Investing in Real Estate Profitably: Eliminating the Need for Mortgage Insurance

In an earlier article, we presented various options for ensuring that you have positive cash flow when holding rental houses, by minimizing loan payments. One problem which we now can address is to how to eliminate the need for paying mortgage insurance.

Any loan with less than 20% down payment will include or require mortgage insurance. It may be included in the rate (which is called "Lender Paid Mortgage Insurance" or LPMI) or more commonly it is a separate itemized item, but in either case you must pay it.

If you want to pay less than 20% down, the best way to get around mortgage insurance is to finance your purchases with two loans, a first and a second mortgage. For example, the first mortgage is commonly 70%, 75% or 80% of the purchase price and the second mortgage makes up the difference to 90% or 95% of the purchase price. You can get both mortgages from the same lender, but usually you can find better rates on the second mortgage from a lender that specializes in second mortgages. An independent loan broker can put this together for you nicely.

Both mortgages typically close escrow at the same time and both lenders are fully aware of each other. For simplicity, put both loans in the same escrow and sign them both at the same time. If you want to be tricky and try to use two mortgages to get 100% financing (ie no down payment), there are ways to do this, but we do not recommend it and it is not within the scope of this article.

The second mortgage is typically at a higher interest rate than the first, but not always. For example, there are some very competitive home equity lines of credit (HELOCs) with rates only a fraction above the prime interest rate. You have to have good credit scores to qualify, but if you do, they are very attractive. The problem with a HELOC based on the prime rate is that it charges the prime rate does not get too high before you pay it off. As you may recall from the early 1980s, the prime often does go sky high and it could happen again.

There is a particularly large variation in the interest rates for second mortgages from various lenders. Moreover, if your credit, income, and assets are not ideal, you may not be qualified for certain second mortgage programs, so it may be more difficult to find a second mortgage at a good rate that you do qualify for. It is very important therefore to ask your independent loan broker to check out various options and to shop the rates. He / she should be comparing at least half a dozen different second mortgage programs.

When you use two loans as described above, it is usually advisable to have an interest-only or minimum payment loan for the first mortgage. This allows you to focus on paying down the principle on second mortgage over a period of say 5 years, if you can afford it. If you can not do that, than obtain a second mortgage that also has a 5-year fixed period and an interest only option. You are then covered with predictable and low payments for at least 5 years.

This article has reviewed a strategy for improving your cash flow when purchasing investment rental homes - namely, using two loans to eliminate mortgage insurance. There is much more to say on this topic. So keep an eye out for additional articles by the same authors on this and related topics.

(c) Copyright 2004, Jeanette J. Fisher and Robert S. Kramarz. All rights reserved.

Evaluating Stocks: Fundamentals and Technical Analysis

Certainly, a "complete" course on security analysis is well beyond the scope of this text. There are many excellent books devoted to the subject of how to analyze the value of securities - both from a fundamental as well as a technical standpoint. The goal here is simply to provide a basic understanding of the methods and theories behind each type of stock analysis.

It should be pointed out early on that Fundamental Analysis and Technical Analysis of securities are two fairly radically different approaches to determining the correct [or fair] value of a company's stock. Let's start with a general overview of each method and then look into the specifics of each area. Again, for a more detailed examination of each type of analysis, we suggest you refer to our book list and / or the books specifically mentioned throughout this document.

The definitive work on Fundamental Analysis is broadly considered to be the classic book "Security Analysis" by Benjamin Graham and David Dodd. This book, which was first published in 1934, is considered by most on Wall Street to be the 'Bible' of security analysis.
In fact, it was Benjamin Graham that Warren Buffett studied under when he first started in the stock market. Much of Berkshire Hathaway's success can likely be traced back to the information and ideas provided in the book Security Analysis and by the teachings of Benjamin Graham (although, it's widely acknowledged that Warren Buffett put his own spin on things over the years as well).

Fundamental Analysis is just as it sounds. It is based on examining the fundamental pieces of a business and its operation. There are no exotic formulas used. You do not need to be a mathematician. Anyone with a simple calculator and some basic information about a business should be able to employ Fundamental Analysis quite effectively.
The basic idea is if you put a dollar into the business (in the form of buying the stock) how much of a return can you expect. How much yield will you likely see and / or how much growth will you experience based on the operation, markets, competitors and costs of the business. Obviously, not all aspects of these fundamentals can be quantified. Such such as "good will" or changes in the economy or the consumer can be difficult to nearly impossible to calculate. However, to a large degree Fundamental Analysis throws these items out as concerns and simply looks at the cold hard facts which you do have available to you. Things such as costs of goods sold, margins, tangible assets, expenses, etc.

Armed with these basic and tangible numbers, one should rather easily be able to calculate the value and profitability of any business (given the numbers available and / or provided are accurate of course). Once a valuation is arrived at, the person performing the valuation can decide whether or not the market place (in this case the stock market) is applying what could be considered a fair market value to the stock. Certainly, when trying to make a profit on Wall Street, it is advisable to search out stocks which are (or at least appear are) being improperly or undervalued by the market. For the Fundamental Analyst, once an undervalued security is found, it's simply a matter of buying the stock and waiting for the market to realize the "more accurate" value of the security (assuming of course he / she is correct in their assumptions).
Find a cheap security, buy it and become rich. If only it was that simple. Or maybe it is? Just ask Mr. Buffett.

If the definitive work on Fundamental Analysis is provided by Graham and Dodd, then perhaps the definitive work on Technical Analysis is provided by Martin J. Pring in his book "Technical Analysis Explained". To quote this well regarded book on the definition of Technical Analysis:
"The technical approach to investing is essentially a reflection of the idea that prices move in trends which are determined by the changing attitudes of investors towards a variety of economic, monetary, political, and psychological forces. is an art - is to identify trend changes at an early stage and to maintain an investment post until the weight of the evidence indicates that the trend has reversed. "

Technical Analysis is nothing new. It has been used in one form or another for as long as stocks have been traded. In fact, the star character in one of my all favorite favorite books ("How I made $ 2,000,000 dollars in the stock market" by Nicholas Darvas) used mainly Technical Analysis principles in his investing - whether he knew it or not. However, "Charting" also commonly called "Chart Reading", which Technical Analysis is also referred to as, has become much more popular and broadly used inhaps only the last 20 to 30 years on Wall Street. This may be a large due in part to its more wide spread teaching and acceptance in colleges in more recent years.
If, based on my own experience and knowledge of this method of analyzing securities, I had to summarize all of the technical analysis down into one central idea, I would put it like this:

The corner stone of Technical Analysis is the concept that no single individual can ever hope to know as much about a security as the whole of Wall Street does at any given time. Because "Wall Street" is made up of everyone who is invested in - or may invest in - the stock market, their collective knowledge about any specific stock and / or the market is such that this mass of people and combined knowledge (ie Wall Street ) can valuate securities nearly instantaneously and far more accurately than any single individual.

As such, in the mind of the Technician, it follows that there must be no need to use something as "archaic" as Fundamental Analysis to value a stock, when everything known about the stock (and this includes the business fundamentals) is almost instantly reflected in the stock's price. In this situation, it would make much more sense to use the recent and historical trends and movements of the stock price to deduce not only the current fair market value of the stock, but where the price "may move" in the future. This future price movement is large extrapolated based on historical chart patterns and how the stock has recently expired in relation to support and resistance levels. Any Technical Analysis book worth its salt will quickly introduce you to chart patterns such as "double tops", "trend lines", etc. It is these patterns which are the core of Technical Analysis.

However, the question of whether or not these patterns on charts can always accurately predict future price movements of a stock is (and probably always will be) up for debate between Fundamental and Technical Analysts. If there is one fundamental (again no pun intended) flaw to Technical Analysis, it is that over the years Technical Analysis has been [incorrectly] extrapolated to mean that the market will "always perfectly" evaluate a security based on all information known by the markets. Unfortunately, that is not "always" the case.
This leads to mind a funny joke I once ran across in a book (I believe the book was by or about Warren Buffett) regarding how technical Analysis has been elevated to levels beyond its true capabilities:

A Technical Analyst and his friend were walking across the street. His friend noticed a $ 10 bill laying in the middle of the road and exclaimed, "Look, there is a $ 10 bill in the road". At which point the Technical Analyst said "If it were really a $ 10 bill, it would not be laying in the road".
This joke underscores the idea that Technical Analysis may not always evaluate the market without error. However, as long as you keep this point in mind, then Technical Analysis and chart reading can be a helpful tool in both investing and trading.

Finally, we should point out that the term "Quantitative Analysis" on Wall Street simply refers to someone (also sometimes referred to as a "Quant") who employs a mixture of both Fundamental and Technical Analysis in trying to properly evaluate stocks.

Good luck in the markets!

No permission is needed to reproduce an unedited copy of this article as long the About Author tag is left in tact and hot links included. Questions and comments can be sent to Ray at articles@daytraders.com .

How to Make Money in the Nutrition Industry

Nutritional wellness make up a 12 billion dollar market industry and the number is continuing to go higher. Today now more than ever people are capitalizing on making money in the nutritional industry. Some individuals are selling nutritional products part-time for extra residual income while other use it as a full-time jobs. Making money in the nutritional industry may seem simple to some and difficult to others but there are tactics available to help you achieve a new financial goal in nutrition.

1. First of all you must identify with the products?

Most representative find products that best fits them which in term means that they are actually using the products. Some may only sell one products that they are using and have seen significant results in their own life which makes marketing the product much easier. Example the representative may have in the past experienced a low energy level and may have felt sluggish all the time when suddenly they were introduced to a certain product by a friend or saw a commercial. They tried it for some time and it work and in return that they wanted to share their testimony with other and get rewarded for it by meeting commission or gift like receiving the products free when other select to try the same product.

2. How do I get my product known?

Many people rely on certain market techniques like multi-level marketing (MLM) which is a bit intimidating for some because it may seem like a pyramid scheme which many are familiar with.

How to Win the Lottery With the Law of Attraction - The 3-Step Daily Process

Using the law of attraction to win the lottery is like manifesting any other goal or desire, but sometimes it can be hard to know exactly what to do when trying to attract something very specific. This article is going to share a simple, 3-step process that you can use daily to begin attracting money through lottery wins.

Step One:

As with manifesting any goal, it is vital to visualize the output you want. In this case, you want to visualize yourself being a lottery winner. But there are several ways to do that, right? Any of them will work.

You can visualize yourself having already won and enjoying the money.

You can visualize yourself actually winning - seeing the winning numbers on your ticket.

You can visualize yourself winning but focus only on the emotional joy and excitement that you feel.

You can visualize yourself going to the lottery office to pick up your check.

You can visualize yourself going to the bank to deposit your check ... and so on.

Spend time each day (a minimum of 10 minutes a day) visualizing any or all of these scenes with a lot of excitement and happiness.

Step Two:

Let go of the desire to win when you are not actively visualizing. You do not want to obsess over it because that can quickly turn into "attachment" which will block the wins from arriving. (Have you noticed that when you want "need" to receive something it stays away?)

Instead, go about your daily activities and do not think too much about the lottery. Buy your tickets like usual - DO NOT spend excessively on tickets in the hopes that you will win faster; just buy the amount you normally do without you feel a strong nudge to buy an extra one.

Step Three:

Stay open to inspired nudges! Once you begin actively working with the law of attraction to win the lottery, you may start getting "feelings" about certain tickets, or a set of numbers may jump out at you and you'll get a feeling you should play them. Pay attention to these feelings and follow them when you can.

Do not be surprised if sometimes nothing comes from them sometimes - it's all part of the learning process as you develop your intuition and align with the income you are focusing on (winning). As you go along your hunches should get clear and more accurate.

Good Reasons to Install a Monitored Home Security System

Homeowners who are considering installing a home security system may need a rationale to make this investment. There are plenty of good reasons to install a home security system. Your home is a significant investment, not to mention a safe haven for you and your family. A monitored system can insure that your home remains a safe haven for your family and provide a layer of protection from intrusion or burglary.

Statistics do not lie. It has been found that homes without a security system are more likely to be broken into than homes with one. This layer of protection can bring you a feeling of peace of mind. It guarantees that your home is protected from intrusion whether you are home or not. You can travel away from home knowing that your home is protected and that if there is a breach, a monitor will dispatch police to your home immediately to investigate and apprehend burglars looking to steal your valuables. A monitored system can also help you sleep peacefully at night, knowing that your home and family are protected from home invasion and prowlers in the night.

As mentioned early, a home security system reduces your chance of a break in. Criminals generally case out homes in a neighborhood and look for patterns as to when the family is away and when they go to sleep at night. They are looking for easy targets. A home with a professionally installed alarm system is less likely to be considered an easy target by these criminals. Most security providers provide signage which actually serves as part of the overall security system. Having signs prominently posted on the property stating that the home is protected 24 hours a day will act as a deterrent for criminals and they will move on to a home that is an easier mark.

There are also financial benefits to home security. In addition to the most obvious benefit, preventing the loss of valuable property, you may also receive discounted homeowner's insurance premiums. Lower premiums can help you save money, so installing an alarm system makes good economic sense. Insurance companies are happy to discount the premiums on homeowner's policies because they are less likely to have to pay out for loss of property and valuables in the event of a break in. A home with a professionally installed system is usually eligible for these discounted insurance rates, as having it in place acts as a deterrent and it is less likely that criminals will get away with any burglary they attempt.

These are some good reasons to invest in a professionally installed home security system. Not only do you get peace of mind that your home is protected around the clock and that help can be summoned immediately if there is a break-in at the home, but you also get some financial incentive for installing a home security system with a discounts on your home owner's insurance premiums. Coupled with the fact that it serves as a deterrent for would-be burglars, and you have the perfect ratione for investing in a quality, monitored alarm for your home and family.

Expected Profit In Human Resources

An optimal scheme is one that gives the employer the highest expected profit net of compensation paid, subject to the constraint that the employee must be given compensation package attractive enough to get him to accept the job.

1 - The optimal compensation scheme for the employee will typically involve him getting more compensation the greater is x. But, at the same time, he will not bear the risk of the venture: He will be guaranteed a base wage, even if x = O.

2. In general, the wholly optimal compensation scheme is a complicated function of x. But if we restrict attention to more realistic and simpler compensation schemes where the employee is paid a base wage of B and a bonus of b per unit of x produced, we typically find that B is greater than zero and b is smaller than the "full "value of a unit of output to the employer.

3. In some instances, the value of the services provided to the employer may not be known when it comes time to pay off the employee. For example, the branch manager of a bank may decide on loans to make, and it will take years to discover whether those loans perform well or not. In such cases, incentive payments can and should be made on the basis of any observable variable that is statistically related to the value of the services provided. For example, a branch manager may have her compensation based on the quality of a randomly selected sample of loans that she makes, where the quality of one of those loans is determined by independent examiners.

4. Other things held equal, incentive compensation works better the better (less noisy) the compensation-linked variable is as a signal about the employee's level of effort e.

5 - In formal models, the employee likes money and dislikes effort, and the employee motivates higher levels of distasteful effort by offering higher levels of income for better outcomes. There is nothing in the formal theory, however, that mandates that compensation is the only motivator. Promotion, power, autonomy, the esteem of co-workers, and the ability to remain employed-to enjoy the work atmosphere, to maintain enjoyable social relations, to keep one's children in the same schools-are all tangible things that employees value to varying degrees. Thus, any and all of these can motivate employees. (There are also intangibles - such as pride in one's work, interest in the work itself, and the psychological need to justify to one actions previously taken - that go into the creation of intrinsic motivation.) When applying these ideas, the employer must consider the net effect of all the motivators, including intrinsic motivators. And specific problems accompaniment specific motivational devices, particularly promotion.

The basic principal-agent model asserts the employee is effort averse, and the point of incentives is to get the employee to exert himself. Employees will fill their working time with some mix of activities, activities at which they will work quite hard without specific extrinsic incentives. The employer's problem is to motivate them to choose the particular mix of activities that the firm would like to have done. Very few people complain, for instance, that the problem with elected government officials is that they are not doing anything; rather, the complaints seem to be that they are doing the wrong things!

Incentive schemes that reward only one activity or one particular class of activities can have unpleasant effects. For example, an incentive scheme that rewards a salesman based on the volume of sales may cause the salesperson to devote too much energy to repeat sales and not enough to developing new clients.

Power Words And Phrases

I like to use power phrases when writing sales material. These power phrases add punch to a line or a paragraph and I usually use them to start off a sentence.

You can generally find a lot of "power phrases" when reading good sales copy. I usually keep a notebook nearby so that whenever I come across a line or a phrase that I Iike in sales material, I write it down for possible future use.

They are also great for writers block too. When I am stuck in the middle of writing, I'll usually refer to my power phrases, and the next thing I know, the sentences sometimes start writing themselves.

Some examples of the power phrases I use include:

"Listen closely ..."

"As you may already know ..."

"Now, I do not know about you ..."

"Well, I've got news for you ..."

"Let me explain ..."

"And best of all ..."

"In fact ..."

"Here's the bottom line ..."

"Quite frankly ..."

"Now, I know what you're thinking ..."

"Take a deep breath and relax ..."

"The answer is yes ..."

Power phrases can be used to grab and hold people's attention so that they keep reading. Some may even call these "hypnotic" phrases.

Even single words can invoke a reaction in some people that can be used to add "punch" to your sales material. I call these power words.
Some power words to use in your marketing include:

Free, Powerful, Incredible, Easy, Shocking, Cheap, Revealed, Best, Uncovered, Hidden, Proven, Results, Revolutionary, Profits, Fantastic, Inside, Learn, Enhance, Scientific, Private, Breakthrough, Save, Guaranteed, Tricks, You, Love, Limited, Special, Secrets

You can use power words to add punch to a headline, sentence, a short ad, or whatever fancies you.

Those are just a few of the power words and phrases that I have collected over the years.

Do yourself a favor:

Another power phrase ...?

No really ... do yourself a favor:

Always keep a notebook nearby and look out for words or phrases that capture your attention in sales material. Then write it down. If it captured your attention, it's sure to capture other people's attention too.

And over time, you'll have plenty of power words and phrases to choose from when writing your sales material.

They sure make life a lot easier ...

And profitable too!