WIAcademy EducateBlog

The struggling economy is affecting nearly everyone. As more jobs are eliminated, many perceptive people are realizing that the sense of security offered by working for someone else is just an illusion. Just ask some of the folks who had “secure” jobs in the auto or banking industry! The days of training for an occupation, finding a good job, and retiring after 40 to 45 years of dedicated service are now relegated to history.

In today’s harsh world, a person is likely to have numerous jobs over their working life span, will probably end up in several different career fields, and should never adopt feelings of job security. Many people are finding that the only security they will ever have will come from being their own boss. As glamorous as that sounds, however, it is hard work and usually harder than most people realize.

Everyday, thousands of people are taking that leap of faith and starting their own business. However, many of these businesses are doomed to failure right from the start because the time was not taken from the beginning to develop a detailed business plan.

No matter what business you are in, if you don’t have a written business plan, you are not in business! If you are considering starting a real estate investing or any other business, the first thing you should do is to put together a properly developed business plan that will be your blueprint to success and your guide for the future.

Although most people intuitively know they need to develop a good business plan, they still fail to do so. Many are so anxious to begin building their business that they simply don’t take the time to think everything through. However, planning before you start a business will not only provide the proposed business with direction, but will help determine if you really want to start the business in the first place. It forces you to look to the future and to see what impact the business will have on your lifestyle and financial well-being.

A simple start-up plan for a new business should include, as a minimum, these basic items:

• A basic summary of the business
• The business mission statement
• An outline of the keys to success
• A detailed market analysis
• A break-even analysis with a projected time line
• An estimate of required funding
• Any skills required
• An analysis of the skills of all those involved

This simple plan is very good for deciding whether the business is even worth pursuing and if the owners have the needed funding and skills to get the business off the ground. If you find that the business is not worth pursuing, maybe because of the lack of a viable market, it may be best to find another business idea or, at a minimum, greatly modify the current business model.

If it is discovered that the owner(s) don’t have the proper funding or basic skills to start the business, then it becomes evident that additional sources of funding need to be identified and/or people brought in with the required skill sets. It is much better to identify these problems before you open for business, rather than scrambling to save the business from failure as the problems appear down the road!

Assuming the simple business plan indicates that the business is financially viable and that the owner(s) either has the needed skills or has team members who possess the needed skills, then it is time to make a critical decision. The owner needs to take a hard look at the business model and its time and financial requirements, and then decide if they have a strong enough desire to make the business a success and stick with it for the long haul.

Getting a new business up and running will most likely require far more effort and time than can be imagined. This is not bad because any worthwhile venture will require dedicated and consistent effort, but one needs to be willing and committed to dedicate that extra time and effort. Longer hours will cut into family and leisure time. Are you willing to give up all your spare time, including nights and weekends, to get the business going? Do you have the flexibility to make yourself available in this way? If you are still working 9 to 5, are you willing to take on another job of starting your own business? This second job may take as much or more time than your full-time job. Are you up to the task?

What Is a Business Plan?

A business plan can have different purposes and many benefits. It will:
• Provide you, the owner/entrepreneur, with a detailed description of your short- and long-term goals for the business
• Provide you with a road map detailing how to reach those goals
• Provide detailed strategies, time lines, and check points for achieving those goals on a daily basis
• Help you focus on key points and money-making activities
• Help you prepare to deal with problems and bumps in the road
• Help you prepare to take advantage of future opportunities
• Help you allocate financial resources
• Help you allocate personnel resources
• Give details about the skills of your management team and workforce
• Help you attract talented people to your team
• Help you obtain the needed funding for your business
• Provide details showing cash needs during various phases of growth
• Provide projections of income and cash flow
• Help you prepare for future growth and grow your business in a controlled fashion
• Allow you to get feedback from your Mentors before you start your business. This can save you countless hours of time

Key Elements in a Business Plan

A normal business plan (and one that follows the advice of business experts and the Small Business Administration guidelines) includes a standard set of elements. Outlines and formats can vary, but generally, a plan will include components such as descriptions of the company, product, or service; the market; forecasts; management team; and financial analysis. A simple business plan outline will include these basic elements:

1. Cover page
2. Table of contents
3. Executive summary
4. Company description
5. Product or service definition
6. Market analysis
7. Strategy and implementation methods
8. Web plan summary
9. Management team highlights and experience
10. Financial analysis details and cash flow projections
11. Appendix with all supporting documents

Planning Your Business Plan

The first thing you need to do is to clearly define your business goals – both long-term and short-term. Discuss why you are getting into the business and what you want to accomplish in the first year, second year, third year, etc. Remember that these goals are not cast in concrete. A business plan is a dynamic document – it is a work in progress and should be reviewed and updated as the business grows and goals change.

Next, develop a clear business model. How will your business accomplish the goals you have set? Clearly define your product or service and what makes it stand out from the crowd.

Then refine your market research. Spend time to understand the market. Who is your target audience? Who are your competitors? What are the competitors doing to acquire business? Will you take business away from your competitors or is there enough untapped business that you just need to start advertising? Is there enough profit in this business to make it worthwhile? Brainstorm with other business associates to make sure you completely understand the market and its specific dynamics.

Define in detail all of the business strategies you will be using to claim your market share and meet your goals and how you are going to implement those strategies. Spectacular strategies and stellar planning documents are just words on paper unless you assign responsibilities with dates and budgets, follow up with those assigned tasks, and track the results. Implementation is where your plans become reality.

Determine who is going to be on your business and management team and what skills and abilities they bring to the table. A detailed list of the tasks that need to be performed will help you to see if you have enough manpower to do the job. Depending on your budget, you may need to scale back your goals or timetables if you find there is simply too much work for your starting team.

Last, but certainly not least, is the financial part of your business plan. If you are going to use your business plan to obtain funding, you need to make sure your financial section is detailed. The appendix can be used to house supporting data so that your financial section doesn’t appear cluttered, thus making it easier to follow. Use bar charts and pie charts to illustrate the numbers.

At a minimum, your financial section should contain a cash flow analysis. This is one of the most important parts of your entire plan. You should also have sales forecasts, profit and loss statements, projected business ratios, and market analysis tables. This is an area in which you may need the help of a financial consultant to make sure your numbers and charts are easy to follow and mathematically correct. Your financial professional may have suggestions for other projections and charts needed for your particular business situation.

Once you have done all your research and have all your data assembled, it is time to write the first draft of your formal business plan.

Business Plan Element Details

The order of the elements in your business plan can be different than suggested here, but your standard plan should include all of the suggested elements and others as needed for your particular business. The order in which you write the elements will also vary from the order you have them in your presentation. For example, although the executive summary comes first (after the cover page and table of contents), you will actually write it last, since it is a summary of the whole document.

1. Cover page – Make it attractive, but simple, and include the name of your company, contact information, and title of the business plan.
2. Table of contents – List each section and subsection with page numbers so reviewers can find what they want easily. Also, detail what is in the appendix, including page numbers for various charts, data, etc.
3. Executive summary – Write this section last. Try to keep it to one page, or two if absolutely necessary. This is a critical section of your business plan. Get it right or your target readers and potential investors will not read the rest of your business plan. Your first paragraph should include your business name and location, what product or service you sell, and the purpose of the plan. In following paragraphs, include the highlights of your business plan: business objectives, mission statement, projected sales, projected cash flow, projected profits, keys to success, and any other information that you don’t want your readers to miss.
4. Company description – Describe business legal structure, company ownership, history (for ongoing companies), start-up plans (for new companies), company location/facilities, etc.
5. Product or service definition – Describe your company’s products and/or service focusing on customer benefits. Also include a competitive comparison, sales literature, special technology, future products and services, etc.
6. Market analysis – Who are your customers and how will you find them? Identify the size of the current market, customer’s needs, market trends and growth, distribution analysis, your main competitors, and their major strengths and weaknesses, etc.
7. Strategy and implementation methods – Describe how your strategies and implementation will give you a competitive advantage in the marketplace. Define the specific assignments for your team members with dates, budgets, and tracking criteria. Detail your overall marketing strategy outlining various marketing and sales programs. Define your pricing strategy. If you don’t have a lot of expertise in marketing, you will probably want to consult with a marketing specialist.
8. Web plan summary – In today’s market, if you are not online, you will become invisible to a lot of potential customers. Get a website up and running now! Describe your site in your business plan and provide your web address.
9. Management team highlights and experience – Detail your organization (if you have one) and point out the strengths and experience of each member of your team. If you are the only member of your company (which is the way a lot of small businesses start), outline the contacts you have on your team and list all of the resources you have at your fingertips. Talk about plans to add key personnel as your company grows.
10. Financial analysis details and cash flow projections – Include a complete analysis of your cash flow and profit forecasts. Other financial data should include basic financial assumptions, a break-even analysis, and business ratios. If you are hoping to get a loan from a bank, ask them what they will need to see and provide that in your plan.
11. Appendix with all supporting documents – You can put lots of supporting data in the appendix. Just make sure it is easy to find. The first page of the appendix can be a separate table of contents just for the appendix.

Developing a great business plan is critical to success of anyone starting any business. Get the help you need to produce an aesthetically pleasing, accurate, and easy-to-read plan. You can get special help from retired executives in your area. Go to:

www.score.org

to see if SCORE has an office in your area. If not, lots of help is available from SCORE via the Internet and over the phone.

You can also get help from the Small Business Association (SBA) by visiting:

www.sba.gov

The SBA even has an online training for writing a business plan at:

http://appl.sba.gov/training/sbabp/index.htm

Good luck with your business plan. It just may be the most important thing you work on this year!

Posted 11:11 PM | Permalink | Comments (0)

In this two-part series, the most common option myths will be explored and debunked. By better understanding the fallacy of these myths, you will be prepared to use options properly!

Myth #1: It’s cheaper to let options expire worthless.

While I’m not really sure how pervasive this myth is, a few traders have certainly been duped into letting an option expire before realizing that doing so is not always cheaper.

The first problem with making blanket statements about options, such as the aforementioned myth, is there are so many different types of strategies and scenarios that it's quite near impossible to state that one technique is better all the time. Are there scenarios in which allowing an option to expire is cheaper? Sure, but there are many more scenarios in which allowing an option to expire is more expensive.

Let’s recap what happens with options expiration. At expiration, an option will reside either out-of-the-money (OTM) or in-the-money (ITM). All OTM options expire worthless, and all ITM options are automatically exercised. As an option trader, there are only four different scenarios that may play out with your option positions at expiration:

• Long OTM option
• Long ITM option
• Short ITM option
• Short OTM option

Because each situation is unique, each one is evaluated individually.

Long OTM options
If you are long an OTM call or put option that remains OTM, riding to expiration will only cause you to lose more money, as the option value will continue to erode until it expires worthless. Therefore, unless you anticipate that the stock will experience a strong enough move to put your option ITM, it is usually better to exit long OTM option positions prior to expiration to salvage whatever value is left in the option.

Long ITM options
Like long OTM options, it is also more expensive to ride a long ITM option position to expiration. As stated, ITM options are automatically exercised; thus, riding an ITM call (put) to expiration will result in you having to buy (sell) 100 shares of the underlying stock. Coming up with the capital required to buy (short) shares is obviously more expensive than merely selling the option before expiration.

Short ITM options
Suppose that one is short an ITM call or put. Would riding to expiration be cheaper than closing it out prior to expiration? Yet again, the answer is no. Short ITM calls would automatically be assigned, resulting in having to sell 100 shares of stock at the strike price. Rest assured, the margin required to short 100 shares is going to be greater than whatever it costs to close out the short call prior to expiration. On the other hand, allowing a short put option to expire ITM will result in having to buy 100 shares at the strike price. The capital outlay required for that is obviously going to exceed the minimal cash required to close the trade prior to expiration.

In the case of a covered call (long 100 shares and short ITM call), you may want to ride to expiration and allow assignment, but it's not necessarily cheaper than closing prior to expiration as the myth purports.

Short OTM options
That brings us to the fourth and final scenario: riding short OTM options to expiration. This is the most common scenario where it is cheaper to ride an option to expiration. For example, suppose I'm short a naked OTM put option that is worth $.05 and has a week until expiration. Consider the following two scenarios:
1. I could close the trade now by buying to close the put for $.05. In addition to paying the $.05, I would also pay commission for the trade.

2. I could also ride to expiration and allow the OTM put option to expire worthless. This results in pocketing the remaining $.05 and avoiding having to pay commission.

Although it would be cheaper to ride to expiration, this assumes the option remains OTM. What if the stock undergoes a gigantic move the last few days before expiration, resulting in your short option moving ITM by a dollar? That option, which was trading at $.05, is now trading at $1.00. In retrospect, you will kick yourself for not buying it back at $.05 when you had the chance. That's the risk you run when trying to eke out every last penny of a short option's premium. My experience has taught me to buy back any short options that are almost worthless (maybe $.15 or less). It might not be a bad idea for you to at least consider the benefits of foregoing the last few dollars in exchange for eliminating risk.

Myth #2: Option volume is a directional indicator.

One of the most common ways traders use option volume is by looking for huge increases in volume (number of contracts traded) in an effort to identify big traders that may know something about such events as a future take over, FDA announcement, or other news likely to drastically move the stock. In other words, the options market may be tipping its hand and hinting at a potential big move in the underlying stock.
At first blush it may seem as if identifying abnormal option volume is a great way to find out when a stock is poised to make a big move. However, there are a few caveats that make option volume a bit more complex than it seems.

First, volume is relative. In other words, high volume for Microsoft (MSFT) options is completely different than high volume for Chipotle (CMG) options. So don't be too quick to think that 5,000 contracts, which is definitely high volume for CMG, represent high volume for MSFT. Make sure you familiarize yourself with the average number of contracts traded for a specific stock before trying to identify what qualifies as high volume.

Second, for every buyer there is a seller. In other words, if there are five contracts traded today, there were both five contracts bought and five contracts sold. Consequently, you can't merely look at the total amount of contracts that traded and discern whether they were buying or selling the options. Unfortunately, you have to dig a bit deeper and see whether or not they traded on the Ask, which implies the options were bought, or the Bid, which implies the options were sold. Furthermore, even if you found out if they were bought or sold, you don't necessarily know what strategy the options buyer are utilizing. Suppose you find out a big buyer came in and purchased a ton of out-of-the-money puts. While your initial thought may be that they are placing a bearish bet, they may actually be bullish by already owning shares in the underlying stock and merely want to buy protection, or perhaps they were entering a put vertical or calendar spread. The bottom line is that it's tough to identify a huge increase in open interest or volume and know what it means. Some traders may enjoy using abnormal volume in their option trading, but it's not really my cup of tea. There's too much other, easier to discern, information that one can use.

Third, for every good signal you get from abnormal option volume, there are probably two or three signals that don't come to fruition. With all the take-over chatter that's out there, you are bound to have numerous abnormal volume trades occurring as people speculate on the rumors, but, in reality, few big winners really occur. It is sometimes difficult to discern what exactly differentiates a good abnormal volume trade from a bad one. There is always a lot of random speculation within the options market. In the end, there are a ton of other signals, such as technical analysis, we could use for predicting stock direction before looking at abnormal option volume.

Posted 10:03 AM | Permalink | Comments (0)

By Harold Moses

Students often ask me what my favorite or most-used exit strategy is, and my response is always lease/option. Of course the follow-up question is, why?

My primary real estate strategy is to hold properties as rentals. However, like many other investors, I began my real estate investment career concentrating on buy-fix-sell, but eventually I figured out that at the end of the day I had no real assets; I was not reaping the wealth-building benefits of holding real estate.

So I gravitated toward the buy/hold strategy and began buying all the four-plexes, tri-plexes, du-plexes, and single family homes I could get my hands on. I became a landlord. This strategy worked great since I now owned property, each one its own little business that produced cash flow, with appreciation as well as depreciation. But the landlord part became a bit of a challenge. Collecting rent or lease monies, making sure the property stayed viable for the next tenants, and making transitional renovations (repairs and upgrades when tenants moved on) could get a bit out of hand. Damage and security deposits only go so far, and many tenants actually do more damage than the deposit covers.

When I investigated the lease/option, the following advantages are what I discovered:

• Target a better-qualified tenant
• Still have cash flow
• Still own and control the property
• Maintain tax benefits
• Minimize land lord responsibilities

The Lease/Option strategy differs from traditional rentals in that your target market is better qualified (they have more cash); they have better, more stable jobs or careers; they are generally more responsible; and they have a real desire to be a homeowner. This strategy offers the opportunity to potentially increase the cash flow that the property “throws off.” For example, a qualified tenant/buyer will pay the property owner a price for the right, or option, to purchase the property at a later date for a purchase price agreed upon today.

Lease options allow the property owner to maintain control of the property, technically it is still a rental, so when the tenants want to make changes such as painting or landscaping, they still need to seek approval. Lease options also allow the property owner to maintain the tax benefits of owning investment property, even though the intention is to eventually have the tenant/buyer exercise their option and purchase the property.

When executed properly, lease options will eliminate a lot of the traditional land lord headaches. As an interested potential owner, the tenant/buyer takes care of the normal wear and tear issues, leaving the property owner with only the bigger issues—such as water heaters, appliances, and structural issues, all of which will be covered by a home warranty or other insurance policy.

When determining option consideration, take into account the following:
• How much should the consideration be?
• Does the consideration need to be a lump sum or can it be paid in installments?
• How long should the term be?

There is nothing set in stone as to how much the option consideration should be. I like to find out what the tenant/buyer has to work with and what they are willing to pay; obviously the more, the better. What I typically see in the markets is usually one to three percent as upfront option consideration, which usually works out to be three to six thousand dollars.

So what if the tenant/buyer is unable to come up with the lump sum up front? An effective way to work within this situation is to increase the amount the tenant/buyer pays each month. For example, asking for five thousand up front and the tenant/buyer can only come up with three thousand, offer him the opportunity to pay the two thousand deficit over the life of the option. So, for a 12-month option, the tenant/buyer will pay an additional $167 each month, by a separate check, above the normal rent amount.

The length of the option period should be whatever time period the owner and tenant/buyer are comfortable with. If the tenant/buyer needs time to iron out issues in order to become “mortgage-able,” then a longer option period of 24 to 36 months may be in order. In general, I prefer a shorter, 12-month option period.

In conclusion, in today’s ever-tightening credit environment, the lease/option strategy offers the property owner a more qualified tenant, greater flexibility, and continuing income, as well as offering the tenant/buyer home-ownership potential in the future.

Harold Moses is a real estate mentor for Wealth Intelligence Academy®.

Posted 01:10 PM | Permalink | Comments (0)

We all love to save money. When working on a rehab project, it can be difficult to find ways of saving money without ruining the integrity of the finished product. In this article, I will explore some of the best strategies I found over the past 20 years to save money on rehabbing projects.

When it comes to the actual rehab cost, a rehab project possesses two basic cost categories: materials and labor. On the labor side, you have a few choices on how to get the job done. While hiring a general contractor is the most expensive option, doing so can save you time; to you, saving time may be more valuable than the financial savings of other approaches. If this is not the case, there are two different options you may want to explore.

First, you could hire subcontractors. If you are acting as your own general contractor, you can typically save approximately 10 percent of the total cost of the project, as long as you know how to manage people and the timing of each trade. For example, if you double-schedule subcontractors who cannot work together without tripping over each other, you can cause delays, and rescheduling may cost you more than hiring a general contractor. Therefore, you need to know your limitations and understand the timing of each subcontractor’s work. If you forget to inform and remind subcontractors of when you will need them, they may be tied up on other projects and your job may be delayed, causing you to pay interest on a house that is just sitting.

When working with subcontractors, it is also important to get three to four quotes on the work before hiring someone. Make sure that everyone you consider is bidding on the exact same scope of work and materials, and check their references carefully. You need to make sure that they not only do quality work, but that they do it in a professional and timely manner. I have turned down many low bids because I learned that the subcontractor had a reputation of being slow to respond or late to a job. This delay can cost a lot of money, and has to be considered when determining whether a quote you have received is truly a good deal. Once you find a subcontractor from whom you consistently get good prices and quality, timely work, I do not believe that you need to continue to get three to four bids on projects that fall within the same category as the other jobs he has done for you. I prefer to be loyal to the subcontractors that have treated me well, although I do check their prices occasionally.

The third and least expensive method of rehabbing a property is actually hiring the laborers you need in order to get the job done. Doing this requires skill in the management of people, and you must find and hire the right people. Remember that when you hire the laborers yourself, you are ultimately responsible for the quality and timing of everything; therefore, you need to know exactly what needs to be done and by when. All of your terms and agreements absolutely must be put in writing. If the terms are not in writing, a dispute often will arise, even among family and friends.

When determining how you will pay your workers, it would be wise for you to consult your accountant, who can either refer you to a payroll service or tell you the maximum dollar amount that you are allowed to pay laborers in cash. You can also try working with a temp agency that specializes in the construction industry; they will handle the payroll for each person you hire. These services do not provide cheap labor, but if you are well-organized, have materials on-site, and need people for a few or several days, this is a great option and can save you the costs of hiring a contractor and the hassle of trying to finding more work for the workers once the task is done.

One last thing I would like to mention in relation to the hiring of laborers is insurance. Make sure your payroll service is paying into whatever your state mandates for workmen’s compensation, and check with your homeowners’ insurance agent to see if you need an additional rider on your policy when you are acting as your own general contractor. If you do this frequently, your agent may set you up with a general liability policy in your corporation’s name.

Now that we have discussed saving costs on labor, let’s take a quick look at the materials side of cost cutting. If you are hiring laborers, subcontractors, or even general contractors, you can save big money by buying your own materials. Remember that you must buy the quality of materials that your neighborhood dictates and follow the specifications of the installer. There are some cheap products out there that actually cost you a lot more in the long run than they save you in the short term. For example, there are storm doors available that cost $150 and take 30 minutes to install. Similar doors can be bought for $105, but take three hours to install. If you are paying an installer $25 per hour, you will actually save money and end up with a nicer door by buying the more expensive one. Ask your installer or supplier what brands are the quickest to install and still have the quality that you need. When buying materials, it is usually better to buy 10 percent extra to make up for potential waste and the possibility of damaged goods. I have learned that it is cheaper to return extra materials than to delay the job by running short and having to send someone to buy more at an inconvenient time.

Another way to save on materials is to buy from discount suppliers. Many large cities now have a Habitat for Humanity ReStore. You can often find great buys on even new materials that have been donated as overstock or scratch-n-dent. Be cautious not to buy a color or style that you or your buyer will not be happy with. There are many days that I am unable to find a single product that is suitable for my project, but there are other days when you can save hundreds or even thousands of dollars on something that is a perfect match for you.

You should also check Home Depot and Lowe’s for their scratch-n-dent appliances, cabinetry, and bath fixtures. If the scratch is repairable or in a location that is covered by another cabinet anyway, you can save a bundle here as well. Check around your area for major suppliers’ warehouses or factories. In my area, for example, is the KraftMaid factory. Their warehouse features an enormous selection of cabinetry at huge savings. I do not find a match every time, but most of the time, I do and it is worth the effort. Appliance and window stores also have overstocked, mistakenly ordered, and scratch-n-dent items as well.

Another idea for saving on materials is to volunteer at your local kitchen and bath showroom to take down their kitchen and bathroom displays when they are changing out for the new line. I have been able to get entire kitchen displays for free by volunteering for half of a day! The last place to check, if you have storage room, is building material auctions in your area. If you can sit on the expense of buying the materials and have room to store them without having to pay for a storage unit, you can find huge savings here. Remember that in this business, every dollar saved is another dollar in your pocket when you sell!

Mark Gilliland
USA RE Mentor

Posted 03:48 PM | Permalink | Comments (1)

What is probate? Probate is a process that occurs when a person with assets passes away. Simply put, it is a legal process to clear and transfer the deceased person’s assets to the appropriate beneficiary, be it person, entity, corporation, or charity. Each state has its own rule concerning the dollar-amount value at which an estate must go through the process of probate. The set of statutes, limitations, and laws defining and governing this process vary by state, so be mindful that learning the particulars a specific state’s process is essential if you plan to be able to navigate the process successfully. You may want to consult with an attorney to ensure that you are sufficiently educated concerning the potential parameters and criteria with which you may be dealing. Your local title company may be able to answer some questions as well.

How long does probate take?

Usually, a simple probate will take approximately six months. If there are multiple properties, several people or large amounts of money and assets involved, it could take years to sort through everything and wrap up the process. The first step is filing notice of hearing to petition the court to start probate. The notice will be published for a set time in the local newspaper, and must also be mailed to all heirs of the deceased and all persons named in the will. Additionally, creditors must be allowed time to make claims against the estate if the deceased has left behind any outstanding debts. There is a specific time period in which such claims must be filed, and if there is no claim filed within that window of time, creditors may not sue the estate or its beneficiaries.

During probate, the executor, administrator, or personal representative obtains the death certificate; has appraisals of the properties completed; determines the amounts of any debts, income, property tax, estate-inheritance tax or a state tax filed; and pays any outstanding debts. He or she pays creditors, court fees, and attorneys’ bills, and files claims or denies claims. The representative may then sell any assets or properties in order to satisfy these debts—all of this is done before the heir and beneficiaries are considered entitled to and granted anything, and is all accomplished within a set time frame, as there is a deadline by which to complete the necessary forms and claims. Once these steps have been completed, the PR will petition the court for a hearing to close the probate, and will distribute the assets to the heirs and beneficiaries, as well as to the attorney and to him or herself for payment.

Depending on the circumstances of a person’s passing, the probate process will either be testate or intestate. When a person leaves a will and/ or amendments to the will (codicils), the situation is termed testate; in the absence of a will, an intestate situation has occurred. When a final will and testament has been left, the document will name a person whom the deceased designated to oversee and carry out the terms he or she set forth. This person is now generally referred to as “executor,” although a few jurisdictions may retain the use of the feminine form of the word, “executrix,” when appropriate. The probate court will work with the executor to clear the deceased’s assets for distribution to any heirs.

If a person passes away intestate, someone will be appointed to serve in a similar capacity to that of executor; this person is referred to as the administrator or personal representative. The courts must follow a set procedure when appointing a personal representative. Each state has its own state’s will, known as a default will. When a person passes away without leaving behind a will of their own, the default will goes into effect for the deceased person’s assets, and the court-appointed personal representative looks after the decedent’s assets and investments, protecting them and distributing them according to the state’s default will. Unfortunately, in the absence of a personal will, the person(s) that the court deems to be the heirs are not necessarily the people to whom the decedent would have wanted to bequeath is or her estate.

How can we as investors help those in this situation?

Now that you have some understanding of how the process of probate works, you may decide that you would like to learn to assist families during this time. Sometimes an investor approaches a family while the estate has already gone through probate, and sometimes it is still in the process. In some situations, the family may not even be aware that the estate must go through probate. In any situation, we can assist them and, with the services of a qualified attorney, can purchase the property through the use of a contract, even if probate has not been completed. The contract then is processed by the court, and once the court accepts and approves it, the investor may close on the property.

How might we find these probates or people?

During the course of our lives, we all build a personal network of friends, family, and acquaintances. This network can lend a hand when it comes to passing on information for us. When you decide to work with bereaved families in this way, let the people in your life know your plans. There is no substitute for word-of-mouth when it comes to introducing one to new opportunities. You may also choose to contact grieving families directly. Local newspapers feature legal notices and obituaries, both are sections in the paper you might want to check out. When you choose to contact someone directly to offer your assistance, you must be sensitive, caring, respectful, and, above all, tactful. Let them know who you are, what you are offering, and how they may contact you. Keep it short, sweet, simple, and sincere.

In closing, I recommend that you begin to make a list of individuals, organizations, and others who regularly have involvement with families immediately before or after the passing of a loved one. As you begin to interact with those who you have listed, you will think of more categories to include, and your list will continue to grow. Spend some time thinking of how best to approach each person or organization you have listed, and provide them with some information on you and the services you provide. Explain to them the benefit of the services you offer to grieving families, such as much needed income to a family left with towering medical bills and funeral expenses and an inherited property they have no use for. Ask them to pass along your information any time they come into contact with someone in need of those services.

Posted 09:18 AM | Permalink | Comments (0)

Economic growth or contraction plays a critical role in the trends of the market place general. As defined by Investopedia.com, Economic growth is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation.

Monitoring, or keeping our finger on the pulse of the market, can play a very important role in the trading decisions we make and in the strategies that we may choose to implement. In this time of increased uncertainty and economic downturn, it becomes more critical than ever to have our ear to the ground, to know what is happening, and moreover, why it is happening.

Under the current administration, government policy and implementations appear to change nearly by the moment. If we are alerted to these changes, it will potentially allow us to take advantage of the various legislation and mandates. It is important for us to know that our economy is growing, and it is equally important for us to understand where the growth will be coming from. Will legislation allow for growth in the private sector, or in the public sector? Will it promote corporate growth, or corporate contraction?

Among other things, many believe that sustained economic growth and stimulus must be ascertained through the promotion of private investment, lower corporate tax rates, and smaller capital gains taxes. Others come from a standpoint of larger social programs, infrastructure buildouts, and bigger government programs as a bottom-up approach to help stimulate the economy.

Other matters that might concern us are an increasingly aging population and whether those types of demographics will contribute to an economic demise. Some of those concerns include health benefits, social security, and housing.

Will we have social security? This has been a monster topic, hotly debated, for decades now, yet nobody has really offered up any viable solutions. What will be the costs if social security went belly-up? What would be the costs if it were sustained?

Housing! I think that it is safe to say that this issue has been front-and-centre throughout 2008 and on into 2009. We are definitely in uncharted territory, after a failing housing market, we began to experience an increase in the foreclosure rate. In the United States, there has been a precedent set through the establishment of government programs that will allow the refinance of mortgages at new terms, or to have bankruptcy judges determine if, not only interest on loans should be modified, but additionally, whether or not the principle of the loan should be modified. Should we follow this in Canada? Agree or disagree?

Bailouts, moral hazard, Ponzi schemes, Congressional tax evasion, undocumented workers—somebody stop me! Whether you are for or against any of the aforementioned and inclined to believe that Program A or Program B is either the best thing since sliced bread, or the worst idea since the first person who considered careening over Niagara Falls in a barrel, we cannot let our personal views cloud what is real; we cannot allow our ideals to affect our investment decisions. This is where the consistent monitoring of economic reports and the economic calendar come into play.

There are a series of economic reports that are advertised weekly for scrutiny by such market participants such as the Canadian government, the Bank of Canada, institutional investors, investment banks, hedge funds, mutual funds, pension funds, analysts, floor traders, professional traders and the increasingly knowledgeable retail investor. These reports have the potential to be a forward look into the future, and make projections as to the robustness, or lack thereof, of the economy. These are the type of reports that are followed by the bigger market participants, allowing them to evaluate where they believe the economy may be headed. They are generally not looking to tomorrow’s market or to next week’s market, but are rather making their investment decisions based upon where they believe the market will be six to nine months down the road.

This gives us great reason to be following in their footsteps, achieving realizations of what is happening in the economy to help us make our investment decisions. Like it or not, the institutions are the stock market. We need to be sharp and nimble to compete in a very unforgiving and volatile investment environment. Therefore, we need to be in the ballpark ready to play ball and compete for the championship.

So, what is the mechanism and resource for access to these reports? It is the economic calendar. The economic calendar allows us the same transparency into the market afforded the big boys and girls. We can follow the results of the economic news events via this calendar day-to-day, week-to-week and month-to-month. The types of economic reports that we’ll find on this calendar are various inflationary reports, economic growth reports, energy reports, and employment reports, among many other results. They can be such a benefit to us as traders/investors, since they allow us to make a determination as to where we believe the economy is headed and which sectors of the markets will be most positively or adversely affected by their results. In this manner, we can select investment candidates by investigating those sectors of the markets and finding securities within those sectors. We can then watch that list for the right opportunity to enter a position.

Such a calendar for the United States can be accessed through WIA’s EDUTRADER software by clicking on Tools > Calendars > Economic.

For other global economies, Forex Facotry, www.forexfactory.com, is a reliable source for various economic calendars. Economic reports can be a vital and critical part of our investment decisions and knowledge base. An awareness of market and economic conditions can not only potentially enhance the way that we invest, but moreover, can enhance our lives by allowing us a deeper understanding as to why things are happening. Through that process, it has the ability to grant us an opportunity for more educated and valued decision making in many aspects of our lives. Whether it translates to mortgages, interest rates, inflation, deflation—a greater understanding of the economy through the study of economic reports will help us to position ourselves more effectively in all investment decisions.

We will better understand where we are headed as a nation and what those implications mean to us as individuals when we make the decision to become more informed. Knowing the choices available to us and possessing an in-depth understanding of these options makes us better-prepared to meet the challenges ahead.

Posted 06:09 PM | Permalink | Comments (0)