Real Stock Market

LG and Alltel Jointly Launch ‘LG Swift’

2008-11-27T09:33:00.002-08:00

America’s largest network, Alltel Wireless and LG have jointly rolled out a fast and easy-to-use, LG Swift phone in the US market. With it unparalleled features, the phone stands apart from others.

The stylish LG Swift comes up with FasTap layouts as hot keys which integrate together with a regular phone key pad with raised buttons for each of the alphabet that provides the same functionality as the QWERTY keyboard offers. With the unique feature of the FasTap technology, a user can have an instant access to different functions like emails, navigations, music, games and various other functions without interfering with the main menu.

FasTap technology with FasTap Press-to-Experience keys offers one touch access to services and applications like the Alltel Navigation services, Shop and image library.

Announcing the launch, Brian Ullem (Vice-President, device strategy, Alltel Wireless) said, “The LG Swift is an innovative phone that helps our customers explore and enjoy Alltel’s most popular data features.”

“The introduction of FastapPress-to-Experience keys enables us to delivers information andentertainment to our customers faster than ever before”, added Ullem.

Touted to be a multimedia phone, the LG Swift comes with 1.3 megapixel camera with camcorder, multi-shot and video recording functionalities. Besides this, the phone also brings the following: a MicroSDHC slot, music button, Bluetooth, external music buttons, one touch speakerphone and media player. The music lovers can enjoy the music with dual speakers with stereo sound system using the background music mode or the Bluetooth headset.

The phone offers a talktime of 3 hours and standup time is up to 140 hours.

Available in red and blue, LG Swift is priced at $49.99 after a $50 mail-in debate. This discounted price is for new customers on two year service agreements, as well as for the existing customers on qualifying rate plans.

Infosys to carry out acquisitions in Europe, Japan

2008-11-27T09:33:00.001-08:00

Second largest software and services exporter from India, Infosys Technologies is looking for acquisitions in Europe and Japan. It may acquire some consulting, SAP implementation and BPO firms with deals worth $600-700 million.

CEO of Infosys Technologies, Kris Gopalakrishnan said at the India Economic Summit, that the company would go for its expansion plans despite global slowdown and credit crunch. He termed China, Mexico and Eastern Europe as favorite destinations of the company and remarked that the company intends to invest in these countries in coming times.

Kris said that the company is unlikely to perform well in December quarter due to the global slow down and its revenue may decrease following depreciation of Rupee against Dollar. The company has substantial exposure in the US market and its 40 per cent revenue comes from non-US markets including European countries.

Infosys Technologies would recruit 25,000 employees in the current fiscal despite slowdown in IT segment. It would use this opportunity to train their employees and increase R & D activities. The company will adopt cost cutting measures such as cutting discretionary spending and entertainment activities.

LG 18.5-inch W1941S LCD Monitor Launched In India

2008-11-27T09:32:00.003-08:00

Technology giant LG has rolled out its latest LCD Monitor, named ‘LG W1941S’ in the Indian market.

Aimed at office and home users, the newly launched LCD monitor sports a 18.5-inch screen, 1366 x 768 pixels of resolution, 16:9 aspect ratio, 8000:1 DFC, 5 ms response time and viewing angle of 160/160.

The plug-and-play LCD from LG uses less power of 21W as compared to other LCD monitors that consume about 40W.

The W1941S comes with F-engine technology to offer microscopic picture quality.

Mr. R. Manikandan, Business Group Head, DDS, LGEIL, said, “With this new launch, we reiterate, LG as a company is committed to providing the best-of-class products having the perfect harmony of technology and aesthetics. This widescreen LCD monitor comes with a unique feature for watching pictures and movies originally recorded in 4:3 aspect ratio, undistorted at a press of a button. The f-engine technology embedded in this monitor helps to achieve microscopic picture clarity..

The monitor also has sleep mode (power save option), sRGB, DDC/CI and the aspect ratio control of 4:3 in wide, full, intelligent auto for making resolution adjustment automatically.

India’s billionaires lose a lot due to financial crisis

2008-11-27T09:32:00.001-08:00

The ongoing global financial crisis has adversely impacted the billionaires of India as per the recent 40 billionaires list compiled by prestigious Forbes magazine. Net worth of Indian billionaires was $351 billion a year ago and now it has declined to $139 billion with loss of $212 billion.

The volatile condition of Indian stock market, depreciation of Rupee against US dollar and instability of demand supply chain, caused huge losses to Indian billionaires. Stock prices fell nearly 50 percent from January while Rupee depreciated nearly 24 per cent against US dollar, which shaved off almost 60 per cent wealth of the richest Indians.

Meanwhile, Mr Mukesh Ambani of Reliance Industries, has become the richest Indian in the world. He displaced steel giant and chairman of London-based ArcelorMittal, L N Mittal to second position. Mr. Mittal suffered huge loss of USD 30.5 billion and secured second slot in Forbes list.

Malvinder and Shivinder Singh are only billionaires who added to their wealth. They recently sold their 34 per cent stock in Pharmaceutical major Ranbaxy Laboratories to Japanese drug maker, Diacchi.

Mumbai has the highest number, at eight billionaires in top 20, while Delhi got second place with its billionaires Sunil Mittal, Kushal Pal Singh, Ms Savitri Jindal, Malvinder and Shivinder Singh, Shiv Nadar and Indu Jain.

Inflation rate eases to 8.98 percent

2008-11-27T09:31:00.002-08:00

he wholesale price index based inflation rate, witnessed steep decline in the week ending November 1. It currently stands at 8.98 percent as compared to 10.72 percent in the previous week. Leading economists and market experts, earlier forecasted single digit inflation only by next year.

The single digit inflation rate brings great respite to the central government as it is going through polls in states assemblies and general elections are also due next year.

Reserve Bank of India may take more monetary steps to ease liquidity and the recovery of normal annual growth rate. It has earlier taken many steps including revision of cash reserve ratio, SLR and Repo rate to ensure smooth and adequate money supply in the Indian financial system.

The recent steep fall in inflation rate is mainly due to the slump in the prices of various petroleum-based fuels such as naphtha, aviation turbine fuel (ATF), furnace oil and light diesel oil. Crude oil rate currently stands at $56-60 a barrel from $147 a barrel in July this year.

Meanwhile, inflation for 30 essential commodities increased to 7.74 per cent on a weekly basis from 7.51 per cent. The manufactured product index fell by 0.7 per cent following decline in the prices of edible oil. Prices of vegetables, fruits and tea also declined marginally in the reporting week.

Sharp launches 108 inch LCD in India

2008-11-27T09:31:00.001-08:00

Electronics major Sharp has launched the world's largest 108 inch Liquid Crystal Display (LCD) screen in Indian market.

This newly launched device christened ‘LB-1085’ costing Rs 97 lakh, is meant for hospitals, security purposes and High Networth Individuals.

Explaining the difference between Displays and LCD TVs, Mr Sunil Sinha Sinha, managing director of Sharp business system limited stated, “Displays are designed for 24-hour usage whereas LCD TVs are meant for intermittent usage.”

LB-1085, with 7.8 feet hight , is bundled with an ASV low-reflection black TFT LCD monitor, a screen-size, which roughly equals four 52-inch monitors and claims to be of a low-power consumption design aimed at reducing CO2 emissions.

OVL, IRP Red Sea Discover Oil In Egypt

2008-11-27T09:30:00.000-08:00

The ONGC Videsh (OVL), part of Oil and Natural Gas Corporation (ONGC) India, along with partner IRP Red Sea Inc have discovered oil in an offshore block in Egypt for the second time. The company had discovered oil in April 2007 off the North Ramadan Concession in Gulf of Suez.

Although the company did not reveal the size of the oil and gas reserves in the Egypt field, they did say that the flow rate of both oil and gas from the latest discovery is lower than the first discovery.

According to the statement, the find in the well North Ramadan-2 (NR-2), the second oil discovery in the block, is located on a separate fault block north of the first oil discovery NR-1A, which produced about 3,000 barrels of oil a day and 15 million standard cubic feet a day of gas during the testing phase. OVL holds 70 per cent in the North Ramadan Concession, while IPR has the remaining 30 per cent. OVL has participating interest in 35 projects in 17 countries across the world. It is currently producing oil and gas from two blocks in Sudan, one each in Vietnam, Syria, Russia and Colombia. It discovered oil in one block in Brazil, which is currently being developed with production expected to begin in 2009-10.

Oil and gas have also been discovered in two blocks in Myanmar, two in Egypt and one in Iran, where the company is studying if it will be commercially viable to produce the oil and gas. The remaining projects are in exploration phase.

This news has coincided with the acquisition of the U.K.-based Imperial Energy for $2.59 billion by the OVL.

Luminous Teleinfra to set up Rs 150 crore plant in HP

2008-11-27T09:29:00.000-08:00

Luminous Teleinfra, an arm of SAR Group, has announced that it is searching the options to set up manufacturing facility in Himachal Pradesh (HP) with an investment of Rs 150 crore for producing telecom batteries, power management units and conversion devices.

According to the sources, the conglomerate aims turnover between Rs 400-500 crore by fiscal 2009-10 from this project.

While commenting on the plans, Mr Paresh Pradhan, Luminous Teleinfra Director stated, “We will be having battery manufacturing capacity of one billion amperes per hour and power management devices with a capacity of 50,000 units per annum in our new facility, which is coming up at Una in HP.”

According to the company officials, the funding of proposed project is done by promoter's equity, term loans and four per cent stake by IFCI Venture Capital Funds Ltd.

According to the reports, the company would also offer turnkey site preparation services for telecom cell sites all over India by leveraging its competencies in supply chain, project management and network design and implementation.

Government re-imposes import duty on steel

2008-11-27T09:26:00.000-08:00

The Union government has re-imposed five per cent steel duty on pig iron, semi-finished, flat and long steel products. The move is aimed to help domestic steel industry from the impact of global financial crisis. Steel prices in the international market have significantly declined and its demand is also reduced due to down fall in real estate and automobile sector. Government has also imposed 20 per cent import duty on crude soybean oil which would be effective immediately.

Earlier, steel industry demanded 10 per cent import duty on steel products to discourage steel import by domestic industry. Cheep import rate is causing huge losses to steel producers across country due to decline in demand. Steel Authority of India Ltd (SAIL) and JSW registered 25-30 per cent demand reduction amid global slowdown. Low demand and cheap import forced steel producers to impose production cut by 25-30 per cent.

Industry seems unhappy with government's move and said that Ukraine and China are offering steel at much lower prices. There is a difference of about Rs 10,000 per tonne between imported and domestic steel prices.

Dabur India Ltd acquired 72% stake of Fem Care Pharma

2008-11-27T09:22:00.000-08:00

Dabur India Ltd bought 72% stake of Fem Care Pharma for Rs 203 crore in an all-cash deal. This acquisition deal got approval from board of directors on Friday.

Dabur made this deal to enter skin-care market in India. As required under takeover regulations, Dabur will make an open offer for an additional 20% stake in Fem Care.

Sunil Duggal, chief executive officer, Dabur India said: “We will fund the entire acquisition from internal accruals. We have around Rs 250 crore of cash.”

According to sources, Dabur has not bought Fem Care's speciality Chemical unit as it doesn't fit into its portfolio and constitutes only 3% of Fem's sales. Sources also reveal that a joint venture in US called Fem Mitechell in which Fem has 25% stake is also being retained by the Fem's promoters as it was not adding much value to Dabur.

Anand Burman, Chairman of Dabur India said acquisition of Fem Care Pharma is in line with the company strategy to aggressively expand its scale of operations and strengthen its presence in FMCG space. This transaction would give Dabur an entry into high-growth skin care market with an established brand name Fem. Further, Dabur also has the potential to extend the brand into newer and related skin care categories.

10 truths of getting rich through stocks

2008-11-27T09:18:00.000-08:00

You will truly profit from investing only when you have a clear appreciation of its principles and realities.

Once you understand these, you will be better able to keep a cool mind during the inevitable ups and downs -- and reap riches by investing with controlled risks.

1. Investment rewards can only be increased by the assumption of greater risk

This fundamental law of finance is supported by centuries of historical data. US stocks have provided a compounded rate of return of 11 per cent per year since 1926, but this return came only at substantial risk to investors: total returns were negative in three out of ten years. Higher risk is the price one pays for more generous returns.

2. Your actual risk in stock and bond investing depends on the length of time you hold your investment

Holders of a diversified stock portfolio in the US, from 1950 to 2000, were treated to a range of annual total returns, which varied from +52% to -26%. There was no dependability of earning an adequate return in any single year. But if you held your portfolio for 25 years in the same period, your overall return would have been close to 11% -- whichever 25 years you were invested.

In other words, by holding stocks for relatively long periods of time, you can be reasonably sure of earning the generous rates of return available from common stocks.

3. Decide how much risk you are willing to take to get high returns

JP Morgan once had a friend who was so worried about his stock holdings that he could not sleep at night. Morgan advised him to 'sell down to his sleeping point'. He wasn't kidding.

Every investor must decide the trade-off he or she is willing to make between eating well and sleeping well. Your tolerance for risk informs the types of investment -- stocks, bonds, money-market accounts, property -- that you make. So what's your sleeping point?

4. Dollar-cost averaging can reduce the risk of investing in stocks and bonds

Dollar-cost averaging simply means investing the same fixed amount of money in, for example, the shares of a mutual fund at regular intervals -- say, every month or quarter -- over a long period.

It can reduce (but not avoid) the risks of equity investment by ensuring that the entire portfolio of stocks will not be purchased at temporarily inflated prices.

5. Stock prices are anchored to 'fundamentals' but the anchor is easily pulled up and then dropped in another place

The most important fundamental influence on prices is the level and duration of the future growth of corporate earnings and dividends. But earnings growth is not easily estimated, even by market professionals.

In times of optimism, it is easy to convince yourself that your favorite company will enjoy substantial and persistent growth over an extended period. In times of pessimism, many security analysts will not project any growth that is not 'visible' and hence will estimate only modest growth rates for the corporations they follow.

Given that expected growth rates and the price the market is willing to pay for growth can both change rapidly on the basis of market psychology, the concept of a firm intrinsic value for shares must be an elusive will-o-the-wisp.

6. If you buy stocks directly, confine your purchases to companies that appear able to sustain above-average earnings growth for at least five years and which can be bought at reasonable price-earnings multiples

As difficult as it may be, picking stocks whose earnings grow is the name of the game. Consistent growth not only increases the earnings and dividends of the company but may also increase the multiple (P/E) that the market is willing to pay for those earnings.

The purchaser of a stock whose earnings begin to grow rapidly has a potential double benefit: both the earnings and the multiple may increase.

7. Never pay more for a stock than can reasonably be justified by a firm foundation of value

Although I am convinced that you can never judge the exact intrinsic value of a stock, I do feel that you can roughly gauge when a stock seems to be reasonably priced. The market price earnings multiple (P/E) is a good place to start: you should buy stocks selling at multiples in line with, or not very much above, this ratio.

Note that, although similar, this is not simply another endorsement of the 'buy low P/E stocks' strategy. Under my rule it is perfectly alright to buy a stock with a P/E multiple slightly above the market average -- as long as the company's growth prospects are substantially above average.

8. Buy stocks with the kinds of stories of anticipated growth on which investors can build castle in the air

Stocks are like people -- some have more attractive personalities than others, and the improvement in a stock's P/E multiple may be smaller and slower to be realized if its story never catches on. The key to success is being where other investors will be, several months before they get there. Ask yourself whether the story about your stock is one that is likely to catch the fancy of the crowd.

9. Trade as little as possible

Frequent switching between stocks accomplishes nothing but subsidizing your broker and increasing your tax burden when you do realize gains. My own philosophy leads me to minimize trading as much as possible. I am merciless with the losers, however.

With few exceptions, I sell before the end of each calendar year any stocks on which I have a loss. The reason for this is that losses are deductible (up to certain amounts) for tax purposes, or can offset gains you may already have taken. Thus, taking losses can actually reduce the amount of loss by lowering your tax bill.

10. Give serious thought to index funds

Most investors will be better off buying index funds (funds that buy and hold all the stocks in a broad stock market index) rather than buying individual stocks.

Index funds provide broad diversification, low expenses and are tax efficient. Index funds regularly beat two-thirds of the actively managed funds with which they compete.

Tax-Breaks

2008-11-27T09:17:00.001-08:00

You may be somewhat aware that your home is a good source of tax breaks, but maybe you don’t realize just how many there are. April 15 is almost here, and many people will be scouring their lives for any potential tax breaks. You may not have to look far if you are a homeowner. A recent Realty Times article discusses the top 10 tax breaks you can get from your home.
Mortgage Loan Interest. This is one of the best tax breaks your home has to offer. In the early years of a loan, interest payments constitute a large portion of your mortgage payments. Mortgage interest on a maximum of $1 million in mortgage debt secured by a first and second home is tax-deductible. This level applies to joint filers; if you file single or separately, you get half of the deduction. Home equity loan interest is also deductible, but is limited to a much smaller amount.
Points. You can fully deduct points associated with a home purchase mortgage. You can also deduct refinanced mortgage points, but only when they are amortized over the life of the loan. If you refinance a second time, the balance of the old loan’s points from a refinanced loan provides an immediate write-off, as you begin to amortize the new points.
Home Improvement Loan Interest. Interest on a home improvement loan is also deductible, but is calculated differently from interest on your mortgage. You can deduct all of the interest on a home improvement loan if the work is a capital improvement (improvement that adds value to your home, adapts it to new uses, or prolongs its life) rather than repairs, maintenance or cosmetic. You can only get tax benefits from repair work when you sell your home, unless you get a home equity loan to make the repairs.
Property Taxes. Any property or real estate taxes are fully deductible. If you receive a city or state property tax refund, your federal property tax deduction will be reduced by the same amount.
Capital Gains Exclusion. Provisions in the Taxpayer Relief Act of 1997 allow married taxpayers who file jointly to retain up to $500,000 of profit on the sale of a home used as a principal residence for two of the prior five years tax-free. Again, the amount is halved for taxpayers who file separately or as a single. This tax breakcan be used as often as you qualify.
Selling Costs and Capital Improvements. When you sell your home, your taxable capital gains can be reduced by the amount of your selling costs, including title insurance, real estate commissions and legal, advertising and inspection fees. Decorating or repair costs, such as painting, planting landscaping or cleaning carpets, are also considered selling costs if they are incurred within 90 days of the sale and with the intention of making the home more sellable.
Moving Costs. If you have to move for a job, your moving costs may be at least partially deductible. You must, however, move within one year of starting your new job, move 50 miles farther from your old home than your old job was, and work full-time at the new job for 39 of 52 weeks following the move. Deductible costs include storing your household goods and travel and transportation costs.
Energy Tax Credits. Although not available this year, the Energy Policy Act of 2005 introduced tax credits for upgrading features of your home to energy-efficient models or materials. Up to $500 in 2006 and 2007 is available if you upgrade yourheating and air conditioning, caulk leaks, add insulation, install energy-efficient windows or other improvements that combat energy waste. Certain qualified solar energy and fuel cell systems can earn you tax credits of up to $2,000. You can also earn a tax credit for purchasing a hybrid or other energy-efficient vehicle. Keep in mind, however, that some states offer rebates or tax credits that can reduce the federal credit.
Home Office Deductions. If you have a home office that is used exclusively for business, you could deduct a portion of the costs related to that portion of your home, including a percentage of your insurance and utility costs, among other things.
Mortgage Tax Credit. Qualifying low-income, first-time homebuyers can take advantage of Mortgage Credit Certificates (MCCs) that allow them a credit of up to 20 percent of the mortgage interest payments made on their home. The credit is available each year you live in the home purchased with the certificate, with the same loan. Instead of reducing your income, this credit is subtracted from the amount of income tax you owe.

5 Tips-Equity

2008-11-27T09:16:00.000-08:00

It seems like any excuse is enough to make people run and start tapping into their home equity. A recent MSN.com article discussed the tremendous growth in home equity lending, and gave some tips on how to wisely tap into the equity built up in your home. According to smrresearch.com, growth in home equity loans went over 30% in 2004. Does this mean the lending institutions are taking on more risk? On the contrary, lenders are in the same position they always are, because your home is the collateral, so there is generally very little bad debt. This growth trend has been seen for both home equity loans, which are similar to regular mortgages, and in home equity lines of credit, which are more like credit cards in that you are given a credit limit, upon which you borrow against.
Getting a Good Rate Unfortunately, the tale everyone has been telling is true; an awful lot depends on your credit score. You can expect to get the following rates based on the following credit score boundaries: Good Credit > 760 ½ point below prime OK Credit 700-759 prime Poor Credit < 700 anything from 1 to 5 points above prime.
Paying Minimal Fees Certain fees, such as recording fees and annual account fees are to be expected, but they should not be extravagant. Other fees, such as application or appraisal fees should be avoidable if you have decent credit. Make sure you are aware of all the fees getting tacked on to your loan, and that nothing is out of the ordinary.
Tax Rules If you have enough deductions to make itemizing your deductions worthwhile, then obviously being able to also deduct the interest portion of any new line of credit is a good thing. However, if you do not have enough deductions, then it is possible that other loans will actually give you a better rate. The bottom line is shop around, and do not be fooled into thinking tax deductions automatically make this the way to go.
Understanding the Consequences Getting a new home equity loan or line of credit can be an excellent way to solve some tricky financial issues - as long as you are aware of what the consequences are. By borrowing on the equity in your home, this reduces the amount that can be used to buy your next home, or can be used for your retirement when it comes time to move to somewhere smaller.
20% Rule Another consequence of tapping into your home equity is that you are nibbling away at a source of savings that can be used in times of emergency. A sensible rule to try and abide by is to always have the total of yourmortgage and home-equity loans not to exceed 80% of the value of your home. This leaves you at least 20% of the value of your home that can be used if there is an emergency. Everybody’s situation is different, and there is no easy answer as to whether getting a home equity loan is right for you. However, by understanding your situation and the reality of home equity financing, you can discuss your situation with a home equity loan expert, and determine the right course of action for you!

Rejected-Loan-Application

2008-11-27T09:15:00.002-08:00

You apply for a loan, you think you’ve done everything right, but you end up rejected and dejected. Or, alternatively, you’re about to apply for a loan but are staying up nights worrying about the lender throwing your application in the nearest trash can. Avoid the worry, dejection and upset by being prepared. A recent Realty Times article gives 10 reasons why loan applications are denied. There are several common reasons that loan applications are rejected. Scan this list from Realty Times to learn how you can avoid rejection.
Applying for too much money. If you are in denial about what you can really afford, your loan application might be rejected in mere seconds. Instead, let the lender decide what you can afford to borrow and then decide what you can afford to pay each month. When looking to buy a house, you should get preapproved with a carved-in-stone preapproval that guarantees a loan amount, interest rate and other loan terms.
Bad preparation. Get all your ducks in a row before applying for a loan. You will need an avalanche of documents, so get as many as you can ready to go. Include pay stubs, investment statements, tax returns, current and past addresses and bank statements.
Lack of understanding. Many loan applicants will need loan programs and terms explained. Your lender can help you understand the array of loan terms you may not be familiar with. This will help you become savvier about and involved in the process.
Lack of understanding, part II. Understanding loan jargon is the first step. You will also need a working knowledge of what happens during processing, underwriting and closing. This is crucial to making sure that everything goes your way and goes smoothly. You also need to understand time frames, responsibilities of all parties and documentation needs. Make sure you get a Good Faith Estimate of your closing costs to ensure you understand what you will need to pay. This is also a good reference to use to gauge if everything is as it should be.
Third-party problems. Unfortunately, the multiple parties who will need to coordinate your loan may not always be in sync. Although credit reports and appraisals are typically on time, investment reports, tax returns and home inspections may require extra effort on your part to meet deadlines.
Self-employment. Although being self-employed is not a problem in itself, you will need more documentation to apply for a loan. If you work at home, are paid on commission only or own 25 percent or more of a business, you are self- employed. You will need to show past years’ tax returns as proof of income and communicate your employment status before initiating the lending process.
Property repair problems. If you have a government loan on a home in need of repair, you will need to come with instructions explaining who will be responsible for repairs and when the repairs will occur. You can ask your lender for assistance on this.
Unexplained credit problems. One of the most important things to do before applying for a loan is to check your credit report. You will need to check for any errors that can be corrected, problems you need to explain or delinquencies you can clean up.
Unverified closing funds. If you need to pay a sum at closing, such as a down payment, you may need to show bank statements or other financial documents proving you have the funds, showing how long they have been in place, etc.
Poor communication. There are many parties involved in any real estate transaction, including the buyer, seller, real estate agents, lender, home inspectors, attorneys and possibly many more. Each person must have a good understanding of what is going on during the process. A good lender or real estate agent is crucial to making sure everything goes well. Bad communication can mean that the deal falls apart.

More-Salable-Tips

2008-11-27T09:15:00.001-08:00

The real estate market is now in transition, and gone are the days of quick sales and bidding wars. Cooling sales are a problem for any homeowner looking to sell his or her home. Homes are not selling as quickly as in recent years, which is good news for buyers but bad news for sellers. We’re also seeing recent sharp increases in value leveling off, but not falling, which is good for real estate buyers and sellers. These changes, however, mean that sellers will have to work harder and compete more to get the best price and a quick sale. Here are several ways you can get a leg up on the competition.
Dump the junk. Less clutter in your home makes it look bigger, roomier and cleaner. Go through your home and make piles of items, such as “garbage,” “charity” and “maybe.” Throw away anything useless, give away anything that may still have use and seriously consider the maybes, such as how long it’s been since you’ve used the item and whether it’s broke or damaged.
Price it right. A home that is priced well above the local market or above similar homes will not sell quickly, or possibly at all. Work with your agent to price your home correctly the first time.
Find the best. Having a good real estate agent or broker can make all the difference in the world when the market becomes more competitive. An agent who knows how to market and advertise your property, and who has good experience and connections, will be an invaluable asset. Interview real estate agents and ask for references.
Require a marketing plan. When you decide upon an agent, make sure that he or she develops a customized marketing plan that fits you and your property. The standard approach may not work for every property.
Change the deal. If your home isn’t selling within a decent time period, consider changing the deal instead of lowering the price. For example, instead of lowering your asking price from $500,000 to $480,000, keep the $500,000 but offer a 2 percent “seller contribution” to help pay for closing costs. This saves you money (you pay $10,000 in closing costs rather than a $20,000 price reduction) and is very appealing to many buyers.
Get a HELOC. Having a home equity line of credit (HELOC) in place can help you, even if you’re not planning to sell your home for several years. This way, you’ll have funds available if you want to buy another home while your current home is on the market. Be aware, however, that if your current home doesn’t sell in a reasonable time period, you may be saddled with multiple mortgage payments.
Fix it. Buyers will ask for a home inspection. You’ll save time by getting a preliminary home inspection yourself and making repairs before putting the house on the market. However, if a repair is requested from a potential buyer, it may be cheaper than finding a new buyer.
Ask for feedback. Find out what potential buyers thought after a showing or open house. Take negative comments as constructive criticism, which you can use to make the next showing or open house better.
Beware of the take back. Watch out for buyers who want you to take back financing. When loans are available everywhere for little or nothing down, don’t go into the banking business when there is less risk to you with an outright sale.
Ignore inconvenience. If a potential buyer wants to see the house at 7 a.m. on Saturday morning, so be it. This is a time where you have to be flexible. It is better to show flexibility and have the house seen than to turn away potential buyers

First-Steps-For-Buying

2008-11-27T09:14:00.001-08:00

You have been thinking about it for a while, maybe even gradually saving up for a down payment, when, finally, it dawns on you: you are ready to buy your first home. Since you obviously haven’t done this before, you may be asking yourself, “What now?” It may not be clear to you now, but the first few steps after making this big decision are critical to the success and enjoyment of the process.

According to real estate broker Jim Stacey in his book Washington Homes, there are three stages for first-time homebuyers: contemplation, comparison and commitment. Stacey proposes that homebuyers navigate through the first stage on their own, and that the more preliminary work you do, the easier the process will be for you and your realtor.

The first step is obvious: figuring out whether you are ready to own a home. This does not only mean that you are financially capable of owning a home. It also includes psychological and emotional readiness, as buying a first home is a huge step for most people, as well as a huge commitment and responsibility.

One of the easiest and most valuable things you can do to prepare is obtaining a copy of your credit report and making sure that lenders will like what they see. The Web site, ConsumerInfo.com, offers this service for free, as do many other sites. If your credit report is less than stellar, it is probably a better idea to continue renting while you pay off debts and investigate questionable problems.

Once you are sure that you are ready financially, emotionally and psychologically, you can start the formal process of buying a home. Before going to a realtor, it is an excellent idea to figure out exactly what you want so he or she can make the best use of his or her time and skills. Keep in mind that what you end up with may not resemble the vision you created in the beginning. However, it is a good idea to come up with a “wish list” for a few basic items, including number of bedrooms and bathrooms, neighborhood, yard or garden, age of home, parking, potential resale value, storage space, style, proximity to friends, family or a city or town and property taxes. Obviously, this list can go on and on. It is just important to prioritize characteristics of a house for you, and then define exactly what you want from each characteristic.

Next, you need to find out what you can afford. The easiest way to do this is to find out what you can afford to pay monthly after you have made your down payment. The best way to do this is to visit a lender and get prequalified for a loan. It won’t cost anything, it will give you a good idea of what you can afford and it saves you time later. Keep in mind, however, that you will often qualify for more than what you might wish to spend each month. Think carefully about whether what you have prequalified for will allow you to maintain your current lifestyle, at least for the most part.

You will also need to remember that you will need extra cash to cover closing costs, inspections and future expenses. After all is said and done, the cost of the home will probably be 2 percent to 7 percent more than the agreed upon selling price. You also need to factor in the cost of insurance, annual property taxes and maintenance and repairs. In short, there is a lot more to buying a house than simply the price of the home. So you don’t get discouraged, remember that a first home is very rarely a dream home. Your dream home may be two or three houses away, and you do not want to alter your lifestyle significantly now just because you are overeager.

You now know that you are ready to buy a home, you know what you can afford – it’s time to look for your house! It is especially important to have a realtor during your first buying experience, as he or she can guide you through the process and help you when you’re stuck. To find an agent, start interviewing based on recommendations from friends, family and coworkers. A great realtor will be able to listen to your needs and match you with the perfect home for your price range. He or she should also be able to provide referrals to other professionals, such as lenders and inspectors, who can help along the way.

You should also be sure to talk to friends and family about their real estate experiences, as you may learn some valuable tips or find out what pitfalls to avoid.

When you begin actually looking for a home, go to as many open houses as you can stand, even if your broker is not available. (Just be sure to sign in under your broker’s name.) Be sure to include some houses that you couldn’t afford and some houses that are lower than what you could afford. This will help you zero in on what you want by getting an idea of what’s out there. If you get so tired of seeing peeling linoleum and pasty pink bathrooms that you are ready to give up and rent for the rest of your life, take a day or two off, and remind yourself that your home is out there, somewhere. It just takes time to find it!

Smart-investing

2008-11-27T09:13:00.000-08:00

A primary home is most important. Buying your own home gives you a place to live and teaches you the cost of home ownership, financing and market conditions. You will also learn about property maintenance and build your own network of professionals who can prove to be invaluable when investing. Finally, your first home could later turn into your first investment property!
More knowledge is better. Being a savvy investor takes more than just buying up promising properties. Having a good knowledge base will go a lot longer than a “sixth sense” for good deals. The Internet, books by reliable authors, investment groups and college courses are all good resources to learning the best investment practices. You can also tap into other successful real estate investors or real estate agents for information. Make sure you use more than one resource so you can evaluate the viability of the information you gather.
Professional help may be necessary. Although you may not think you need help, a trustworthy, honest professional may be the partner you need. Realtors can be especially helpful if you are new to investing, and management companies may take the pain out of property management. For instance, managing a rental property takes a lot of time, and you will need to be prepared to make repairs, resolve issues and advertise for renters if you are taking on the task yourself. In the long run, a management company may be just what you need. Use the referrals of friends, family and associates to find reliable, honest professionals to help you.
Know the market inside and out. Before you invest, investigate the local market thoroughly. There is no universal real estate “bubble.” Each market is different, and experiences different fluctuations and trends. One market may be good for rental income but not appreciation, while another market may be excellent for appreciation but poor for rental income. There are endless variables, and it is important for you to know exactly what you’re getting into. Remember that one area is never the same as another area.
With these basic tips under your belt, you are ready to venture out into the investment landscape. Gather as much knowledge as you can, and, after that, happy investing!

10-deal-wreckers

2008-11-27T09:11:00.000-08:00


Not understanding the length of the process. Buyers and sellers often err in thinking that the home buying or selling process is shorter than it is. There are a thousand things that can hold things up – sellers can be slow on formally accepting an offer, buyers have trouble selling their old house, financing is held up, repairs need to be made, etc. Make sure to allow two to three extra months to complete the deal.
Tipping your hand. As with any negotiation, not having a good poker face can ruin the deal for you. Try to contain your enthusiasm for a house, as sellers and their agents can try to take advantage of it. Also, don’t let your love for a property cloud your good judgment.
Assuming the appraisal and the actual value are one in the same. Yes, appraisals are meant to be objective estimates of value. Different appraisals can come up with different results. Sellers should have their agent perform a comparative market analysis to get a better idea of their home’s true worth before putting it on the market, while buyers should request a similar service from their agent.
Skipping loan preapproval. This is a crucial step for buyers, and one that may seriously affect your chances of getting a good home quickly. Obtaining preapproval for a mortgage will give you a better idea of how much you can safely borrow, and will allow you time to correct any problems. It also marks you as a serious buyer, and sellers with a potentially hot property should never settle for anything less than proof of preapproval.
Trying to time the burst of the bubble. Trying to time a purchase or sale with when the real estate bubble is going to burst is nearly impossible. And, in most parts of the country, the bubble is still intact. In reality, real estate bubbles don’t “pop” anyway: they deflate and then inflate again with market fluctuations. Buyers and sellers should realize that real estate is always a long-term investment.
Living outside of reality. When buying a home, if you only follow your heart, you may be in for some nasty surprises later on. Your dream home may be your dream home, but make sure to consider the big picture, including the commute, area schools, taxes, homeowner association and other quality-of-life-affecting aspects of home ownership. That fantastic house may not be worth the other trouble it creates in your life.
Hiring the wrong real estate agent. This one can really affect the buying or selling process. Always interview several agents, and make sure to obtain references. Don’t only look at large companies or top-producing agents. Also, seriously think before hiring a friend or family member who is an agent. Remember also that an agent who suggests the highest listing price or has the lowest commission is not necessarily the best choice. If you remember the mnemonic SEED – smart, empathetic, experienced and dedicated – you will usually be happy with your agent.
Not knowing the contract. Since the contract is a legally binding document, not knowing what you’re signing can be a very big mistake. Review it carefully before signing, and make sure it contains everything it should, including who is paying for what and any verbal commitments. Make sure your agent takes an active part in the construction and negotiation of the contract. This is one step that can cause you large amounts of time and heartache if done wrong.
Timing the transaction incorrectly. As you may imagine, two mortgages can be extremely difficult to manage. If you are selling your current home and buying another home, keep in mind that the sale of your current home is the most important transaction. If you have a choice, secure the sale of your old home before you sign a contract for the new home.
Not doing a criminal search. Agents in many areas of the U.S. are not obligated to tell buyers if there is a sex offender or other criminal residing in the neighborhood. Ask your agent to provide you with this information, if possible, and also do your own research. Check with the local sheriff’s office to find out how to access sex offender and other criminal databases.

10 Top Notch Link Building Tactics for Real Estate Websites

2008-11-27T09:08:00.000-08:00

Its a thing of beauty really, staring at that blank slate and just waiting for your very first backlink to show-up, almost as if its the first star in an evening sky. Once you see it there, glittering on your dimly lit screen, you know that you’re well on your way. Every web entrepreneur has experienced this at one point or another, and don’t you forget that every website was, at one point, new to the Internet. So forget about what all of those so called “seo gurus” are saying. Link building is an art form in which we can all create a masterpiece, not just the artists themselves.

Link building, as with any seo(search engine optimization) technique should be used in conjunction with other techniques to create a harmony between your website, your visitors and of course the search engines. If you can find a common middle or a balance between these three very different, yet very important parties, you will have mastered the art of seo.

When Link Building and Real Estate Meet in the Middle

Simply uploading a website into cyberspace isn’t enough to be successful in any niche, but it especially won’t help us real estate webmasters. Real estate is one of the most competitive niches online and as if that were not enough, it is heavily abused by spammers as a means to make an easy buck. Due to the sheer number of spam websites that float to the top of many real estate search terms, web searchers, webmasters and even search engines have begun to grow weary of new real estate websites. This means that you will have to work diligently to create and possibly even more challenging, maintain a professional and credible profile for your business.

There are numerous factors that may effect the way your business projects itself across the Internet. The obvious factors are the professionalism of your website, the manner in which you present yourself to clients, fellow webmasters and so forth, but you may not realize that the links you build to your website also reflect on your business at a professional level. You must understand that everything we do online is traceable. If you use a regular username, people can search that username and find every website that you have publicly participated with, are you comfortable with that? Keep that in mind when you begin to build links aka promote your real estate site, your actions are a reflection of you.

Now lets get right down to the nitty gritty of building a successful real estate website. If you are one of the many misguided new real estate agents hoping to turn thousands of web visitors into home buying machines (that’s clients for you dull people) you may be in for a mental earthquake of sorts. In order to get your website seen by anyone, let alone thousands of people, you are going to have to start building some quality, authoritive links that will present your site to the search engines, think of it as a sacrificial offering to the Internet God’s.

Here are Your 10 Ideas for Building Great Backlinks - To Real Estate Websites of Course!

1. Go where the agents are - When it comes to link building, sometimes you just have to follow the crowd. Chances are that if any particular website or social gathering is already popular with real estate agents, there’s a good reason for it, find that reason! Popular sites like ActiveRain, RealTown, Zillow, Real Estate Voices, WannaNetwork, Zolve and even MySpace, Twitter and Facebook all offer excellent opportunities to get your links out there and visible to the search engines and the public.

2. Snatch up all of your keyword real estate - Alright so you might be wondering what keyword real estate is, so I am going to tell you. Lets say for instance that your primary search term is “Portland Real Estate” , simple enough, but we want to not only target that search term, we want to own it. Every time a person or a search engine finds a page about Portland Real Estate, they should also find a link to your site, so our goal is to gather up as much virtual real estate for that term as we can. Use these examples and then see how many more you can find:

http://squidoo.com/portland-real-estate/
http://hubpages.com/hubs/portland-real-estate
http://portlandrealestate.blog.friendster.com
http://geocities.com/portland-real-estate/
http://myspace.com/portland-real-estate
http://portland-real-estate.spaces.live.com
http://digg.com/users/portlandrealestate
http://portland-real-estate.wordpress.com
http://portland-real-estate.blogspot.com

Are you starting to understand where I am going with the keyword real estate idea? There are literally hundreds, if not thousands of these keyword targeted pages that you could create for free and best of all each one would have quality links directed back to your website. Be sure that you fill these pages with quality, unique content that not only people will want to read, but also that search engines will index. The idea of these pages are to increase your backlinks and drive click through traffic to your site so use them wisely.

3. Make friends and links in the forums - One of the large bonuses we have as real estate webmasters is that there are plenty of real estate targeted forums that we can use to build links and network with other agents. Keep in mind that we are building a professional appearance so you really have to make a valuable contribution each and every time you post in a forum, let your signature line do the selling. There are a bunch of great forums, that offer quality backlinks in your forum signature along with excellent contacts, here are my favorites:

Real Estate Webmasters
Bigger Pockets
Real Estate Forum
Wanna Network
Agents Online
Commercial Real Estate Forum
Real Estate Discuss

4. You might also try home repair and DIY forums - These can be a great place to meet homeowners and people potentially interested in purchasing a new home. A few of my favorites are:

DIY Chatroom
Do It Yourself Forum
House Repair Talk
Bob Vila Forum

5. Become part of the conversation - Some people call this blog commenting and various other names, but here is the secret, just think of it as being a part of something bigger. Blogs are designed to create a community, that is why they have options to comment and/or vote for your favorite posts and so on. By commenting on blog posts you are not only adding value to a blog, you are also building that community. One comment inspires others to comment, its a chain reaction and most bloggers appreciate you leaving a good comment now and then. Here is a great list of do-follow real estate blogs to get you started, but remember to contribute.

6. Join the free seo friendly directories - It amazes me that so many agents seem to have difficult time grasping the concept of directory submissions. They are really easy! These days, reciprocal linking is pretty much out the window, Google has caught on and people just aren’t doing it as much any more. So why sign-up for directories that require reciprocal links? You don’t have to sell your soul to get a good link, here is a list of 1600 directories that you can submit to for free.

Have You Tried Building Links Outside of the Box?

You know what I mean. The ideas above are great, they work great and they are an easy way to get quality backlinks to your real estate website, but they are also the same ideas that you have probably heard over and over. So try thinking outside of the box to come up with new links, here are some ideas to get you started:

7. Start a blog on eBay - We are looking for authority sites, right? Well then, one the of the most authoritive sites I can think of is eBay and they will allow their registered members to setup their very own blogs, that you can use to write articles and yes, even post links(wink….wink..). Get your own eBay Blog here.

8. Offer your expertise - You know it surprises me how guest writing is so often overlooked. I am constantly visiting new websites to generate ideas for building links and I rarely ever see this as an option. Guest writing is as easy as sending an email to express your interest and typing up an article. You get quality in-content backlinks for your work and probably make a new friend or contact along the way. I highly suggest this method as a primary link building tool in your arsenal.

Sometimes it can be difficult tracking down blogs or websites that might be interested in allowing you to write for them, but there are some searches that you can try. Run a Google search for some of the following queries, be sure to leave the quotes in place:

“This guest post was written by”
“guest writers” real estate
inurl:real estate “our contributors”
Looking for “guest bloggers” real estate
“write for us” real estate
inurl:real estate “write for us”

9. Post free advertisements for your website - You may not know this, but there are websites that allow you to announce your website to the public. Typically, they will ask you to write a minimum 400 word post with no more than two to three links to your site. There are a bunch of them out there but Free Ad Blog and Free Blog Post will get you started.

10. What about podcasting - If you run a blog, you may be able to jump on the ever popular podcasting bandwagon. How you ask? Simple, Odiogo will automatically convert your past and future posts into podcasts with a simple plugin. Once you have been converted you are ready to start submitting your blog to the thousands of podcasting directories out there.

Link building is much easier than the majority of people make it out to be. Sure it can be boring scouring the Internet for that next link, but its pretty fun when you find it, believe me. Take these ideas and expand on them, see what you can come up with for your next link building campaign.

5 Tips to Becoming an Even Better Real Estate Agent

2008-11-27T09:02:00.000-08:00

How many of you wake up each day in hopes of not being successful, please raise your hands. Funny, I’m not seeing any hands raised, yet the greater majority of real estate agents (many of the ones we have worked with in the past) give very little effort towards taking their careers to the next level. Which leads me to my next question.

How many of you go above and beyond what would be considered a “regular” scope of work, to really propel yourself and your business into that mythical, yet wonderful, real estate walk of fame? Ahh, now I can see a few hands raised, though not nearly as many as I would like to see. So lets work on that, shall we?

There are probably a million and one different things that you can do to improve yourself in your career, but what if you had to narrow those things done to the most important five. Five is an easily manageable number that will allow you to dedicate an ample amount of time towards working on each item. Below is our list of five things every agent should work on for their

1. Think of yourself as a success -That almost sounds to simple to be true, but its not, simple that is. Many people naturally find things that they dislike about themselves or their situation and they spend their lives focusing on those. They are in essence creating a bubble of negativity around themselves which acts as a magnet and draws in even more negativity. That vicious circle has to stop, and it can be done. Johann Wolfgang von Goethe once said, “To achieve all that is dreamed, one must think of himself as greater than he is.” and I simply couldn’t invent a better way to put it to you. Once you begin to envision your success, you will become successful.

2. Have a business plan in place - Don’t tell me that you have never pictured selling real estate as a business! Becoming a real estate agent is very much like starting a business and you have to treat it as such if you plan to be a success. I know that the thought of developing a business plan can seem overwhelming, I have done it before, but there are some resources to help make it a little easier. The Small Business Administration offers some information to help you with your business plan and you may also want to check out this free business plan outline to get you started.

3. Market yourself to the fullest - Marketing your real estate business is crucial if you plan to succeed in this cutthroat industry. We often find that the number one thing separating an average real estate agent from an extraordinary real estate agent, is exposure! Whether it is online or offline you have to devote your energy towards marketing your business(see tip #2 above).

4. Don’t be afraid of trying new ideas - Trying new techniques and ideas can really give you an edge in the real estate industry. There is a constant stream of new tools, information and resources being handed to real estate agents, you just have to be willing to try them. It is true, that sometimes while trying new things you can shoot yourself in the foot so to speak, but on the other hand, that new idea could revolutionize the way that you sell homes and increase your income ten fold, so is it worth a shot?

5. Be yourself - I know this landed at the bottom of the list, but it may be the single most important piece of advice you will ever here. I am not sure why, but many agents feel that they need to put on a persona in order to sell houses, don’t do it. Chances are that your clients can tell when you are putting on a show, and as soon as they realize it, they are out the door. Be yourself, be sincere and genuinely try to help people, your business will thank you.

Tips For Real Estate Investors

2008-11-27T08:59:00.000-08:00

Real Estate Investors Association's 20,000 affiliated members were double the previous year's numbers, but even at 20,000 represented only about one fourth of all U.S. real estate investors in investment clubs, the association said.

While the investor purchase portion is 23 percent, other second home buyers who become aware of the potential for a return on their property may very well take a more speculative approach. The second home market now accounts for 38 percent of the existing housing stock and 36 percent of all homes purchased last year, NAR said.

"These aren't second homes. You know where that down payment is coming from. People are leveraging one price asset against another on a pure momentum play," said Robert M. Campbell, a San Diego-based realty broker, investor and author of "Timing The Real Estate Market."

Residential real estate investors have become a driving force in the residential real estate market -- much as the dot com stock market did to create the New Economy and the longest economic expansion on record.

But just as the dot com bust littered Wall Street with lost shirts, a real estate down turn could leave blood red ink flowing down Main Street if rookie investors let the lure of green cloud their judgment.

We talked to individual investors, real estate agents who also invest, investment clubbers and others to help get you started with the dos and don'ts of real estate investments.

Here's what they suggest.

Buy your own home first. Buying a home will not only put a roof over your head, but teach you the true cost of property ownership beyond the monthly mortgage payment, give you a primer on financing, school you on how location and changing market conditions affect property values, give you the angle on tax and other home owning benefits, help you learn about property maintenance, introduce you to a host of professionals who could prove invaluable when you really get into investments and otherwise act as a prerequisite foundation for higher studies in real estate investments.

Even before home ownership the process of buying a home provides basic information that later could prove invaluable to you as an investor. What's more -- your first home could later become your first investment property, a property in a market with which you are familiar.

"I bought my first house on May 1, 1981. The property became a rental in February 1988. Technically it was 50 percent a rental in June 1981 as I shared the house to afford it," said Richard Calhoun, broker/owner of Creekside Realty in San Jose, CA, and a real estate investor for nearly two decades.

Go back to school. A booming real estate market that pushes your home value up by double digit percentages in the first year doesn't automatically make you a savvy investor any more than the dot com boom could have made you a stock market mogul. After you buy your own home turn to the Internet, libraries of books by reputable authors, successful, credible investment groups, college and university level courses. Individual real estate investors, salespeople and others who you met on the way to home ownership may also be valuable resources, both for information and perhaps as a mentor.

Using more than one resource will help you cancel out the bad information and ferret out the good.

"The importance of knowledge and education cannot be overestimated and is almost always underestimated," said Calhoun.

Get professional help. The same way you find any competent, trustworthy and honest professional is the same way to look for a mentor, investment partner with prior knowledge or investment group. Seek referrals from friends, family, professionals with whom you already conduct business, co-workers and others you trust who've recently had a satisfactory, successful experience investing in real estate. Someone who already knows the ropes comes in handy when you need a leg up on a deal.

"There are many honest and reliable outfits and clubs that are genuinely beneficial to those looking to increase their knowledge. That's one of the good things about a club -- you get to ask other people whose information is good and whose is garbage," says Phyllis Rockower, founder of the Real Estate Investor's Club of Los Angeles.

You'll also need professional help once you are beyond the buying stage -- someone to manage your investment for example.

"For many, the question of managing rental properties is resolved by the proximity to the property and the willingness on the part of the owner to invest the time required to market and manage the property. Often, it makes sense for those far away to take advantage of a "local" property manager. The rewards of self management may be great, but one needs to consider the time investment required," said Bart Meltzer, president of RentOne Online, a Scotts Valley, CA, Web-based marketing and management tools provider for vacation rental managers.

Learn your investment market. One market's bubble could be one investor's boom and another investor's bust. A home in one market could give you vacation rental income in a half year sufficient to cover the cost of principal, interest, taxes, insurance, home owner association dues, upkeep and other costs, but not appreciate, while another home in another market won't bring you enough rent to cover your expenses but appreciate more than enough to make up for it over the long term. The variables are endless.

7 Tips to Real Estate Agents' Success

2008-11-27T08:57:00.000-08:00

With over 2 million real estate agents according to the National Association of Realtors (NAR), becoming a successful real estate agent takes more than just a license and a knowledge of current laws and regulations.The first year drop out range estimated to be from 40% to 80% demonstrates that many real estate agents are not as successful as they could be and research suggests that 90% give up after 3 years. The following 7 tips may help you avoid becoming one of these statistics.

First and Foremost YOU are a business. Real estate agents work for a broker, but are independent, commissioned sales people. This means that you are a small business and must run your practice as a business. Again, remember you are a small business owner.
Embrace a Planning Attitude If you don't have a plan, then you are on some else's plan - usually the successful real estate agent's. During the last 10 years, what I have learned as a performance improvement consultant or coach is that most people place more value in planning a trip to the grocery store or a vacation than planning their lives either professionally or personally.
Research Your Market Plan Since you, as the real estate agent, are responsible for your own expenses, do your research specific to your marketing plan within your strategic plan. Time spent in constructing your marketing plan is definitely well spent. NOTE: Remember a business plan usually is data driven, while a strategic plan identifies who does what by when.
Establish Sales Goals Using your strategic plan, establish sales goals. If you are new to this industry, it may take 6 months before the first sale. HINT: Use the W.H.Y. S.M.A.R.T. criteria for goal setting.
Create a Financial Budget Budgeting is critical given the up and down of this volatile market place. Your financial budget should plan for your marketing costs, any additional costs such as education and your forecasted income.
Make Managing Yourself a Priority Building a business is not easy. You must learn how to manage yourself especially in the area of time management, ongoing real estate business training coaching, continuing education units, and personal life balance. Real estate is said to be a 24/7 business much like any small business. However, it is important not to lose sight of your personal life including family, friends, physical health, etc.
Find a Mentor or a Real Estate Coach Going it alone is not easy. Take the time to find a mentor who can help you steer through some of the known obstacles and help you during the "peaks and valleys." If you have the resources, you may wish to hire a real estate coach or an executive coach who specializes in small business help and sales.

Disability insurance policies

2008-11-27T08:52:00.000-08:00

When Sunil Kumar Sinha, 34, lost his left hand in an accident, he felt completely desolate. An engineer by profession, Sinha had got married recently, was planning to purchase an apartment soon and then there were other financial goals that he wanted to attain in the years to come. But all seemed lost now.

A sad story that can happen to any of us. In advanced countries, there are support systems for people like Sinha, either in the form of direct financial assistance or in terms of identification of opportunities.

For instance, in New Zealand, if you are above 16 years of age and have been permanently and severely incapacitated, the government has schemes under the head of disability allowance and sickness benefits.

However, in India, there is no protection available for such people. Also, with the rising cost of medical treatment, it is a huge financial hit that one has to incur in case of an unfortunate event. Thus, it is always prudent to plan for such issues in advance.

In order to plan for your financial support in case of disability you need to look into:

Cost of medical treatment: First, you should be aware of the insurance cover that your employer provides for you and your family. If this cover is not enough, you need to buy additional cover.

Ideally, the total insurance should be to the tune of Rs 300,000 to Rs 500,000 per head. The expense is also not too much. For a 30-year old, health cover of Rs 300,000 would cost only about Rs 3,000 per year. Of course, the premiums are higher for older citizens.

It is also important that when you are taking additional cover, mention the existing cover from your employer in the application form. Most insurance agents may ask you not to do it or may not even bring up the subject. But this is important because such hidden facts may allow the insurance company to reject your claim at the time of need.

Transfer of other expenses: If your life insurance policies offer premium waiver benefit, take it. Essentially, these waivers are offered in case you are incapacitated. Here, the insurance company, on your behalf, will pay for the premiums, either till the disability continues or the end of the policy term, whichever comes earlier.

The cost of such riders is not very high. For a 30-year old taking a policy of Rs 50 lakh (Rs 5 million) for 20 years, the premium waiver option comes for a mere Rs 490 a year.

Compensation: While expenses covered above are useful, they do not help in running a household. Here too, there are some good policies available. Almost all policies have a critical illness plan as well as a disability rider.

If you are diagnosed with critical illness like paralysis, stroke, heart attack etc, you will get the entire assured sum. For a 30-year old, a critical illness policy of Rs 10 lakh (Rs 1 million) would cost Rs 3,000 a year.

Likewise, with the disability benefit rider with your life insurance, the company (depending on type of plan) will pay you regular instalments. For instance, Reliance [Get Quote] Life Insurance pays you basic sum assured in ten equal annual instalments.

However, while all these policies sound great, it is important to remember that it is cheaper to create safety nets through investment rather than insurance plans. So, it would be great if you can get rid of such insurance policies as you grow older because the premiums are much higher.

That is, a Rs 10 lakh (Rs 1 million) health cover costs just Rs 3,000 for a 30-year old but the same policy costs Rs 30,000 for a 55-plus person. It is the same case with other policies as well. Moreover, it is at this later age where your chances of such illness or disabilities are higher.

If you plan your finances well, you will be able to knock off the critical illness cover much before your retirement. Later, if need be, you can get rid of other covers as well. The idea is to get rid of these covers as soon as possible. This is because you save the premiums which can be directly used to invest in income generating assets.

Also, since these premiums get higher with age, it becomes particularly difficult to pay them during retirement years when income is practically zero.

But remember, this can only be achieved if you have planned your finances properly and amassed enough resources to take care of any contingency.

Tips on buying the right insurance

2008-11-27T08:51:00.000-08:00

In India, insurance is broadly divided into life and general insurance. Life insurance covers a family against the financial implications of the death of the insured.

In addition, it may also provide certain survival benefits, in case the policyholder survives the policy term. Life insurance policies are broadly termed as "benefit policies".

General insurance is a broad term encompassing protection in several areas such as health (For some strange reason, it is not treated as a part of the life insurance sector), property, professional liability among others. These are usually "non-benefit" covers. They will only reimburse losses suffered and not confer any additional benefits to the policyholder.

We shall discuss individual heads of insurance and the products therein in greater detail in later articles.

Before deciding whether you require insurance or not (although all of us certainly require it in some form or the other), take the following into consideration:

The probability and impact of an event:

Assess the probability of an event and its financial impact on you, before zeroing in on a policy. Of course, an element of intuitiveness, is contained in the estimation but it is preferable to a random choice.

For instance, a shopowner in Mumbai can consider an earthquake as an event, which will occur infrequently but may still opt to insure against it, as the financial damage in case of an earthquake, could be significant.

Also, if the event occurs infrequently, the premium charged by an insurance company is also low. If an event occurs very frequently (like earthquakes in Japan), the premium will be high. Of course in the case of life insurance, although death is a certainty, the financial impact of death will vary with age, and the number of dependents.

Will I be adequately insured?

Merely having a cover is not enough. Take care to ensure that the cover is adequate for you. Too small a cover is virtually pointless, considering that it will not serve yours or your family's purpose.

Too much insurance will mean wastage of precious money towards payment of premiums. There are certain techniques to help you estimate the right quantum of cover. We will discuss these later.

Can I afford it?

We should take care that insurance premiums do not eat into a huge chunk of our income. This is especially important in case of long-term contracts such as life insurance. This may mean working backwards, and calculating the size of the cover, based on the premium afforded by you.

Beware of agents who try to hard sell you high-priced insurance covers, as they may be detrimental to your long-term finances.

Two of the most common mistakes committed by customers in the case of life insurance are:

Income tax-led decisions:

While contributions towards life insurance premium of up to Rs 100,000 can be reduced from "gross total income" under section 80 C, there is no need to be guided solely by this consideration. Also, do not wake up to the need for insurance only in the final quarter of the year.

By doing so, you are only playing into the hands of agents who will exploit your urgent need to save tax and sell you policies that are not really suited to your needs. Let tax saving be incidental to choosing a cover, not the sole force behind it.

Bundling insurance and investments:

Unfortunately, globally, over the years insurance products has been sold more as an investment tool rather than a 'protection' vehicle. The nomenclatures change (endowment policies, money back policies, and unit-linked plans) but the underlying principle remains similar.

Agents often succeed in their efforts owing to the following factors:

Providing rosy illustrations of future investment returns, conveniently side-stepping the basic question of whether the coverage amount contained therein is adequate or not.
Stressing that an insurance-cum-investment policy compels the policy holder to be disciplined in their savings program and this aids in long-term wealth creation.

Several studies have proved that unbundling of the insurance and investment aspects lead to better overall results. Of course this will call for investing discipline on the part of the policyholder, but that is another story altogether.

I feel that apart from insurance agents, consumers too are responsible for the so-called mis-selling. Against this backdrop, we will look into specifics of different policies from the next article onwards.

Insurance Glossary

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Accident forgiveness

In most states, customers who have not had an at-fault accident in the previous five years qualify for this program. Accident forgiveness means that GEICO won't add a surcharge to your premium after your next at-fault accident.

Actuary

A statistician who computes insurance risks and premiums. Actuaries keep GEICO profitable and financially stable by setting prices, assessing trends, and determining how much to hold in reserve to pay claims.

After-Market Parts

After-market parts (also called competitive auto repair parts) are made by a company other than the manufacturer of the auto. The after-market parts we authorize meet or exceed the quality of the manufacturer's parts but cost less. GEICO guarantees these parts for as long as you own the car.

American International Underwriters

GEICO offers overseas insurance from American International Underwriters through GEICO's International Insurance Underwriters agency.

Anti-theft device

A device that deters auto theft. Autos equipped with these devices may entitle you to a discount on your insurance premiums.

At-Fault

The party that is legally liable for the damages in an accident.

Auto Insurance

Auto Insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured's property and losses for which the insured is liable as a result of owning or operating an auto.

Auto Theft

The theft of an auto is a type of loss that is covered under comprehensive coverage.

Berkshire Hathaway

The parent company of GEICO. Other companies in the Berkshire Hathaway group are listed at the Berkshire-Hathaway website.

Bodily Injury Liability Coverage

Pays damages for bodily injury or death resulting from an accident for which you are at fault and provides you with a legal defense.

Cancellation

When an insurer or policyholder decides to stop coverage before the policy expires.

Claim

A demand to recover for damages as a result of a loss.

Claims Adjuster

The person responsible for investigating and settling a claim.

CLUE^® Report

Comprehensive Loss Underwriting Exchange (CLUE) reports provide claims history information.

Collision Coverage

Pays for damage to your car when it hits or is hit by another car or object, or if the car overturns.

Competitive Auto Repair Parts

Competitive auto repair parts, or after-market parts, are generic parts made by a company other than the manufacturer of the auto. These parts meet or exceed the quality of the manufacturer's but cost less. GEICO guarantees these parts for as long as you own the car. If we authorize these parts, we show this on the estimate you receive.

Comprehensive Physical Damage Coverage

Pays for damage to your car from theft, vandalism, flood, fire or other covered perils.

Condo insurance

A type of homeowners insurance that meets the special needs of condominium owners.

Coverage

The scope of the protection provided in your insurance contract as well as any of several risks covered by a policy.

Customized Vehicle

An auto that has been altered or has additional equipment and accessories that were not factory-installed.

Cycle-Gard

The motorcycle insurance policy developed by GEICO Indemnity Company to meet the special needs of bike owners.

Damage

Loss or harm due to an injury to a person or property.

Damages

Money that one party becomes legally obligated to pay to another party because of a loss or harm to their person or property.

Declarations

The part of your policy that includes your name and address; the property that is being insured, its location and description; the policy period; the amount of insurance coverage and the applicable premiums.

Deductible

The portion of a claim you pay out-of-pocket before the insurance company pays. Choosing a higher deductible will lower your insurance premiums.

Defensive driver discount

Certain drivers (usually over age 50) who have voluntary taken a defensive driving course may qualify for this discount on their auto insurance premiums.

Direct Check

Direct Check is GEICO's electronic payment method that lets you to pay your premium online with an electronic check.

Direct Pay

Direct Pay is GEICO's electronic payment method that lets you pay your premiums with automatic deductions from your checking account.

Discount

A reduction in your premium if you or your car meet certain conditions that reduce the insurer's losses or expenses. For example, auto insurance discounts are given for cars with auto theft devices and for drivers and passengers who use seatbelts.

Driver training discount

A discount for people who have taken an approved driver training course. This discount is not available in all states or for all individuals.

eBill

An electronic version of your bill that you can review online. Everyone who has registered to use GEICO's Policyholder Service Center can choose to receive eBills.

Emergency Road Service Coverage

Protection for problems that are not typically handled by your auto insurance such as:

being locked out of your car,

having a dead battery re-charged,

inflating a flat tire, or

filling an empty gas tank.

Endorsement

Any change made to the policy.

ePolicy

GEICO's electronic system that allows you to review your policy documents online.

Estimate

The initial assessment of the cost to repair your damaged property.

Exclusion

Restriction in your insurance policy that denies coverage for certain perils, persons, property, or locations.

Expiration Date

This date, found on your declarations page, indicates when your policy coverage runs out. Your renewal policy will start on this date.

Financed Car

An auto purchase financed by a loan. The lender retains a lien on the auto until it has been paid off.

Forms

Two types of forms are important in insurance: 1. preprinted contracts that form your insurance policy, 2. questionnaires or coverage selection forms that a policyholder is required to fill out.

GEICO^®

Government Employees Insurance Company and its affiliates GEICO General Insurance Company, GEICO Indemnity Company and GEICO Casualty Company market collectively under the trademarks GEICO and GEICO Direct.

GEICO Direct^®

A brand name that includes all of the GEICO companies.

GEICO Overseas

A program provided by International Insurance Underwriters, Inc. that provides automobile and property insurance outside the United States.

Good student discount

May be awarded to full-time students who maintain a grade average of "B" or better.

Hazard

Anything that increases the chance of an accident occurring.

Homeowners Insurance

Insurance that protects the homeowners from losses to the insured's personal property and any damages for which the homeowner is liable.

Inspection

In some instances, GEICO policyholders will be asked to have their auto inspected. This inspection is not a safety inspection but is intended to reduce insurance fraud by verifying the condition of the auto and making sure that the auto exists.

Insurance

Insurance is a system in which groups of people who have similar chances of suffering a loss transfer their risk of loss to an insurer who pools the risk of many people together. In exchange for payment of premium, the insurer promises to reimburse the person for their covered losses.

Insurance Fraud

A variety of crimes that range from staging accidents, inflating medical bills, to falsifying an application for insurance.

Insurance ID Card

A card issued by your insurer containing basic information about your insurance policy. Some states require you to keep an ID card in your vehicle.

Insurance Score

Used in the underwriting process in some states. An individual's insurance score is based, in part, on a person's credit history.

Insured

A person or organization covered by an insurance policy.

Insurer

An organization that provides insurance.

International Insurance Underwriters, Inc.

A GEICO-owned subsidiary that provides insurance through American International Underwriters.

Leased car

An auto rented under a long-term contract (lease). The leasing company retains ownership of the auto and must be shown on your insurance policy.

Liability

Any legally enforceable obligation or responsibility for the injury or damage suffered by another person.

Limits of Liability

The amount specified in your policy up to which the insurance company will protect you.

Maps and More

A companion product available to GEICO policyholders that provides travel club services such as: Trip Routing Services, Discounts on Hotel and Car Rentals, No-Fee Traveler's Checks, and more.

Mechanical Breakdown Insurance

Covers repairs to all mechanical parts of the car, protecting you from expensive repair bills.

Medical Payments

Pays medical expenses (and in some cases lost wages) of the driver and passengers in your car.

Motor Vehicle Report (MVR)

A report from the agency that issues your driver's license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.

Motorcycle Insurance

GEICO's Cycle-Gard insurance provides protection from losses resulting from owning and operating motorcycles.

Motorcycle Safety Foundation (MSF)

A national, nonprofit organization. Some applicants who complete MSF courses qualify for discounts on GEICO's Cycle-Gard motorcycle insurance.

Multi-car discount

Available to policyholders who insure more than one vehicle at the same location.

No-Fault

An insurance system where your own insurance pays for your injuries regardless of who caused the accident.

Non-renewal

When an insurer decides not to renew a policy at the end of its policy period.

Original Equipment Manufacturer Parts

Auto parts obtained from the original manufacturer of the car or the supplier of the original part.

Overseas Insurance

Auto and Property Insurance for those living abroad is available from American International Underwriters through GEICO's subsidiary, International Insurance Underwriters.

Payment Plans

Your auto insurance premium can be paid using one of our installment payment plans; you make several smaller payments but incur a service fee.

Peril

A danger or hazard that can cause a loss, for example, a car collision with an object, or a fire.

Personal Injury Protection

Pays medical expenses (and in some cases lost wages) of the driver and passengers in your car.

Personal Property

Property that is not land or connected to land (real estate), such as furniture or jewelry.

Policy

A contract between you and the insurance company.

Policy Change

Any change made to your insurance policy during the period that the policy is in force.

Policyholder

The person who took out the insurance policy and is named in the policy declarations.

Policyholder Service Center

Refers to geico.com's online system for managing your car insurance policy online, also known as mypolicy.geico.com

Premium

The price of the insurance policy that the insured pays in exchange for insurance coverage.

Property Damage Liability Coverage

Pays when you are legally liable for damage to the property of others caused by your auto. This coverage pays for property damage up to the dollar amount you selected plus the cost of any legal expenses.

Quote

A statement of the premium that will be charged for insurance coverages based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.

Rate

Often used as a synonym for premium but actually refers to the base rating units that are used to determine the final premium.

Rating Plan

The rules that determine the cost of your insurance premium. These rules modify the base rates by applying discounts and surcharges based on your personal characteristics, for example, using your seat belt, insuring more than one car.

Renewal Date

The date that your insurance policy expires and the date that your renewed policy will begin.

Renters insurance

Insurance that provides protection from losses that arise out of the rental of a home. Protection covers losses to the insured's property, not to losses that occur as a result of owning a home.

Replacement Parts

Several types of parts may be used when your vehicle is repaired: new parts, both original equipment manufacturer and after-market; [link to definition] and recycled parts. New or after-market parts will be used if we can't find like-kind and quality recycled parts. A 5-year-old car, for instance, would be repaired with parts at least as good as the parts that had been in the car. We guarantee the after-market parts used for these repairs for as long as you own the car.

Rider

In motorcycle insurance, a rider is someone who will operate the insured motorcycle.

Risk

The chance of suffering a loss.

Self-Insured Retention

In umbrella insurance, self-insured retention is similar to a deductible in other types of insurance. The self-insured retention is the amount of damages for which the policyholder is responsible before the umbrella coverage begins to cover a loss.

Special Investigation Units

GEICO helps fight fraud through its special investigation unit, staffed with experts in fraud detection and investigation.

Subrogation

If your car is damaged because of another driver's negligence and you ask GEICO to settle the claim for damage to your car, we will seek payment recovery (including your deductible) from the other party. This process of payment recovery is called subrogation.

Sunny Day Riding Program

Cycle-Gard's Sunny Day Riding Program gives riders who don't normally use their cycle in the winter a credit on their premiums, but it covers the rider and cycle year round.

Towing and Labor Coverage

Provides insurance if your auto needs to be towed or requires roadside assistance.

Umbrella Insurance

Provides high limits of additional liability coverage above the limits of your homeowners and auto policy. In addition, it provides coverage that may be excluded by other liability policies.

Underwriting

The process an insurer goes through to determine whether or not it will provide coverage for an applicant.

Uninsured Motorist Coverage

Pays for your injuries and, in some circumstances, certain property damage caused by an uninsured or a hit-and-run driver. In some cases it also includes coverage for underinsured motorists-an at-fault driver with insufficient insurance to pay your claim.

Vehicle Identification Number (VIN)

A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This number is used for identification purposes and is visible on the dashboard when viewed from the outside of the vehicle.

Top 7 Mistakes in Buying Life Insurance

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When most money conscious consumers start to think about buying life insurance these days, they instantly think "term insurance."

This type of life insurance; provides a coverage for a specific amount of period, usually 10, 20 or 30 years, is usually cheaper than "whole-life" or permanent insurance. The main reason: Term insurance only pays out if you die, while permanent insurance can be included as an investment or savings account component. Term insurance is also fairly simple to buy and is easy to shop for on the Web.

Although it is still crucial that you understand just what you are buying when you shop for term life insurance. Even an inexpensive policy, if not designed to meet your particular financial needs, still can be money down the drain.

The following mistakes are the seven most common that insurance agents say consumers make when buying term life insurance online or offline.

1. Choosing term insurance solely because it is cheap.
Shopping for life insurance only by looking at its price tag is "like buying a Volkswagen Bug because it is on sale when you really need a vehicle that can haul a boat," says Michael Gerkman of Gerkman Insurance in Portland, OR. Typically the premium price (your monthly or annual cost) is certainly a factor, ensuring that your term life insurance matches your financial goals is more important, he says.

2. Not understanding that term insurance is temporary.
That's why it is called "term" insurance -- because you buy it for a set period of time, say, 30 years. Examples of temporary needs, for which term is a great product, include insuring yourself while a business buy-sell agreement is completed for, say, a five-year period; insuring yourself and your spouse until your children can care for themselves (20 years, starting at their birth); or insuring yourself until your mortgage is paid off (15 or 30 years) so your spouse is not burdened with house payments if you die prematurely.

"Term insurance has become the more popular product, but there are still situations in which whole-life insurance policies are more appropriate," advises J. Derieck Hodges, C.I.C., Ch.F.C., of Albrecht-Hodges Inc., in Cape Girardeau, Mo. "If, for instance, you have a disabled child, you may need to insure yourself and your spouse throughout your entire life, so there will be money available for the child's care after you die."

In that example, a 30-year level-term insurance policy you bought when you were 30 would expire when you are only 60. At that point, you still would want to carry insurance, says Hodges, but your age and health conditions might make it impossible or very expensive to do so. In that case, permanent insurance might have been a better choice, he says.

3. Buying from a less-than-stable insurance company.
"There are so many good insurance companies out there with reasonable rates that I can't think of a single reason to buy from a company that doesn't have at least an A rating," says Hodges. The industry's top-rated companies carry even higher ratings, such as A++. Ratings for insurance companies are usually listed along with their online quotes, or can be found online at A.M.Best.

You can also check a company's financial standing through Standard & Poor's and Moody's ratings. "An insurance company should be very quick and willing to share their ratings with you, as well as information about who owns them," says Sam Bennett, C.I.C., a partner in the Columbia, Mo., Harrison Agency Inc. "If they aren't, walk away."

4. Buying insurance coverage based on a set formula.
You may have heard that a good rule of thumb is to buy life insurance coverage equal to 10 times your annual salary or 10 times your beneficiary's annual financial need. The idea is that if your surviving beneficiary invests the life insurance proceeds in the stock market (getting an average 10 percent annual return), they'll have a steady income stream and never need to tap the investment principal.

While this formula isn't a bad place to start, Hodges is a bit leery of "cookie cutter" financial analysis. "A good agent can quickly do a solid needs-assessment for you, looking at your expected timeline and your financial needs to come up with a reasonable amount of insurance," he says. "Everyone's needs are a little different, and you don't want to buy too much or too little insurance."

5. Insuring a young child.
The goal of life insurance is to insure someone who has dependents who would suffer or have financial needs that wouldn't be met if that person died. Most children do not have anyone depending on their income. As a result, insurance on a child is not a good idea.

Some parents think they should have insurance to cover burial costs if a child dies prematurely. However, most agents suggest you instead invest in a good stock mutual fund. That way, you can use the investment proceeds for positive needs such as college funding, rather than just for death costs.

6. Buying insurance from a pushy agent.
Life is too short; you might as well do business with people you like and trust. "If an agent starts pushing products at you without first asking detailed questions about your financial picture, that's a huge red flag," warns Gerkman. "Would you let your doctor give you a prescription before even asking you how you are feeling?"

As always, the best way to find a good insurance professional is through referrals from friends or co-workers who are satisfied with their agents. Arrange face-to-face meetings with two or three agents and pick a professional who listens well, explains products thoroughly, doesn't appear to be "pushing" a particular product or company and with whom you have a good rapport. Remember: This may be the person who helps your family with your claim if you die.

You can also shop for term-life insurance polices online.

7. Failing to regularly review your policy.
You got a divorce, but your former spouse is still your life insurance beneficiary? The horror! Did you buy term insurance to cover you while you pay off your mortgage? If you refinanced during the latest rate drop and restarted the clock on your loan, you might also need to update your insurance term. Life definitely has a way of throwing changes your way. Just make sure your life insurance changes along with you.

Tips for Filing an Insurance Claim

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First, review the National Flood Insurance Program (NFIP) Flood Insurance Claims Handbook. It provides additional help with the process of filing a claim.

If possible, photograph the outside of the premises, showing the any damage or flooding. Also, photograph the inside of the premises, showing the damaged property and the height of the water if your property was flooded.

Call your insurance agent to report your claim. If you have seperate flood insurance, also call your flood insurance agent to report your claim. Your flood insurance agent will prepare a Notice of Loss form and an adjuster will be assigned to assist you.

Separate the damaged from the undamaged property and put it in the best possible order for the insurance adjuster's examination. If reasonably possible, protect the property from further damage.

When the adjuster visits your property, let him or her know if you need an advance or partial payment of loss. Again, good records can assist your insurance companies and the NFIP in giving you an advance payment. Use your inventory to work with the adjuster in presenting your claim.

Damaged property which presents a health hazard or which may hamper local clean-up operations should be disposed of. Be sure to adequately describe and photograph discarded items so that, when the adjuster examines your losses and your records, these article are included in the documentation.

Good records speed up settlement of your claim. Compile a room-by-room inventory of damaged goods, and include manufacturer's names, dates and places of purchases, and prices. Try to locate receipts or proofs of purchase, especially for major appliances, and note manufacturers' names, serial numbers, prices, and dates of purchase.

What is a Bridging Loan

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A bridging loan as the name implies is a loan used to "bridge" the financial gap between monies required for your new property completion prior to your existing property having been sold.

A bridging loan is in simple terms a short-term mortgage that is secured against the property that you are selling, with the money that is lent being used to complete the purchase of the new property. Because of the nature of their use, bridging loans can be arranged in a very short period of time, usually around seven to ten days, which is important when you need to complete on the purchase or risk loosing the property.

Bridging loans are short term loans arranged when you need to purchase a house but are unable to arrange the mortgage for some reason, such as there is a delay in selling your existing property. Timing is of the essence when selling one property and buying another. Sometimes if you are looking for a new home and the right property becomes available, it is not always possible to wait until your current home is sold.

The beauty of bridging loans is that a bridging loan can be used to cover the financial gap when buying one property before the existing one is sold. For example, if you are in a chain, where you are buying a property at the same time as selling a property, it's possible that you'll be put in the situation where you need to complete your purchase, but the funds from your buyer are not available. You are now under pressure to complete on a particular date but do not have the funds available. This is where bridging loans come in. They are looked on as short term lending to cover a specific short term need.

Bridging loans can be arranged for any sum between £25000 to a few million pounds and can be borrowed for periods from a week to up to six months. Because of the nature of bridging loans they can usually be arranged at short notice and within a few days. Bridging loans are widely available and can usually be arranged by your existing mortgage provider.

A bridging loan is similar to a mortgage where the amount borrowed is secured on your home but the advantage of a mortgage is that it attracts a much lower interest rate. While bridging loans are convenient the interest rates can be very high. When considering a bridging loan please remember that you may be paying not only for the bridging loan but also for the mortgage on your existing property. Although bridging loans are convenient, you need to consider the pitfalls too, like the high interest rates.

The downside to the fast nature of these types of loan is that the interest rates charged on them are relatively high, this is because not only are they short-term and for large amounts, but the risks to the lenders of non-payment are higher than for other circumstances and this is taken into account when the loan rates are calculated. Although the rates are high when compared to other loans available on the market, when you take into account the short amount of time over which this interest is charged, and the benefits that a bridging loan can bring, the costs are reasonable.

Bridging loans are designed to provide you with the equity from your current home in order to make your new purchase, before you are able to sell your own property. The loan is secured against the home that you are selling in the form of a mortgage or second mortgage, and will allow you in general to release around 65% of the property's value. With these funds you are then in a position to complete the purchase of the new property, and once your old property sells you can clear the bridging loan. If you are considering such a loan, you should be confident of a sale, and that you will be able to clear the debt within six months, as the high interest rates are something that you do not want to be paying long-term.

Bridging loans are available to the people that have found it more difficult to get mortgages, such as those with an adverse credit rating. This enables these people to build a track record before applying for the traditional mortgage. Bridging loans can take from 48 hours at the shortest to around ten days if the circumstances are more complex.

Despite the costs, bridging loans are very popular, after all if you have spent a lot of time searching for the perfect property you will not want to miss out on it because of a relatively short delay in the sale of your current property. It is in these cases where bridging loans can prove invaluable, enabling you to secure the sale of the home that you want, and concentrate on the sale of your property at a later date.

Bridging loans can be provided for:

Residential property

Commercial property

Land

New build

Renovations or refurbishment

Speculative properties

Conversions

Overseas property

How To Easily Find A Military Loan

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Military members the price for serving your country and defending freedom is difficult, fortunately finding the right loan to fit your situation doesn't have to be when you know where to look. Finding a loan provider that understands the pressures and time constraints that many military members are currently going through can be difficult and downright depressing. Lets be honest, after working upwards of 15 or more hours a day who has the time or energy to go seek out loan providers in person. Fortunately the Internet has easily resolved that problem.

Using the Internet to find a military loan provider has leveled the playing field. Never again will you have to worry about talking to a loan lender during your short lunch hour or feel pressured to take the first loan that you qualify for. Now you can simply do an online search for military loan providers and find a loan provider for free in the comfort of your own home.

Most online loan lenders allow you the opportunity to compare numerous quotes for free and you're never under any obligation to accept any loan that is offered to you unless it meets your specific needs, wants or desires. In most cases you can find out if you're approved for a loan within 24 hours. Some providers even have the capability to tell you within minutes if you qualify for a loan. The only requirement is for you to fill out a simple form on their website that usually takes less then 5 minutes. Don't worry; they also keep any information you provide secure and confidential. Best of all you can search for your loan at any time day or night - even in your pajamas if you so desire.

Stop searching for a military loan the hard way. Instead use your computer and find the loan you need online without any time constraints or hassles.

Six tips to choose your home loan lender

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Every one dreams of buying a home but most of us do not have sufficient funds in our bank account to make such a purchase. So we are left with the option of asking a housing finance company to finance our purchase. However choosing the best home loan lender is important if we have to escape all the hassles that are linked to availing a loan.

Also before you pick the lender for your home loan try to sort out in own mind the criteria you are looking considering your own credentials. Check on some important aspects of the loan, such as finance costs and interest rates. Tracing down a good home loan lender who can guide you through the entire loan procedure and help in accomplishing your dream of a nice house is a little difficult. So some of the following tips can help you in achieve your dream faster.

1. Finalize your property before the lender

You should always finalize the property you want to purchase before looking for lenders that would be ready to finance your house. This is important because some banks lend for a property that is already furnished while others extend for a self constructed property or property that is under construction. Thus it is better to finalize the category of your property first and then look for lender options. It will help us to focus in a defined area and extract all relevant information before finalizing on the lender.

2. Ensure your loan eligibility criteria

All the banks follow some eligibility standards for giving a loan. Primarily, it depends on your income and repayment track records. You can get details of all bank home loan criteria from individual banks or in the Rupeetimes Home Loan section and choose the one that can offer you maximum amount based on your income. The loan eligibility amount can also be increased if you club your and spouse’s income.

3. Fixed or Floating interest rate

One is always left in dilemma while opting between fixed and floating interest rate. It is always thought that a fixed interest rate means same rate throughout the tenure but sometimes it is adjustable after a certain period of time, provided which either your EMI amount or the loan tenure can increase. Thus it is better to clear this point in hand with your lender. On the other hand, if you are opting for the floating rate loan, make sure that your lender’s floating rate has come down at least over the past two years. Market scenario should also be analyzed if you planning to avail a floating rate loan as it depend on the economy’s interest rate. Some time back Rupeetimes.com covered an article describing the pros and cons of fixed and floating loan rates.

4. Processing fee is non-refundable

Banks always charge a fee in order to apply for loan with them. This fee is known as the processing fee and is non-refundable. Generally it varies between 0.50% and 1% of the total loan amount. However one should be clear that paying a processing fee does not mean that o loan will be sanctioned by the bank. Therefore it is always better to have written agreement with your lender. A switching fee is also charged if plan to switch from a floating rate to fixed rate. The catch is that you can try to negotiate on this. Some banks on negotiations even give you a flat processing fee.

5. Assure all the hidden costs

Mostly the interest rate charged by the bank is taken into consideration while taking a loan but there are large hidden costs involved with most loans that prick the borrower’s pocket. Hence it is advisable to decide on all legal charges, pre-payment charges, valuation fees, processing fee and other hidden costs before a loan is availed.

6. Be assured about the lender before making a choice

You should always be well informed about your lender as it will help to have a clear picture about the future. Depending on where you live, you can locate online comparison on rupeetimes.com that will tell you about a number of similar lenders suiting your needs. At a glance you can get all the right and detailed information you need and on what each lender can offer to its customers. If you match up what each lender can give you to what you are actually looking for and which best suits your needs, you can then compare it with others.

Free Money Saving Auto and Home Loan Tips

2008-11-27T08:28:00.000-08:00

Free Auto Loan Tips

The following tips should help increase your chances of getting a car loan at a better rate.

Tip #1 - If you just started a job (recently graduated from college) then wait 6 months to apply for your car loan.

Tip #2 - If you have currently have bad credit then repair it before applying for an auto loan.

Tip #3 - If you've recently moved then wait until you have lived at your new address for 6 months before applying for a loan.

Tips #4 - If you have had a previous auto loan or home mortgage on your credit report then your chances for a new loan improve greatly.

Tip #5 - Try and pay off all of your credit card balances or at least lower them. You may want to consider finding the best debt consolidation loans to erase all of your credit card bills. The bottom line is don't keep a high debt load or credit card balances.

Tip #6 - You must have a stable job or occupation.

Tip #7 - Other examples of credit extended to you should appear on your credit report. Verify this with a quick and easy online credit report. Also avoid charge off's on your credit report.

Tip #8 - If you've filed bankruptcy before then you should wait 3-4 years before trying to get an auto loan.

Free Home Loan Tips

Tip #1 - Make Bi-Monthly Payments: Instead of paying your mortgage with one monthly payment switch to paying half of your loan payment every 2 weeks. The savings comes from the 26 half payments you make which add up to 13 monthly payments versus the regular 12 payments you would normally make in a year. The end result is you save a large sum of money on the interest owed and you'll own your home a lot sooner!

Tip #2 - Choose a 15 year mortgage instead of a 30 year mortgage: You'll end up with a higher monthly payment but in the long run you also save tens of thousands of dollars in interest charges, especially if you shop for the best home loans you can afford.

Tip #3 - Mortgage Refinancing: Currently this is the most popular trend. You refinance your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and plan to keep the new mortgage for several years or more.

Tip #4 - Buy down the rate: The seller or builder, or through innovative pricing, can help you buy down your mortgage rate for one, two, or three years.

Tip #5 - Consider an adjustable-rate mortgage (ARM): If you think you will be in your house for less then 5 years then perhaps you should consider an ARM. An adjustable-rate mortgage (ARM) starts with a considerably lower interest rate, but then adjusts every year. This type of loan moves a little bit of the risk away from the lender, and the lender rewards you with a lower rate. Usually these mortgages are capped to rise not more than two percent in any year, and not more than five or six percent for the life of the loan for your protection.

Timothy Gorman is a successful webmaster and publisher of Military-Loans-Online.com - Which provides free money saving loan quotes on all of your loan needs to include home equity loan information that you can research in your pajamas on his website

HOUSING LOAN Tips

2008-11-27T08:27:00.000-08:00

(1) USE CLICKS FOR BRICKS

Ho hum! Is this article about another one of the traditional brick and mortar corporates, making a foray in the virtual world? Nope, it sure isn't. This is about using the myiris.com home loans site for finding your set of bricks and making a home out of it. Even if you intend living out of a suitcase, this site helps you find some place to dump your suitcase.
"House hunting isn’t the easiest of jobs what to talk of getting a loan for owning it". If you have been brought up on this spiel, chances are that you are going to be ripped off as you make for easy prey to be suckered. There is this plethora of information, most of it superfluous, floating all over, which can get pretty tedious to wade through. This site here, cuts through all that hype, nonsense and humungous piles of information, to get you relevant details for making your purchase decision.

(2) LOAN MELA

It’s like a mela out there what with the number of banks and housing finance companies (HFCs) competing to
give out loans. Today there are about 20 National Housing Bank-registered HFCs and over 200 unregistered
HFCs in the country wanting to dole out loans. Getting a loan would seem easy given this scenario. But is it?
Before the oft-repeated Hindi film scene of getting lost at the mela occurs here’s what you need to
consider before going in for a loan. This way you don’t need to go through the hajhaar hassles before the invariable happy ending.

(3) WHY TAKE A HOME LOAN?

What's an average Indian's most cherished dream? A world trip with Aishwarya Rai would seem to be the answer as seen from the various episodes of Kaun Banega Crorepati (KBC)! Jokes apart, moving into their dream house would rank among the top three things on the wish list of most people. After all, there's nothing like having a roof, particularly one's own, over one's head. All that house hunting every few years, grumpy landlords, killing rents would be a thing of the past. Hey, you even get to use nails to hang your favorite paintings and pictures.

Taking a home loan nowadays has many advantages.

Added to this, the RBI has been regularly slashing interest rates, with the result that housing finance loans that came at an interest rate of 16.5% to 18% four years ago are now available at 11.5% to 13% or lower. Each year the Finance Minister's largesse during the Budget seems to be solely concentrated for the housing sector and construction sector. The Budget 2000's allowed interest payment upto Rs 1 lakh and principal payment of Rs 20,000 to be exempted from income tax. To top it all, the Housing Finance Companies (HFCs) are aggressively wooing customers. When EVERYTHING seems to be on a roll, make the best of the situation.

(4) WHAT ALL CAN I TAKE A LOAN FOR?

There are different types of home loans tailored to meet your needs. Here’s a dekko of some of them:

Home Purchase Loans: This is the basic home loan for the purchase of a new home.

Home Improvement Loans: These loans are given for implementing repair works and renovations in a home that has already been purchased by you.

Home Construction Loan: This loan is available for the construction of a new home.

Home Extension Loan: This is given for expanding or extending an existing home. For eg: addition of an extra room etc.

Home Conversion Loan: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.

Land Purchase Loans: This loan is available for purchase of land for both construction or investment purposes.

Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home.

(5) HOW MUCH WILL THE BANK/ HFC LEND?

The corollary to this question is - How Much Can I Afford? This is presuming that questions like what sort of loan I require what sort of time frame am I looking to get a house/flat, its ranking on my priority list etc have been thought out and you are gung ho about the idea of a house.
The amount of loan, the bank/HFC gives you depends on three more or less similar questions they ask themselves about you:

Will we get our money back? - This roughly translates to finding out whether you make enough money to pay back the loan.

Can this guy repay us? - This translates to finding out your credit worthiness and the risk profile

Are we safe? - This translates to taking a check on the collateral - if you have a co-guarantor or something of value - should you be unable to repay the loan

Once the bank/ HFC is satisfied that these questions are answered comfortably, issues concerning various interlinked parameters of a housing loan — tenure, amount interest rate and miscellaneous charges — also have an impact on your ability to afford the loan.

Amount
This largely depends on a number of factors like your age, profession, salary, the city you reside in among other such factors. It varies between Rs. 25,000 to Rs. 1 crore depending on the lender. As a rule of thumb, depending upon the HFC, you will have to cough up 15%-20% of the loan amount as a down payment. For smaller amounts, this may not be much. But for figures running into lakhs, this could make loads of difference. For eg. An apartment costing Rs 10 lakh may get 85 per cent financing. So, you will have to arrange for the remaining Rs 1.5 lakh. If you take this into account, the additional thousands will definitely put a strain on your finances.

Tenure
Generally, the maximum tenure of home loans is 15 years, with a few lenders offering tenure of 20 years or more (ICICI has recently launched a 30 year loan). The longer the tenure, more you pay in total interest, but your monthly payments will be less. So depending on your earning potential and bank balance, you can choose an appropriate tenure. An important requirement of most banks/HFCs is that you pay up the entire loan before you retire. You can always prepay your entire loan amount before it is due. There is a trend to do away with the pre-payment penalty being imposed by some lenders so its best you check on this as well.

Interest Rate
Without doubt the most important parameter to factor into your calculations. The interest rates may vary from institutions to institutions and generally range from about 12.5% to around 16%. Repayment is in the form of EMI's (equated monthly installments). The longer the tenure, the more you pay in interest, but your monthly payment will be less.

Refinance
This is a concept that is yet to catch on in the home loan market but is bound to be a major service in the months to come. Under this facility, you can take a new loan from another bank/HFC to pay back an old loan before its natural tenure. It gives you the opportunity of prepaying your high cost debt and gets a lower cost one. In today's falling interest rate scenario you should use this vehicle to lower your debt payments as much as possible. The lender facilitates the shift by paying the outstanding and transferring the asset to their portfolio.

Miscellaneous charges
A heading that should be ignored at one’s peril! The interest rates and EMIs are not the only cost factor. Never underestimate how much the processing and administration fees amount to. A 1% administration fee and a 1% processing fee on, say, a Rs 5,00,000 loan, would amount to Rs 10,000. Other times, it could be just one fee (either administration or processing) but could yet work out to be much more if it is considerably higher at, say, 2.5 per cent or 3 per cent. The various other fees, which you are required to pay along with the margin amount, are:

a) Interest Tax
This is the tax payable on the interest paid on a home loan and not the principal. This tax is some times included in the interest rate of the loan, or may be charged separately as interest tax.

b) Processing Charge
It's a fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may also be a percentage of the loan amount. The loan amount received by you can be less than the processing fee.

c) Prepayment Penalties
When a loan is paid back before the end of the agreed duration a penalty is charged by some banks/companies, which is usually between 1% and 2% of the amount being pre paid.

d) Commitment Fees
Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.

e) Others
It is quite possible that some lenders may levy a documentation or consultant charge.

(6) WHAT ALL IS REQUIRED TO GET A LOAN

Having homed in on the bank and the type of loan you require, comes the toughest part of how to get a loan. Getting a loan isn’t like taking a walk in the park. The bank requires a plethora of documents for ascertaining your credentials and details of the plot/house/flat. Here’s a sample of what you need to produce to get your loan:

Common (for salaried as well as self-employed borrowers)
Proof of Age
Proof of Residence
Photograph
Bank Statements for the past six months

For salaried borrowers
Latest salary slip or statement
Form 16

For self-employed borrowers
I-T returns for the last 3 years
Balance sheet for the last 3 years
P&L accounts for the last 3 years
Tax challan for the last 3 years
Flat and house
Sales affidavit/ letter of allotment in case of society or association of persons
Original vendor's sale deed
Original sale agreement
I-T clearance as the case may be
Encumbrance certificate

(7) DO I NEED TO GET INSURANCE FOR MY HOUSE

Many lenders may insist on getting your home insured to safeguard their interest. After all, if say your house, which you hadn’t insured gets destroyed in a fire, the loan lender will be left high and dry without any collateral. There are various kinds of insurance covers available for a homeowner. The various options may be insurance against fire, against other disasters, etc. Apart from getting the mandatory ones you should try to get insurance as per your circumstances.(for further details check the Sure Insure section).

(8). HOW MUCH TIME DOES IT TAKE TO GET THE LOAN SANCTIONED

Finally, once all the nitty-gritty but essential work of selecting the land/ home, completing all the legal documentation's etc is completed, you can think about getting your loan. It takes around fifteen days for processing of one's application if the documents are in order. It takes another week for the company to check out the property papers and make the disbursement. In case of property under construction, the disbursement is made in installments according to the stage of construction.

Start Your Own Small Business

2008-11-27T08:26:00.000-08:00

Wouldn't it be great to be able to quit your job, be your own boss and earn a paycheck from the comfort of your own home? The good news is that with a little planning and some startup money, it is possible!

Creating the Concept
Before quitting their jobs, the potential entrepreneurs must first think of a concept, product or service to generate a steady income. And while that may sound easy, it's not. You should conceive a plan that puts your knowledge, experience and expertise to use but in a way that allows you to make the most amount of your money.

When first thinking of some business ideas, start with areas you already have a great deal of interest, equipment and materials for. This will help cut down on the startup costs for your company and also let you hit the ground running when you do hang out your shingle. Also, peruse the local paper and advertisements to see what other types of businesses are out there. Are there other similar businesses in your neighborhood or is there a business area that is lacking?

Doing something you like isn't the only consideration. You need to get an idea of the prospects for the potential business. Is it a business with a market? Can you make money at it? This will require some research into the marketplace as well as how other similar businesses have fared.

Developing a Work Space
Your home is where you live. This means that its primary function is to serve as a dwelling for you and your family - not as a warehouse or meeting place for your business and its clients. Make certain that if you are considering entering the manufacturing business (for example) that your garage or shed is large enough to handle your work - without forcing your family and your vehicles into stormy weather.

Similarly, if your work will be computer-based, make sure that you have the technology necessary to give your idea a fighting chance. In addition, make sure that you have a dedicated area that's cut off from the rest of the house and that can afford you some privacy. Remember, hearing a barking dog or a crying baby in the background when you are trying to work or meet with a client may not be ideal for you or your family.

Outsourcing Partners/Employees
While it would be great to be the sole owner of your company and have complete control of every aspect, sometimes a lack of funds or experience make it necessary to have a partner. In this case, consider someone that is bright, will represent the company well, and has some sort of expertise in the business you are developing, be it sales, marketing, book-keeping, or other financial matters.

Also, try to define the tasks that you and your partner(s) will be responsible for before opening up shop. That way, there will be fewer disagreements and the business will operate more smoothly. Also, make sure that all partners are legally cared for by the company, and that the proper forms are filed with the regulatory authorities - this may mean filing twice and paying for title changes if you need to find a new partner, but it will protect both of you in the long run.

Next, decide if you'll need employees - whether now or in the future. If so, put some thought into how you will get them and what you will pay them for their work. Also, think about how you'll do payroll, and whether people will want to work from your home, from their own homes or if you'll need to find another facility to house them.

Doing Your Research
Some books on forming a small business suggest that after hatching an idea, an entrepreneur should just "go for it." However, this bold approach could land you in some shaky territory.

Instead, a good first move is to start asking family and friends what they think about your small business idea. Consider asking them specific questions such as:

Would you purchase this particular product and/or service?
What do you think its worth?
What is the best way to market the idea?
Is this something that you think is a fad, or do you feel it could be a viable business for the long term?
Is there anything you can think of to improve this idea?
What other businesses in this field have you heard of or do you currently use for this product/service?

If you're married and/or have kids, you should also be asking your family how they feel about you quitting your job and working from home. This will affect them on a psychological and financial level. If any of their answers are negative, you should spend some time discussing their concerns and decide whether your goal is worth continuing against their wishes.

After obtaining all of this feedback, go back to the drawing board and see if the idea can be improved upon so that your product or service can be differentiated from the competition. Remember, you want to hit the ground running and turn as many heads as possible when first starting off!

Finding Funding
Once you have an idea and the approval of your family, you need to decide how you are going to finance it. Most businesses will need at least a little startup income. This investment will hopefully help you break even after a year, but keep in mind that even successful businesses can remain in deficit for the first few years. Because of this, you will want to tap into a few different sources of funding. Some of these include:

A small-business loan
Savings
Money generated from other investments
Family/friends who will act as investors
Personal loan from the bank
Home equity loan
Credit cards (as a last resort)

Source capital that won't hamper your longer-term security. In other words, try to avoid racking up costly credit card debt that could cost 20% or more in yearly interest fees. Also, try to avoid borrowing against your 401(k) or other similar plans as this may adversely affect your retirement.

Finally, one of the best things you can do before you take the entrepreneurial leap is to build up an emergency fund to fall back on if your company doesn't break even for a few months. Three months of living expenses is a minimum goal for a new business owner, but even more will help take the stress off of you and let you spend your energy on your company. (To learn more, see Build Yourself An Emergency Fund.)

Covering Your Bases
All business owners should think about what would happen to the enterprise and the revenue streams being generated if health or other issues were to prevent them from being involved in the business. In other words, if the entrepreneur were to become disabled, who would takeover? Could the business survive?

Consider these issues beforehand and determine whether disability income insurance makes sense, or if a partner could fill the void caused by your absence. (To find out more about protecting your company, see The Disability Insurance Policy: Now In English, Protecting Your Income Source and Protect Your Company From Lawsuits.)

Foreseeing the Future
It's great to own a business, but ultimately the entrepreneur will probably want to retire or move on to other challenges. With that in mind, you should create a business plan that discusses how you will transfer, sell or close your company. If your business depends on your unique knowledge and contacts, it may not be able to be assumed by another party.

Conclusion
There are few things more satisfying and rewarding than launching and owning your own home-based business, but before diving in, be sure to do your homework. Making a business work is not an easy task, but proper planning will help to increase its chances of success.

Are You An Entrepreneur

2008-11-27T08:19:00.000-08:00

Many people dream of starting their own businesses, but not everyone is cut out for this line of work. Being employed by someone else offers a slew of advantages, from health insurance and matching retirement contributions to a regular schedule and the company of coworkers.

Entrepreneurs: Nature or Nurture?
Are good leaders made or are they born? No one knows for sure, but successful entrepreneurs tend to share these traits:

Discipline
To be successfully self-employed, you'll need to have the discipline to set work hours, meet deadlines, pursue new clients and avoid tempting distractions like your TV.

Frugality
To prevent yourself from going broke when your business is new or times are slow, you must be willing to cut back - sometimes way back - on your spending. Remaining self-employed has to be a top priority above buying new clothes or other niceties. It's a good idea to be frugal not just in slow months but in the good ones as well to give yourself a well-padded savings account that can tide you over when your business isn't generating income. (For tips on cutting back, read Save Money The Scottish Way.)

Self-Confidence
In order to successfully sell yourself to others, you have to be your own biggest fan. If you don't believe you're one of the best at what you do, no one else will either. Business will rarely just fall into your lap, so you'll need to be willing to promote yourself and ask for work whenever and wherever possible.

Good Communication Skills
Clients won't always make their expectations crystal clear. Rather than guessing what they want, you must not be afraid to ask lots of questions. It's also a good idea to ask for feedback during and after assignments to make sure you're meeting your clients' expectations.

Humility
Few clients will expect you to be perfect, but if you can't fess up and apologize when you make a mistake, you'll get crossed off their lists. (This trait applies to investors too. Read Seven Common Investor Mistakes to learn more.)

Honesty and Integrity
When you're self employed, your reputation is crucial. You don't have the image of a company to fall back on or make up for the occasional bad employee. You are the company and you are the employee; as such, everything you do needs to reflect well on your business.

Superb Record-keeping Skills
It's very important to know when you sent out invoices, when you were paid, who still owes you money, how much money your business has, how much you have made and how much you need to make. Detailed, accurate records are critical to the financial health of your business and are indispensable for tax purposes. (To learn more, read Six Steps To A Better Business Budget.)

Is Buying A Franchise Wise

2008-11-27T08:18:00.000-08:00

Many people think that buying a franchise is a sure way to become a millionaire, but in reality, there are a number of reasons why becoming a franchisee isn't all it's cracked up to be. In this article, we'll take a look at some important considerations before you dive head-first into a franchise purchase.

Pesky Start-Up Costs and Royalty Fees
Start-up costs and royalty fees can put a serious damper on a franchisee's take-home pay. For example, when opening a McDonald's, the franchisee must not only pay money toward the location, he or she must also pony up a $45,000 franchise fee for the right to operate the business for a period of 20 years. After 20 years, assuming the company agrees to renew the contract, another $45,000 franchise fee is charged.

The total monetary layout to open a McDonald's franchise can range anywhere from $500,000 to $1.6 million.

The real kicker, however, is the ongoing royalty fee. Here's how it works: Each and every year, franchisees must pay the franchise a fee equivalent to 12.5% of sales. It also means that no matter how successful you are as a business owner and how innovative you are at driving revenue, you'll always have two partners: Uncle Sam and company headquarters.

The unfortunate part is that royalty fees are pretty standard in the franchise world. In fact, Burger King charges its franchisees 4.5% of sales in addition to a $50,000 franchise fee, and Dunkin' Donuts has its franchisees cough up 5.9% of sales each year in addition to a franchise fee that can range anywhere from $40,000 to $80,000, depending upon the location.

Subtract payroll, food costs and taxes - in addition to these royalties - and it's easy to see why life as a franchisee may not be the life of luxury you imagined.

Lofty Raw Material Costs
In order to maintain consistency among their offerings, most franchises insist that their franchisees buy raw materials directly from them or from a supplier with which they have a "special" relationship, meaning that they receive rebates on what the franchisees order. In any case, the prices that they charge for these materials (either the company or the supplier) are often much higher than what the materials would be sold for elsewhere.

In fact, it's not uncommon for some fast-food franchisees to pay 5-10% above prevailing market value for a box of lettuce or tomatoes, or other produce that could easily be bought elsewhere. After all, produce is produce, right? It's fairly consistent from vendor to vendor. The point is that over a year's time, the premium that a franchisee may have to pay for raw materials can equate to big bucks!

Furthermore, if the franchisee does decide to go elsewhere for its raw materials and it violate the initial contract, the franchise has the legal right to terminate the relationship and, theoretically, the franchisee could lose his or her entire investment.

Lack of Financing
Most franchises don't provide financing. This means that the franchisee will probably have to tap his or her savings or obtain some other source of financing (such as a small business loan). In other words, the franchisee is on his or her own!

With that in mind, some franchises, such as Lawn Doctor (which offers lawn and turf treatment services), will finance franchise fees, start-up costs, inventories and equipment to help their franchisees get started. Situations like these are particularly attractive because although franchisees will probably have to put up a portion of their personal assets as collateral for the loan, at least they won't have to zero out their bank accounts or tap retirement funds to set up shop. (To read more about financing, see Should You Take A Loan From Your Plan?, Getting A Loan Without Your Parents and Qualified Plan Loans: Guidelines To Operations.)

Lack of Territory Control
While most franchises will limit the number of stores that they open in a given area because of fears of market saturation and diminishing returns, many franchises will still try to fit as many retail locations into a given area as possible.

That's why it's not uncommon to see five different McDonald's locations within a five- mile area - the corporate head is trying to squeeze every last dollar out of the territory. But the individual franchisee is really the one who suffers. Every time a new location opens within close proximity, their potential market is essentially cut in half!

Lack of Individual Creativity
Franchises demand uniformity. In fact, everything from in-store décor, signage, products offered and the uniforms the employees wear is dictated by the franchise. For a person who likes to be creative this can mean a bleak existence.

Unfortunately almost every (if not all) franchise has similar requirements. So, if you like to be your own boss, a franchise is probably not for you.

Franchise May Not Know Your Area
You've probably heard many times that "location, location, location" is the most important factor in determining the success or failure of any business.

The point is that unless the franchise sets up shop in a favorable location that's going to support the business, the franchisee will have an incredibly difficult time making ends meet.

Take the Pizza Hut that's located about five miles from my home as an example. Now I'm sure that the folks who compiled the demographics on the area and secured the location for the franchisee thought it would work out fine. After all, the town is chock full of people and in close proximity to a major highway.

But what headquarters probably failed to uncover was that the location is also virtually surrounded by adult communities. In other words, people who usually aren't too keen on eating pizza or dining out with any frequency. In addition, a few miles up the road where the younger (pizza eating) crowd is located, there are four or five mom-and-pop pizzerias that provide stiff competition.

Therefore, although franchises may be able to do a quick demographic study and gauge whether there is a good chance that a location will fare well, they rarely know an area as well as the locals.

Handle A Home-Based Business

2008-11-27T08:17:00.000-08:00

Outline the mission statement, which should detail exactly why you are in business. Beyond that, write down the goals for the business, how you will meet the goals, who will be responsible for them and when they will be realized.

Evaluate the cost of the service or product in the outline. For instance, determine the costs of all materials found in the product, labor costs for creating the product and the cost for indirect materials and labor, such as supplies and clerical services. Figure out the cash flow by starting with the purchase of the inventory and following through to how payment is collected.

he business plan should also address the following points:

who the customers are and their needs
your knowledge of the business
your qualifications
pricing models
how the finances are managed
projections for the future
how it is different from the competition

Financing and Legal Setup
Identify the amount of startup funds and the type of financing you will need and their source. Prepare to invest 20-50% of your own money into the business and know that the average startup costs are $10,000 and upward.

It's important to understand and follow federal, state and local government rules. Papers must be filed if you incorporate, or want to protect the name of the business. Go to your town office or city hall if licenses and permits are needed to operate the business. The local code-enforcement officer can let you know whether you comply with zoning restrictions.

Register for an Employer Identification Number if you plan to incorporate or if your partnership or proprietorship has employees. The business area or home office must be part of the home and used on a regular and exclusive basis in order to qualify for a tax deduction from the IRS. Don't assume your home insurance will cover your home-business activities. Find out how the business will affect your policy and get any extra policies that will help protect you against losses.

Think Professionally
Create a business environment that maintains professionalism and allows you to function well. Analyze the space you will need for the office, production, tools and equipment, clientele and pick-up and delivery. Consider the location, traffic and parking.

The following are some important items you may need to include:

a home computer
an address or post office box
a separate telephone line
voice mail
a fax machine
company letterhead
a separate bank account

Nearly three out of four businesses are in operation after two years, so this means you'll have to find ways to adapt as the business expands. It's possible to keep the business at home by adding another room to your house or buying a new one, but prepare yourself in the event that growth requires you to move the business out and rent office space.

Conclusion
Deciding to start your own business from home is obviously a big step, but with the right forethought and preparation it can be a rewarding experience, both professionally and personally.

A critical component of a successful business is the budget. Read Six Steps To A Better Business Budget to learn more.

Can You Handle A Home-Based Business

2008-11-27T08:15:00.000-08:00

Think you can handle your own home-based business? Certain personality traits could help you succeed. Starting a business is a big responsibility that includes commitment, professionalism and self-discipline. It involves careful consideration, such as what type of competition you'll encounter, the demand for and quality of the service or product you'll provide and the management of cash flow. Read on to find out how a swift launch and expedited growth can occur as long as you weigh the pros and cons of developing a business, create a solid business and financial plan and understand and abide by local and federal laws and guidelines

Find Your Inner Drive
When it comes to starting your own business, examining your abilities before you act can save you from disappointment and wasted time in the long run. For instance, ask yourself whether you can set goals and stick with the plan. Once the goals are set, do you think you can accomplish what you've planned? Setbacks will occur; do you think you can remain optimistic?

Most entrepreneurs often demonstrate characteristics that include confidence, risk-taking, creativity, drive and determination, but the following personality traits can directly impact your business as well.

Passion for the business will make you a hard worker.
Ethical principles, such as wanting to provide a useful business to your community and to have the respect of your peers, can give your business a positive image.
Persistence is needed to stay on top of events taking place within the business. Trade associations and subscriptions to magazines focused on your business can help.
Socializing will help your business grow because it gets the word out about your company and creates relationships for its benefit.
Organization is another attribute that aids growth.

Points to Consider
Determine whether this is the right choice before you take on the challenge by considering the pros and cons. Some potential pros and cons of a home-based business are as follows.

Pros

You can stay at home (no commuting).
You may dress casually.
You can set your own work hours.
You are your own boss.
You would have more tax benefits and write-offs, such as claiming depreciation for your home office.

Cons

The town or city you reside in will want to maintain a positive character and quality, which will mean your activities and future growth potential may be limited.
You may face zoning restrictions.
You may face prohibition of the production and sale of certain goods.
Most likely you will need to invest many hours to set up the business; this may infringe on your personal and family life.
The Internal Revenue Service (IRS) may have a bunch of questions for you to answer, as this federal watchdog keeps a close eye on home-based businesses. (Read more about the advantages and drawbacks of working for yourself in Be Your Own Boss By Freelancing.)

Resources to Consider
Forging ahead and starting the business may require you to enlist the help of a local attorney and an accountant, but free information and assistance are also available from your local Small Business Development Center (SBDC) and SCORE offices. Both are associated with the

U.S.

Small Business Administration (SBA). The IRS can even provide free assistance, which would include accounting and recordkeeping, through the Small Business Tax Education Program.

Six Steps For Better Business

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After you've researched this information, you should then match the business's revenue with expenses. The goal is to figure out what an average weekly expense for overhead, utilities, labor, raw materials, etc. would look like. Based on this information, business owners may then be able to estimate or forecast whether they'll have enough extra money to expand their business, or to tuck away some money into savings. On the flip side, owners may realize that in order to have three employees instead of two, the business will have to generate more in revenue each week.

Let's look at six tips that will help you plan your small business budgets.

Tip No.1: Check Industry Standards
Not all businesses are alike, but there are similarities. Therefore, do some homework and peruse the local library for information about the industry, speak with local business owners, and check the IRS website to get an idea of what percentage of the revenue coming in will likely be allocated toward cost groupings.

Small businesses can be extremely volatile as they can be more susceptible to industry downturns than larger, more diversified competitors, so you only need to look for an average here, not specifics.

Tip No.2: Make a Spreadsheet
Prior to buying or opening a business, construct a spreadsheet to estimate what total dollar amount and percentage of your revenue will need to be allocated toward raw materials and other costs. It's a good idea to contact any suppliers you'd have to work with before you continue on. Do the same thing for rent, taxes, insurance(s), etc.

Tip No.3: Factor In Some Slack
Remember that although you may estimate that the business will generate a certain rate of revenue growth going forward or that certain expenses will be fixed or can be controlled, these are estimates and not set in stone. Because of this, it's wise to factor in some slack and make sure that you have more than enough money socked away or coming in before expanding the business or taking on new employees.

Tip No.4: Look To Cut Costs
If times are tight and money must be found somewhere in order to pay a crucial bill, advertise, or otherwise capitalize on an opportunity, consider cost cutting. Specifically, take a look at items that can be controlled to a large degree. Another tip is to wait to make purchases until the start of a new billing cycle, or to take full advantage of payment terms offered by suppliers and any creditors. Some thoughtful maneuvering here could provide the business owner with much needed breathing and expansion room. (To get venture capitalists to invest much-need capital into your company, see Fly High With Angel Investors.)

Tip No.5: Review the Business Periodically
While many firms draft a budget yearly, small business owners should do so more often. In fact, many small business owners find themselves planning just a month or two ahead because business can be quite volatile and unexpected expenses can throw off revenue assumptions.

Tip No.6: Shop Around for Services/Suppliers
Don't be afraid to shop around for new suppliers or to save money on other services being performed for your business. This can and should be done at various stages, including when purchasing or starting up a business, when setting annual or monthly budgets, and during periodic business reviews.

Six Steps To A Better Business Budget

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You've just purchased or opened a small business and you know your trade, but when it comes to bookkeeping and, more specifically, budgeting, your skill set is lacking. It's OK - the good news is that it is possible to come up with a budget, or at least a good estimation of what will be needed in terms of dollars and cents. Read on for six simple tips that will help you put together a top-notch small business budget.(To read about large corporations' budgets, check out How Budgeting Works For Companies.)

Why Budgeting Is Important
Estimating and matching expenses to revenue (real or anticipated) is important because it helps small business owners to determine whether they have enough money to fund operations, expand the business and generate income for themselves. Without a budget or a plan, a business runs the risk of spending more money than it is taking in or, conversely, not spending enough money to grow the business and compete. (If you haven't set up your own personal budget yet, read The Beauty Of Budgeting and our Budgeting 101 special feature.)

Budgeting Techniques
Every business owner tends to have a slightly different process, situation, or way of budgeting. However, there are some parameters found in nearly every budget that you can easily employ. For example, many business owners must make rent or mortgage payments. They also have utility bills, payroll expenses, cost of goods sold expenses (raw materials), interest and tax payments. The point is that every business owner should consider these items and any other costs specifically associated with his or her business when setting up shop or when taking over an existing business. (For related reading on owning a business, see Why Owners Sell A Business and Is Buying A Franchise Wise?)

What To Do with Revenue
With a business that is already up and running, you can make assumptions of future revenue based on recent trends in the business. If the business is a startup, you'll have to make assumptions based on your geographic area, hours of operation and by researching other local businesses. Small business owners can often get a sense of what to expect by visiting other local businesses that are for sale and asking questions about weekly revenue and traffic patterns.

4 Steps To A Great Business Plan

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A business plan serves two purposes:

It provides a road map for your business.

It helps you obtain outside financing.

If you're going into business for yourself, you must have a business plan - period. Numerous studies have shown that one of the major reasons new businesses fail is poor planning.

Are you an entrepreneur?

Start your own small business

The good news is that developing a business plan is not as hard as it seems. In order to develop a solid business plan, you need to have a thorough understanding of the business you're entering. Next, you need to determine how you'll use the plan and who your target audience is. Finally, you should create a complete a business plan that is comprehensive and concisely written. We'll explore each of these steps in detail.

Step 1: Know your business
In order to prepare a business plan, you must know the business you are entering inside and out. This means lots of research. Research comes in two forms: reading everything you can about the industry and talking to those who are already in it. Learn everything you can about your business and industry.

Step 2: Determine your purposes for the plan
A business plan serves to crystallize your business vision and guide you in fulfilling that vision; it is also frequently used to entice potential investors.

6 steps to a better business budget

Can you handle a home-based business?

If you are self-financing your business, you design the plan mostly for your benefit, but if you're seeking outside investors, you'll need to target them. As such, before you create your plan, determine whether you will solicit outside investors.

Step 3: Determine your audience
If you plan to recruit investors, you need to build a plan to suit them. Outside investors, who range from friends and family members to banks and venture capitalists, will invest through either loaning you the money, buying shares in your company or some combination of the two. Determine their level of sophistication and what they are looking for in a potential business investment. Remember that regardless of their level of sophistication, they are all looking for four things:

Trust in you - You build trust by demonstrating ethics and integrity, so your business plan should demonstrate those qualities.

Is buying a franchise wise?

Understanding of the business - It is your job to clearly articulate your mission statement, your product offerings and how you will make money. Your may have to tailor your plan to suit your audience: less-sophisticated investors may be scared off by industry jargon, while investment professionals will probably expect it.

Financial confidence - Clearly articulate the risks of investing in your business. Also, show investors how they can recoup their money - whether your venture succeeds or fails.

A good return on investment - Over the period of 1928-2007, the geometric (exponential) return for stocks was 9.8 per cent, while for 10-year Treasury bonds, it was 5 per cent. Historical private-equity returns are more difficult to measure, but, in general, investors will expect a premium of anywhere from 2-5 per cent over public-equity market returns. The return on equity for your new business must be in the private-equity range.

Typically, investors will look to beat a certain internal rate of return. Your job is to make sure your projected returns are in line with those of similar industries.

Step 4: Create your business plan
First, develop an outline of your business plan. Consider every aspect of your business and how it will affect your business plan. Remember, this business plan is a road map. It must guide you. It must also communicate to investors what you're doing and why they should invest with you.

The order in which your plan is presented should be something like the following:

Mission Statement

Executive Summary

Product or Service Offerings

Target Market

Marketing Plan

Industry and Competitive Analysis

Pro-Forma Financials

Resumes of the Company Principals

Your Offering (what type of financing you're seeking)

Appendix (any other pertinent information)

You'll probably also want to note any personal seed capital you're investing in the venture. Financiers want (and often require) entrepreneurs to put their own funds in the venture, and the greater the portion you invest relative to your net worth, the better.

Now let's review each section of the business plan in detail.

Mission statement
The mission statement is a concise, one- to three-paragraph description of your business objectives, or your business's guiding principles. In this section, you should state your unique selling point, or what separates your company from all the others in the industry that are otherwise just like it.

Executive summary
This is a one- to two-page summary of your business. Potential investors will read this to decide whether they want to look at the rest of your plan.

Product or service offering
Create a section describing your product or service offerings in detail, as well as how much you'll charge for what you're selling.

Target market
Present your primary and secondary target markets, along with any research that demonstrates how your target market will benefit from and consequently purchase what you're offering.

Marketing plan
Present your marketing plan, which should show in detail how you'll reach your target market. This part of the plan will include advertising and promotional strategies.

Industry and competitive analysis
Include a complete and thorough industry and competitive analysis that includes all stakeholders in your business. Don't forget to include governmental and regulatory agencies.

Financial statements
These must be complete, accurate and thorough. Each number on your spreadsheets must mean something. Don't estimate payroll, for instance; determine what it will actually be. Your income statement must reconcile to your cash flow statement, which reconciles to your balance sheet. Your balance sheet must balance at the end of every period. You must have supporting schedules (e.g., depreciation and amortisation schedules) to back up your projections.

If you are having trouble building your pro-forma financial models, which should project out for at least five years, seek outside help from a qualified professional.

Use realistic projections. In estimating the growth of your business, you will make certain assumptions, which should be based on thorough industry research combined with a strategy for how you'll compete. Also, analyze how quickly you'll achieve positive cash flow. Investors vary in their standards, but most like to see positive cash flow within the first year of operation, particularly if this if your first venture.

In order for your projections to be accurate, you must know your business. If you've built an accurate and realistic model, but still project negative cash flow for more than 12 months, rethink your business model.

Resumes of company principals
Include the bios and professional backgrounds of all significant employees of your business. You will want to emphasize how their backgrounds have prepared them to take on the challenge of running your new startup. Also, if an employee's business background is in a significantly different industry, you might want to emphasize how this can be an advantage instead of a detriment.

Your offering
Present what level of investment you're seeking and for what purposes you will use the funds. If you're selling business units, state the individual price per unit.

Once you've put together all of this key information, make sure to present your plan professionally. It should be typed, margin aligned and neatly bound. Use color graphics and pictures where possible. Do not handwrite changes or corrections. The inside of your business plan should be near book or magazine quality.

After you've finished your plan, have a professional you trust, such as a Certified Public Accountant or attorney, look it over. This person may catch details, errors or omissions you've made. They also will be able to give you a more objective opinion of the viability of your business.

Building your business plan is just the first step
Once you've completed your plan, you'll submit it to potential investors, who may ultimately commit to financing. Once you receive those commitments, you'll negotiate terms and then, finally, open your doors for business, which is where theory ends and the real work begins.

4 Great Tips On Home Loans & Tax

2008-11-27T08:00:00.000-08:00

A home loan helps you reduce your tax burden besides offering the pleasure of owning a house and living in it.

Home is where the heart is, and in today's world, home is what takes up a good part of your income as well. Most people, young and old, have equated monthly instalments to worry about, which makes home loans a subject of pressing concern.

First the benefits, apart from the obvious one of having the pleasure of owning a house in due course of time. Taking a home loan is a great way to reduce your tax burden. Resident Indians are eligible for tax benefits on principal and interest components of a loan under the Income Tax Act, 1961. The tax deduction can be claimed on interest payments subject to an upper limit of Rs 1,50,000 for a financial year.

Moreover, you can get added tax benefits under section 88 on repayment of principal amount upto Rs 20,000 per annum which can further reduce your tax liability by Rs 4,000 per annum (tax rebate of 20 per cent on the principal repaid, subject to a principal ceiling of Rs 20,000 per year).

Benefits aside, most of us still have to grapple with the fine print of a loan agreement.

Increasing your loan eligibility

The greater your tenure, the bigger the loan eligibility. Since the monthly installment per lakh is lower for longer-tenure loans, banks disburse a higher loan for the same income.

Another way to increase eligibility is to club incomes of allowable relatives such as spouse or parents or children or siblings.

If you have the funds and can invest higher down payment amounts then take a smaller percentage of the cost of the house as a loan.

Show proof of repayment track record for a past loan (car/home/personal loan) or a credit card with a large recognised lender. The bank may be persuaded to increase the income-based eligibility after examining the repayment track record.

Other things being equal, your existing bank (especially a private sector bank) is likely to give you higher loan eligibility than others because it is privy to your savings account.

Funding your down payment requirement

If you are not able to fully finance the margin amount, you can also take a personal loan along with your home loan. This can happen if your monthly income is above Rs 10,000, or if you are a practising professional. But personal loans -- being expensive and for a short tenure -- are likely to drain your monthly resources.

Take this option only when you have resources to pay off the personal loan from sources other than those taken into account for your home loan.

You can provide adequate additional security by pledging liquid financial assets such as shares, securities, fixed deposits, insurance policies with existing high surrender values, etc. in lieu of the 10-15 per cent margin money expected from you.

You can obtain a loan against the surrender value of your life insurance policy from the life insurance company or from a bank.

You could also take a loan from your employees provident fund account if you have had such an account for more than five years.

How to get the best rate for your loan

Unless loan amount is a constraint, approach prospective lenders only after the property is finalised and disbursement is required in the next few days. Most lenders reserve their best rates for immediate disbursement cases.

Bundle your loan request with the loan requirements of your friends and colleagues and thus offer a larger loan portfolio to the bank. This can be specially powerful if the property is in the same building since the legal and technical costs can be reduced which can then be passed on as a benefit to you.

If the property is being bought from a reputed builder, you can also employ the month-end trick by negotiating till the 23rd or 24th of the month. Every bank has monthly targets for its staff and as the month-end nears the bank offers slightly better terms to enable them to fulfil their target.

Remember all rates are negotiable. Check around in the market before finalising your lender.

Can one get both exemption of HRA as well as deduction of interest payable on the home loan?

A number of salaried consumers take a home loan to acquire a residential property but do not stay in that property for various reasons. They stay in rented premises for which they pay rent.

If they are receiving a house rent allowance from their employer a question frequently arises whether they can claim exemption of their HRA based on the rent actually paid by them as well as the interest payable on the loan taken to acquire the owned property. To answer this question we need to look at the relevant part of the Income Tax Act and the rules.

The exemption of HRA is covered under section 10 (13A).

Simply speaking the only conditions for allowing the exemption of HRA are:

Rent must actually be paid by the assessee (legal term for the person whose tax liability is being worked out) for the rented premises, which he occupies.

The rented premises must not be owned by him.

As long as the rented premises are not owned by the assessee the exemption of HRA will be available upto the limits specified in the relevant rules. There is no mention here about any effect on the exemption because of ownership of any other property.

Let us now turn to the deduction of interest payable on a home loan. Contrary to popular perception the interest is not a straight deduction allowed from the salary income. The deduction is actually allowed while calculating the 'income from house property' though the effect (given below), in the case of self occupied property, is the same as allowing it as direct deduction from salary income.

The relevant sections are section 22 to section 27. Again putting it very simply the calculation of 'income from house property' is done as under:

Income from house property (H) = A-S-I, where A = annual value = rental income (net of municipal taxes), less S = 30 per cent of A as a standard deduction, less I = interest payable on any loan taken for acquisition or construction of this property.

The point that we must remember is that "income" can also be negative or in other words include a calculation of loss.

In the case of self occupied property the annual value 'A' is taken as 'nil' (therefore 'S' automatically becomes nil as 30 per cent of 0 is 0) and 'I' is restricted to a maximum of Rs 1,50,000. Therefore in the case of self occupied property the result of calculation of 'income from house property' or 'H' will always be a loss to the extent of the interest payable on the home loan or Rs 1,50,000 whichever is lower.

Where the property is given on rent the annual value will be calculated based on the rental and the final income (or loss) from house property will be calculated as given above. Please note that in such a case there is no restriction on the maximum amount of deduction available in respect of 'I'.

'Income from house property' is either taxed (if it is positive) or if it is a loss, it is allowed to be set off against the income from other heads including salary (and hence the popular misconception that interest on home loans is allowed as a deduction from salary income as the impact, in the case of self occupied properties, is the same as a direct deduction of the interest from salary income).

There is nothing in the section that affects the exemption of HRA at all.

Also there are no conditions that restrict the availability of deduction of interest based on the assessee's stay in any other premises.

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