specifying lengths of time within which the borrower may redeem.

Debtors who run into problems meeting their mortgage obligations should speak to their lender about developing a plan to avert foreclosure. Failure to redeem results in foreclosure of the borrowers rights in the real estate, which is then sold by the county sheriff at a public foreclosure sale. At a foreclosure sale, the lender is the most frequent purchaser of the property. Often other creditors bid at the sale to protect their interest as judgment creditors, second mortgagees, or mechanics lien claimants. All such persons must be notified of the foreclosure suit and given a right to bid at the sale to protect their claims. Similar protections are afforded transactions involving deeds of trust. Subdivision or condominium development mortgages that cover a large tract of land are blanket mortgages.

Construction mortgages need special treatment depending on state construction lien law.

Often the loan proceeds are placed in escrow with title insurance companies to make certain that the mortgage remains a first lien, with priority over contractors construction liens. The time of repayment may be extended by a recorded extension of mortgage.

Other real estate may be added to the mortgage by a spreading agreement. In the former case, the buyer acknowledges the existence of the mortgage and, upon default, may lose the title. By assuming the mortgage, the buyer promises to repay the debt and may be personally liable for a deficiency judgment if the sale brings less than the debt. Lenders regularly assign mortgages to other investors. Assignments with recourse are guarantees by the one who assigns the mortgage that that party will collect the debt; those without recourse do not contain such guarantees. Assignments without recourse tend to involve riskier properties. Mortgages assigned without recourse are often sold at a price discounted well below their market value.

Several agencies of the federal government have assisted the mortgage market by infusion of capital and by guarantees of repayment of mortgages. The Federal Housing Administration made possible purchases of real estate at low interest rates and with low down payments. The Veterans Administration also guarantees home loans to certain veterans on favorable terms.

Both agencies contributed greatly to the growth of the housing market after World War II. In the late 1950s, private corporations began insuring repayment of conventional mortgages. Well first a Loan life coverage ratio is also known as a debt service coverage ratio. Here is the information you requested: The most important ratio to understand when making commercial loans is the debt service coverage ratio. To understand the ratio it is first necessary to understand the numerator and the denominator. 65,000 Please note that commercial lenders always insist on some sort of vacancy factor regardless of the actual vacancy rate in an area to cover collection loss. Their logic is that they would have to pay for management if they took back the property.

Finally, NOTE THAT WE HAVE NOT INCLUDED LOAN PAYMENTS AS AN OPERATING EXPENSE. Next lets look at the denominator, Total Debt Service. This includes the principal and interest payments of all loans on the property, not just the first mortgage. NOTE THAT WE HAVE NOT INCLUDED TAXES AND INSURANCE. 14 Obviously the higher the DSCR, the more net operating income is available to service the debt.

From a lenders viewpoint it should be clear that they want as high a DSCR as possible. The borrower, on the other hand, wants as large a loan as possible. If the net operating income stays the same, and the loan size and therefore the debt service increases, then the lower the DSCR will be. This would mean that the borrower would have to come up with cash out of his personal budget every month to keep the project afloat. Generally commercial lenders frown on a negative cash flow.