Monthly Archives: March 2015

Short Term Versus Long Term How To Analyze Your Assets

This article features some tips long term investment series is going to focus on there other types of long term investments, Property, Commodities and Currencies. All three of these can be sound investments and all three of these carry less risk than stocks.

Property

Right now with real estate prices still affordable but rising and projected to rise steadily is the time to think about investment property. Low home prices and low interest rates are making now more than ever a great time to consider real estate. When it comes to investment property for the common masses, there are two types in reach of everyone. One is the smart move and one is risky and could flop.

The first is that of a house flip. House flips can be tricky, you do need to have an eye for style, and know about home improvement, maintenance, and how to hire contractors as cheap as possible and do as much of the work as possible yourself. You buy a damaged property and make it look better by rehabilitating it. Flipping real estate can carry high expectations and higher taxes. if you have never lived in a home, rehab it and flip it, you will owe taxes when you resell the property. With property flipping, your tax rates will depend on how long you own the property. If you hold onto the property for less than one year you could face taxes as high as 35%, as you will be taxed at ordinary tax income brackets. if you hold onto the property for longer than 1 year, you only face long term capital gains rate which in most cases caps at 15%. The more properties you flip at a fast rate of pace can create even more tax burdens. The tax problems for house flippers are more complex than this summation and are grounds for a whole new article outside of the scope of this one. The tax burden and risks of property flipping is one aspect that is never seen on the TV shows about property flipping, but needless to say the IRS is taking a new look at property flippers in general to close the tax gap.

When it comes to real estate invests for the long term investor, rental property is the way to go. A $100,000.00 triple unit apartment building in a city such as Buffalo N.Y can result in rental income per month of $1400.00 at $700.00 rent per unit. In districts with a low property tax rate you are looking at a very healthy rate of return. Rent for one year on a $100,000.00 double rental unit in the city of Buffalo for example could net you 16,800.00. Property taxes in that city will be around $2500.00 depending on zone, and related expenses another 1k, netting you a return of roughly 13% a year on your investment. When you longer want to deal with renters, sell the property and profit. Location is key when it comes to buying a rental property. You want a location that will be viable in the long term. High rent and/or highly populated areas are ideal you are looking for, as well as medium average income of residents in the location you are seeking to buy property in.


Commodities

With ever increasing new markets and higher demands among developing countries, commodities are becoming a hot asset to add to ones portfolio. For example Chinese demand for some commodities has led some commodities into a a hefty profit. Some markets such as china are veering away from production towards consumption, which is causing the price to rise on Commodities ranging from gold, copper and oil to pork bellies. Interest in commodities as an investment asset, as well as pure profit of commodities has grown tremendously in recent years. With commodities you are speculating that the commodities you are investing in will rise in price, take gold for example and look at the rise in price over the last 5 years and you will have an idea of how commodities work. Commodities however are a risky investment to say the least. Commodities lost more than stocks during the financial crisis, and while stocks rebounded, commodities have lagged behind. Adding some commodities to your investment strategy however can be a smart thing, as at times commodities move opposite of stocks in terms of value. A study originally published in the Journal of Investing recommends devoting 10% or more of your portfolio to Commodities, to reduce risk to your overall investment portfolio. A healthy alternative to commodities is commodity stocks. Commodities in your portfolio help hedge the risk of the basic stock and bonds in your portfolio.

Currencies
These are among the most volatile investments to invest into. predictions and forecasts for Currencies vary widely between reputable commentators. I do not recommend currency investing, however long term wise Asian and emerging market currencies seem to be the industry favored in terms of hedging ones portfolio for long term investments. Currencies are much more complex to invest in than say stocks, bonds or mutual funds.

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What is the process of establishing credit for a business

How do you establish business credit?

We receive so many fascinating reader questions each month, usually in response to our featured news and stories we post online. Last week, Joe asked about opening up credit and loan accounts for his business:

I am interested in learning more about how to qualify for a business loan, credit card, line of credit, etc. I am currently working on improving my personal credit report. I know that my credit score will that play a big part in me being able to obtain a business loan. What else factors in?

Qualifying for a business credit card is much the same process as qualifying for an individual credit card. The borrower’s credit score will play a large role in the application review along with some basic information about the company. The applicant will need to provide details about the type of industry they are in, how many years they have been in operation and how much revenue the business earns a year along with their Federal Tax ID. A good or excellent credit score is needed for most business credit accounts.

Commercial mortgages may also be a good option for small business owners. These loans are specifically designed to help business owners and investors buy real estate such as multi-family, office, warehouse, self-storage, bed and breakfast, restaurant and automotive properties. With these mortgages the applicant will also need to provide information about your business income and industry.

Have a question? Want to share a small business credit tip with Joe? Share your questions and feedback in the comments section below, we are constantly searching for topics related to consumer finances, short term loans, credit cards and financing online. Got a hot tip, reach out to us, searching for suggestions on personal or cash loans, feel free to contact us anytime.