The Truth About Debt Relief Solutions Everybody Should Know

No matter where you look, you're hit with advertisements and commercials guaranteeing debt relief. According to many of these ads, you can be out of debt in a year or two, without changing your payments, or by paying less every month! Or, even better, you can get your tax return early, and use that to pay off your debt. But why not just go shopping with it instead?
You can buy what you need (want?) with that "free money" and not go further into debt, right? Yeah right!

As you've probably already guessed, it's not exactly guaranteed. There are some big problems with many methods of debt relief you hear advertised. The biggest problem is that they're trying to put a financial band-aid on a behavioral broken limb.

However, don't get me wrong, it can certainly be done. Getting out of debt by yourself may not be as hard as many people and companies want you to believe that it is. Many companies have ads on television and online that tout their abilities to get you out of debt quickly and easily, but getting out on your own can usually be just as convenient, as long as you have a plan.

Getting out of debt is actually the easy part. The problem is, that the majority of people get into debt very quickly and never really learn how to get debt free afterwards. The most basic idea to being without debt is to not en cure it at all. But, the life style that we have chosen and has been bombarded into our minds through media and our parents not fully explaining to the younger generation that it is much wiser to pay for things only if you can afford it!

My advice to you is to START SMALL! Try the cheaper do-it-yourself programs first and work your way up before you go and take out another loan to hire a professional debt relief service.

From my personal experience with escaping debt, I honestly suggest you visit Debt Relief America Learning the techniques found there was the turning point for me, and I think it will be the same for you.

Which Types of Commercial Property Should You Invest In?

When it comes to commercial real estate investment, investors often want to know which types of properties they should consider investing in. This article discusses about 5 groups of properties and reasons why you should or should not consider them.

1. Land: the people who invest in raw land often hope to buy agricultural land near commercially-zoned land at a few thousand dollars per acre. They dream their lot will be re-zoned to commercial in the near future which is worth hundreds of thousand dollars or more an acre. People who convince you to invest in raw land often try to sell you this dream. While this dream actually happens just like it's possible to hit the jackpot in Las Vegas, the reality is most investors lose money or get little return in land investment. It is a very risky investment as land generates either no or very little income. From an income tax viewpoint, land does not depreciate in value so you cannot claim depreciation. On top of that the interest rate to land loan is also very steep compared to other types of commercial properties. So each month, you would need to come up with money to pay for the mortgage while collecting none. You should consider invest in land if you

- Know how to develop so you could convert raw land into a shopping center.

- Know exact what you do and have deep pocket.

- Own the land of a shopping center (you don't own the buildings).

2. Apartments: this is a management intensive investment as the turn over rate is high. The leases are short-termed often at one year of month to month. As tenants move in and out, you would need to spend money to get the unit ready for occupancy. Apartment tenants tend to have higher late payments history than other tenants as they are more often have a tighter budget. If you don't like the headaches dealing with lots of tenants, you probably want to stay away from apartments. The key to successful apartment investment is to

- Control or minimize the expenses. This may sound like a trivial task until you see the expense list provided by the property manager. These expenses include: advertising, accounting, bank fees (for insufficient funds), capital improvement, coin laundry subsidy, cleaning, collection fees, garbage disposal, insurance, landscaping, legal (eviction) fees, maintenance, offsite property management, onsite property management, pest control, painting, repairs, sweeping, security, property taxes, utilities and water.

- Invest only in properties in a good location with no deferred maintenance.

- Stay away from areas with rent control, e.g. Berkeley, Los Angeles.

Otherwise you may end up getting little cash flow or even having negative cash flow. If one of your investment objectives is to get high cash flow, you may want to stay away from apartments. In California, if you own a 16 or more units apartment you must have an onsite manager. This increases the expenses further. In general, apartments are easy to buy and harder to sell. There are always lots of them on any markets. The upside about apartments is they tend to have high occupancy rate as everyone needs a roof over their heads. Due to this fact the interest rate for apartments is often ¼- to ½ percent lower than other commercial properties.

3. Special Purpose Properties: These are properties designed for a specific business, e.g. restaurants, gas stations, and hotels/motels.

- Restaurants: some investors like to invest in brand name fast food restaurant like Burger King, Pizza Hut, Jack In The Box, KFC. These are single tenant properties with long term absolute triple-net lease which often require no management responsibilities from the landlord. However, the rental income or cap rate for these restaurants is often lower in the 5-7% range. Emerging regional brand name restaurants like Johnny Carino's, Back Yard Burger, Zaxby's or Tia's TexMex tend to offer higher cap rate in the 7-8.5% range. However, when you look deeper in the financial statements they may not make a profit yet. The restaurant operators sell the real estate to investors higher cap rate and lease back the property for 20 years. They in turn use the sale proceeds to expand their business by building more restaurants. So if you are willing to take higher risks, you will be rewarded to high income with these emerging restaurants.

- Gas stations: when you buy a gas station, you buy both real estate and the gas station business. Most gas stations also have convenience stores and sometimes several car repair bays. The profit margin for gas is fixed at 10-20 cents per gallon [many customers wrongly blame the high gas prices on the innocent gas station operators] but is pretty high for convenience store. This is considered an owner-occupied property which qualifies you to a SBA loan with as little as 10% down payment is required. If you don't plan to get involved in running the gas station, auto repair and convenience store business, you may want to stay away from gas stations as gasoline is a chemical that could contaminate the soil. Once a leakage occurs and contaminates the environment, it takes years and lots money to clean up the soil. You may even be liable to damages from owners of adjacent properties as contamination may spread out to their properties. It's almost impossible to sell your property as no lenders want to loan the buyers the money to buy it.

- Hotels/Motels: once you buy a hotel/motel, you buy the real estate and a 24-hour-a-day 365-day-a-year business. This business requires hard work, and marketing skills to get the rooms filled. The rooms are worthless if they are vacant. The business tends to be seasonal and may be affected immediately by economic downturns and political events, e.g. 9-11. Many of these properties are owned by Indians with the last name Patel as they seem to work harder and know this business well.

4. Office Buildings: these properties are single or multi-story buildings. The older two-story office buildings without elevators tend to have trouble finding tenants on the upper floor as many service businesses may have physically-challenged customers who cannot walk up the stairs.

- Single-tenant buildings: the properties are used as corporate headquarters of big corporations like Cisco. These big buildings tend to be more sensitive to the economy. Once vacant, it's hard to find a replacement tenant.

- Multi-tenant buildings: these properties are leased by small businesses, e.g. real estate, tax accountants. Investors who purchase these properties want to spread out the investment risks. When one tenant vacates a unit, you lose just a small percentage of rental income.

- High Quality Tenants: most of them have good credits, lot of assets and promptly pay the rent when due.

- Leases: The leases for office building vary from full service [landlords pay property tax, insurance, maintenance and utilities] to NNN [tenants pay property tax, insurance, maintenance and utilities]. The NNN lease is a litmus test on whether the office building is in high demand by tenants or not.

- Medical buildings: these properties are leased primarily by doctors and dentists. A good medical building should be in front of or across the street from a hospital. This makes it convenient for doctors to go back and forth between hospital and their offices. Some investors prefer medical buildings as medical tenants are very recession proof.

5. Shopping/Retail Centers: These centers are mostly single-story and can accommodate wide varieties of tenants: retail and service businesses, restaurant, medical, school, and even church. As a result, this is the most popular type of commercial properties that investors look for. They are always in high demand as there are more buyers and few sellers.

- Multi-tenant strip: the advantage of this investment is when a tenant moves out, you only lose a portion of the total income while you are looking for a new tenant. So you spread out the risks in this property.

- Single-tenant building: The advantage is you just have to work with one tenant. Some of the tenants, e.g. Costco, Home Deport, Walmart, CVS Pharmacy sign 10-20 year lease and guarantee with their corporate assets which could be worth billions of dollars. This makes your investment very safe.

- High Quality Tenants: most of them have good credits, lot of assets and promptly pay the rent when due. They often sign long term 5-30 year leases so you don't have worry about finding new tenants every year. They keep your property in good condition and sometimes even spend their own money to make it look better in order to attract the customers to the stores.

- Triple Net (NNN) Leases: the leases for retail centers are often in favor of the landlord. The tenants pay a base rent and reimburse the landlord for property taxes, insurance, maintenance and sometimes even property management fees. This takes away a lot of risks from you as an investor. The NNN lease in a sense is a litmus test on whether the property is in high demand by tenants or not.

- Ground Lease: occasionally a retail center with ground lease is for sale. When you buy this center, you only own the improvement but not the land underneath. It could be a trophy property but you should think thrice about investing. Once the ground lease expires and the land owner refuses to extend the land lease, you own nothing! So it's easy to buy this center but very hard to sell.

David V. Tran is the President and Chief Investment Advisor at Transmercial (formerly eFunding, Inc.), a commercial real estate & loan brokerage company in San Jose, CA. His website is http://www.transmercial.com He may be contacted at (408) 288-5500. Transmercial does business in all 50 states. He is the #1 US commercial real estate expert author. David currently offers 3 FREE real estate investment seminars:

1. How to invest in commercial real estate for early retirement income.
2. How to maximize cash flow with 1031 tax-deferred exchange.
3. TIC: Fractional ownership in high-value commercial properties.

David's blog features a daily list of Best Commercial Properties in the US to invest for early retirement income.

You are welcome to share this report, unedited and in its entirety, with anyone you like. You may not remove this text. � 2007-2009 Transmercial.

Commercial Collections And Credit Granting

It is estimated that billions of dollars in delinquent commercial credit is currently being carried on the books of both American and international businesses. This figure changes as our economy grows or contracts. Increased competition, diversification of product lines seem to indicate that these figures will continue to move upward. Regardless of the state of either the national or international economy, the necessity to grant credit and to collect commercial receivables using professional methods remains vital to all businesses.

Credit Sales Volumes Are Important

The average commercial business sell between two to five percent of their products for cash. The credit department is responsible for the other 95 to 98 percent of the goods and/or services sold. Businesses have varying percentages of their financial resources tied up in receivables. Actual losses might range from one-half of one percent to five percent of sales without serious results. This depends on profit margin and other factors. Losses can explode to significant sums very fast if not restricted by the credit manager.

Good Customer Relations Are Paramount

The credit department must also be in tune with customer relations. This quality is absolutely necessary in order for the company to prosper when selling on credit. It is very, very easy to say "no" to prospective customers, and it is also very easy to firmly demand payment at the time of the sale. If this attitude reduces sales, then the credit department is not performing its complete function, which is to create a balance between sales and collection of money.

When extending credit to a new customer, the following basic information should be harvested for your credit evaluation and kept on file:

Is the firm individually owned, a partnership or a corporation?
You must obtain full names of owners, partners or officers and all business addresses. This is a must. A follow-up form letter to the hastily approved customer may supply this information and the local city directory may be helpful with details of ownership or tenancy. You should, however, get the information before delivery of the merchandise.

How long has the applicant been in business?

Statistics show that 50 percent of business failures are firms less than one year old, 75 percent are less than five years old.

At what bank does the applicant do business?

What is the average size of his bank balance and are there any loans outstanding? The customer may have a financial statement which will reveal this, and certainly a phone call to their bank manager is in order. They might only confirm the existence of an account, unless your customer pre-approves release of the details. A carefully worded and signed application will gain you the most information.

What do the records show?

Are financing agreements kept, or have legal suits been filed? If the amount of credit requested is substantial, additional financial information may be secured from an outside credit information source such as another supplier trade association or business reference. n What are some of the business firms with which the applicant is currently dealing? You will want to check with at least three companies to determine how much credit has been extended and the creditors' payment experience with the applicant company. This procedure may help you and other businesses in exposing customers who exploit their suppliers.

Search for Patterns of Problems

It is a constructive idea to analyze those customers who have become collection problems and to note reasons for their delinquency. A pattern will probably be revealed.

It may be found that some collection problems involve businesses which were in operation less than a year at the time credit was originally granted. This is a "red flag." It does not mean that a new business should be denied credit, but it does mean that additional information should be obtained to ensure that the business is potentially a good credit risk.

Sometimes the credit manager will have to deal with a sales person who is overanxious or under-trained. In the desire to sell, they may make promises that lead to collection problems. When such a pattern develops in an area, it would then be wise to advise the sales manager about the problem. It is often expedient with large orders to send the potential customer a letter spelling out credit terms.

Some Delinquencies Are Unavoidable

It is inevitable in granting credit that certain conditions cannot be foreseen and that there will be unavoidable delinquencies.

It is usually acceptable company policy that credit losses within certain percentage limits can be sustained, as growth can only be achieved by reasonable risk taking. Reserves for bad debts and collection costs are an acceptable and recognized expense for business. A too-tight credit policy can dry up potential growth. A too-loose credit policy can be a great expense.

By granting credit intelligently and by following good billing and collection procedures, it is possible to hold risk to an acceptable figure--to a balance between company growth and losses due to bad debts.

Get free information and advice on commercial collections.