Are Online Business Mentors Important For an Internet Business?
Are you looking for online business mentors to assist you in growing your Internet Business? Everyday people are starting a business online, and attempting to make money with limited support and online coaching. This can be frustrating, and is suggested to play a significant roll in why some people will quit a business before making their first sale.As more and more opportunities have come online, the need and growing demand for qualified online business mentors is suggested to be more crucial than ever. If you are experienced in business building strategies, sales strategies, and marketing strategies than coaching is probably not necessary for you. If you have limited knowledge and experience receiving the right training and coaching may assist you in your problematic areas.With all the resources online should you have to pay for some one to mentor you? If you go online there is information in every niche to assist you. While there is valuable free content on the Internet that can help you to grow your business, there is also a lot of misinformation that circulates the Internet. This can become confusing and actually can harm your business building steps.In every case online business mentors may not be your solution in building Your Internet Business. Outlined below are seven critical questions to evaluate if a finding a mentor is right for you.When Are Online Business Mentors Right For Your Internet Business Growth?1.) Are You Having Information Overload? – The number one cause to a n Internet Business failing is caused because people do not know how to use all the information they have attained. Many times people will gather all the information and then are confused when implementation begins. Each business building technique is like building steps. You should learn step one before learning step two. If you are experiencing stress from to much information, it may mean you are trying to take to much information in at once. It is suggested to master one step before moving on to the rest.2.) Are You Ready To Quit Your Internet Business? – Have you had it and are ready to quit your business. If you are becoming overwhelmed, and are not experiencing results most will want to quit. You need to ask yourself why are you not making money what can you do to make money.3.) Is Your Website Converting? – You have a website, its getting traffic why are you not making sales. It could be a very simple change that needs to be executed in order to have it to start converting to the sales you require.4.) Are You Happy With The Website Layout – You have a website, but you are not happy with the design, the functionality or even the information. You may not need online business mentors, for the website. Check with some web designers to see if they can provide you with the look or feel. You can also check some mentors, if they provide the website statistics and design factors you are considering.5.) Are Your Business Earnings At A Stand Still? – Your making money with your business, but your income has not increased. This could mean that you need to up your learning curve, and enhance your marketing.The top five questions are the typical reasons that people seek online business mentors. It may be time to get the additional training to set your Internet Business up for success, or you may want to test your problematic areas and see if you can find a solution without assistance and help.Many times when you start your business, you are assigned free online business mentors upon start up. This is obviously the best solution as to not have more overhead expenses upon building your Internet Business. While online mentors and coaches are suggested to cut your building strategies down considerably, you have to consider if they are worth the additional expense if you didn’t get it for free. It may all boil down to whether you want to gain the extra knowledge, or attempt to learn the strategies for yourself.
Faith for Finances: It’s Time for a Paradigm Shift
We are in our series entitled Faith for Finances. Today, we are discussing, Faith for Finances: It’s Time for a Paradigm Shift. Glory to God.A paradigm shift has to do with mindset. A paradigm shift is a radical change in underlying belief or theory. That’s the definition: a radical change in underlying belief or theory.As we discussed previously, we do the things we do because of how our thinking has been shaped. Our thinking has been shaped by authority figures, their words and their opinions of us and also, by our social environment. Our social environment would be who we let speak into our lives from our peer groups or our co-workers or church members, etc. Our thinking comes from repetitious information received over time. Whatever you continually feed upon, that’s what grows. So, we have to watch what we let go into our “eyegates” and our “eargates.” For example, we can’t look at everything on TV and think it won’t have an effect on us. We also have to watch what we allow to come out of our mouths. We have to always measure against the Word of God as to what is true or false and then handle it accordingly. We drop it if it’s false, we keep it if it’s true. Finally, our thoughts are shaped by our life experiences. So, whatever life experiences that you have that correspond to the stuff that you’ve been hearing repetitively, you tend to go along with. For example, if you’ve been taught that all short people are mean and you meet a short person and they’re mean to you, you tend to believe what you’ve been taught. However, the question that we have to ask ourselves is, “Who told you?” Who told you what you think about yourself or what you think about a particular situation that you’re in? Then we ask, “What was their motive?” Why did they tell that to you? Would they benefit from it in some way? Finally, we ask, “Did they tell you the truth?” Some authority figures tell us great things. Some things that they told us were with a good motive and were the truth. However, some things we’ve been told were self-serving lies. We have to always test what we’ve been told, and consequently believe, against the Word of God.Our core scriptures for this lesson are 3 John 2 and Joshua 1:8:”Beloved, I wish above all things that thou mayest prosper and be in health, even as thy soul prospereth.” 3 John 2″This book of the law shall not depart out of thy mouth; but thou shalt meditate therein day and night, that thou mayest observe to do according to all that is written therein: for then thou shalt make thy way prosperous, and then thou shalt have good success.” Joshua 1:8So, we have to meditate on the Word of God and we have to make our own way prosperous. It’s not just going to happen. A lot of people are just super lazy. They think that blessings are just going to fall on them from out of the sky and that they don’t have to do anything to get them. However, the Bible says we make our own way prosperous. We follow God, we meditate on His Word and then He instructs us. He tells us things to do, we go about and we do those things, and the next thing you know, we’re prosperous. Also, because we’re doing it God’s way, we have good success. We don’t have all that hullaballoo that the world has… messing up their peace… can’t sleep at night. I remember Deion Sanders saying how he had the best bed money could buy, yet couldn’t get any rest. Before he knew Jesus, he would lie in that expensive bed, but get no rest. Without Jesus, you can have success, but it won’t be good success. It will have sorrow with it. Godly success is accompanied by peace. As we’ve seen on bumper stickers, “No Jesus = No Peace. Know Jesus = Know Peace.” When we follow after His principles, we have peace along with our progress. We have good success.So, it’s time for a paradigm shift.Romans 12:2 says,”And be not conformed to this world: but be ye transformed by the renewing of your mind, that ye may prove what is that good, and acceptable, and perfect, will of God.”We don’t listen to the world. We are not to be conformed to this world. The prefix “con” here means “with,” so you’re being formed with the world, in line with the world. We’re not to do that. We’re not to be conformed to this world, but transformed. The prefix “trans” means “across” so you’re going away from what they’re doing. You’re not lining up with them, you’re going across. You’re getting away from them. Be transformed by the renewing of your mind. You have to renew your mind. You’ve got some junk in there that does not belong, it doesn’t line up with the Word of God. “Pre-Christ” in your life, you got some stuff in there that you gotta get rid of. Specifically, with regards to faith for finances, the majority of the world is not financially secure. I think everyone would agree with that. A statistic that I’ve heard, and I’m not sure if this is correct, but a statistic that I heard is that 98% of the population is either dead or dead broke by the age of 65. I’m hoping that it’s not 98%, because that is a huge, huge number. There’s only 2% left. However, whether 98% is accurate or not, we do know that the majority of people fall into the category of being dead or dead broke by 65. We don’t want to be a part of that number, whatever it is. We don’t want to be conformed to the world’s way of doing things, because we don’t want to be dead or dead broke by the age of 65. We want to be in that 2% or in the minority that are doing things God’s way and walking in the blessing of God. So be transformed by the renewing of your mind that you may prove what is that good and acceptable and perfect will of God. What we need is a transformation in our decision-making process. We need to make decisions based on God’s Word and not on anything else. That’s what we need to fix: how we come to the decisions that we make, how we make choices. We need to obey God and we have to change the way we think on purpose. It’s not going to be an automatic thing. We have to re-learn some things. We have to purposely take out the junk and put in something that is good. It’s a purposeful action; it’s not something you do half-asleep. You have to be mindful of what you’re doing. I was listening to a sermon recently and the pastor was talking about this replacement principle. He spoke about how a lot of people just want to be good in life and they say, “God, make me good. Take away the bad stuff.” However, it’s not that simple. He explained that we can’t just expect God to take something out. We have to replace it with something else. He used an illustration where he had a container with some liquid in it and he began to put rocks into the container in order that the liquid would come out and roll over onto the sides of the container. As I watched this illustration, I realized that we have to put in something heavier than what is already inside our containers. In science, we learn about displacement, which is required for this replacement to occur. In this example, when the heavy rocks were placed into the container, the liquid was no longer in place. It was displaced by the rock. The liquid in this case would be the bad thing and the rock would be the good thing. So you get rid of the bad thing by displacing it, by putting something into your container that’s heavier than what’s already inside. I hear the Holy Spirit saying, “This Rock is Jesus!” Hallelujah! God’s Word, praise God, is heavier than any of the junk that the world has used to shape our thinking and it can displace it! That’s good news.We can change. We just have to make sure that we’re willing to do it on purpose.Isaiah 55:7-8 says,”Let the wicked forsake his way, and the unrighteous man his thoughts: and let him return unto the Lord, and he will have mercy upon him; and to our God, for he will abundantly pardon. For my thoughts are not your thoughts, neither are your ways my ways, saith the Lord.”We have to forsake our ways, just like the wicked must forsake his way. We have to forsake what our flesh thinks is right and what our so-called friends think is right. We have to forsake it. If it’s not lining up with the Word – that’s the measuring stick – if it doesn’t line up with God’s Word, we gotta junk it. We gotta get rid of it. So, we need to forsake that, forsake the unrighteous thoughts, and return to the Lord, who will have mercy and who will abundantly pardon. We, also, need to adopt God’s thinking process, His decision-making process. His thoughts are not our thoughts. We have to take on His thoughts. His ways are not our ways. We have to take on His ways.2 Corinthians 10:3-5 says,”For though we walk in the flesh, we do not war after the flesh: (For the weapons of our warfare are not carnal, but mighty through God to the pulling down of strong holds;) Casting down imaginations, and every high thing that exalteth itself against the knowledge of God, and bringing into captivity every thought to the obedience of Christ.”A stronghold actually could be a good thing if you have the right stronghold in place. A stronghold is a mental thought pattern; it’s a way that you think about things. That’s a stronghold. It’s what’s deep down inside of you. It’s what you hold to. It’s your default. Those are strongholds. So, again, some are good, some are bad. The bad ones are the ones contrary to God’s will. So, we have to cast them down. We cast down imaginations and every high thing that exalts itself against the knowledge of God and bring into captivity every thought to the obedience of Christ.Romans 7:22-25 also illustrates that we need to follow God’s order. In this passage it says:”For I delight in the law of God after the inward man: But I see another law in my members, warring against the law of my mind, and bringing me into captivity to the law of sin which is in my members. O wretched man that I am! Who shall deliver me from the body of this death? I thank God through Jesus Christ our Lord. So then with the mind I myself serve the law of God; but with the flesh the law of sin.”Then in Ephesians 4:23-24, it says,”And be renewed in the spirit of your mind; and that ye put on the new man, which after God is created in righteousness and true holiness.”So, you may be thinking, “What does all this have to do with faith for finances?” Everything. The mind is the battleground where the devil will send defeating thoughts to us. Our thinking controls our actions. If we meditate on what the devil has told us, we will then act on it and bring about failure. We must renew our minds with the Word of God. We must have a paradigm shift to the Word of God.We’ll pick up here on next time and then move onto the how-to of this series.God bless you and until next time, this has been Patricia, walking through the scriptures with you.
What Investors Should Know About Commercial Real Estate Loans
Your commercial real estate transaction does not close unless the loan is approved. You can also improve the cash flow if the interest rate for the loan is low. So the more you know about commercial loans, the better decision you can make about your commercial real estate investment.Loan Qualification: Most of you have applied for a residential loan and are familiar with the process. You provide to the lender with:
W2′s and/or tax returns so it can verify your income,
Bank and/or brokerage statements so it can verify your liquid assets and down payment.
In general the more personal income you make the higher loan amount you qualify. You could even borrow 95% of the purchase price for 1-unit principal residence with sufficient income.For commercial loan, the loan amount a lender will approve is based primarily on the net operating income (NOI) of the property, not your personal income. This is the fundamental difference between residential and commercial loan qualification. Therefore, if you buy a vacant commercial building, you will have difficult time getting the loan approved since the property has no rental income. However, if you
Occupy at least 51% of the space for your business; you can apply for SBA loan.
Have sufficient income from another commercial property used as cross collateral; there are lenders out there that want your business.
Loan to Value: Commercial lenders tend to be more conservative about the loan to value (LTV). Lenders will only loan you the amount such that the ratio of NOI to mortgage payment for the loan, called Debt Coverage Ratio (DCR) or Debt Service Ratio (DSR) must be at least 1.25 or higher. This means the NOI has to be at least 25% more than the mortgage payment. In other words, the loan amount is such that you will have positive cash flow equal to at least 25% of the mortgage payment. So, if you purchase a property with low cap rate, you will need a higher down payment to meet lender’s DCR. For example, properties in California with 5% cap often require 50% or more down payment. To make the matter more complicated, some lenders advertise 1.25% DCR but underwrite the loan with interest rate 2%-3% higher than the note rate! Since the financial meltdown of 2007, most commercial lenders prefer keeping the LTV at 70% or less. Higher LTV is possible for high-quality properties with strong national tenants, e.g. Walgreens or in the areas that the lenders are very familiar and comfortable with. However, you will rarely see higher than 75% LTV. Commercial real estate is intended for the elite group of investors so there is no such thing as 100% financing.Interest Rate: The interest for commercial is dependent on various factors below:
Loan term: The rate is lower for the shorter 5 years fixed rate than the 10 years fixed rate. It’s very hard to get a loan with fixed rate longer than 10 years unless the property has a long term lease with a credit tenant, e.g. Walgreens. Most lenders offer 20-25 years amortization. Some credit unions use 30 years amortization. For single-tenant properties, lenders may use 10-15 years amortization.
Tenant credit rating: The interest rate for a drugstore occupied by Walgreens is much lower than one with HyVee Drugstore since Walgreens has much stronger S&P rating.
Property type: The interest rate for a single tenant night club building will be higher than multi-tenant retail strip because the risk is higher. When the night club building is foreclosed, it’s much harder to sell or rent it compared to the multi-tenant retail strip. The rate for apartment is lower than shopping strip. To the lenders, everyone needs a roof over their head no matter what, so the rate is lower for apartments.
Age of the property: Loan for newer property will have lower rate than dilapidated one. To the lender the risk factor for older properties is higher, so the rate is higher.
Area: If the property is located in a growing area like Dallas suburbs, the rate would be lower than a similar property located in the rural declining area of Arkansas. This is another reason you should study demographic data of the area before you buy the property.
Your credit history: Similarly to residential loan, if you have good credit history, your rate is lower.
Loan amount: In residential mortgage, if you borrow less money, i.e. a conforming loan, your interest rate will be the lowest. When you borrow more money, i.e. a jumbo or super jumbo loan, your rate will be higher. In commercial mortgage, the reverse is true! If you borrow $200K loan your rate could be 8%. But if you borrow $3M, your rate could be only 4.5%! In a sense, it’s like getting a lower price when you buy an item in large volume at Costco.
The lenders you apply the loan with. Each lender has its own rates. There could be a significant difference in the interest rates. Hard money lenders often have highest interest rates. So you should work with someone specialized on commercial loans to shop for the lowest rates.
Prepayment flexibility: If you want to have the flexibility to prepay the loan then you will have to pay a higher rate. If you agree to keep the loan for the term of the loan, then the rate is lower.
Commercial loans are exempt from various consumers’ laws intended for residential loans. Some lenders use “360/365″ rule in computing mortgage interest. With this rule, the interest rate is based on 360 days a year. However, the interest payment is based on 365 days in a year. In other words, you have to pay an extra 5 days (6 days on leap year) of interest per year. As a result, your actual interest payment is higher than the rate stated in the loan documents because the effective interest rate is higher.Prepayment Penalty: In residential loan, prepayment penalty is often an option. If you don’t want it, you pay higher rate. Most commercial loans have prepayment penalty. The prepayment penalty amount is reduced or stepped down every year. For example on a 5 year fixed rate loan, the prepayment penalty for the first year is 5% of the balance. It’s reduced to 4% and then 3%, 2%, 1% for 2nd, 3rd, 4th and 5th year respectively. For conduit loans, the prepayment amount is huge as you have to pay for the interest between the note rate and the equivalent US Treasure rate for the whole loan balance for the remaining term of the loan. This prepayment penalty is called defeasance or yield maintenance.Loan Fees: In residential mortgage, lenders may offer you a “no points, no costs” option if you pay a higher rate. Such an option is not available in commercial mortgage. You will have to pay between ½ to 1 point loan fee, appraisal cost, environment assessment report fee, and processing/underwriting fee. A lender normally issues to the borrower a Letter of Interest (LOI) if it is interested in lending you the money. The LOI states the loan amount, interest rate, loan term and fees. Once the borrower pays about $5000 for loan application fees for third party reports (appraisal, phase I, survey), the lender starts underwriting the loan. It orders its own appraisal using its own pre-approved MAI (Member of Appraisal Institute) appraisers. If the lender approves the loan and you do not accept it, then the lender keeps all the fees.Loan Types: While there are various commercial loan types, most investors often encounter 3 main types of commercial loans:1. Small Business Administration or SBA loan. This is a government guaranteed loan intended for owner-occupied properties. When you occupy 51% or more of the space in the building (gas station or hotel is considered an owner-occupied property), you are qualified for this program. The key benefit is you can borrow up to 90% of purchased price.2. Portfolio loan. This is the type of commercial loans in which the lenders use their own money and keep on its balance sheet until maturity. Lenders are often more flexible because it’s their money. For example East West Bank, US Bank and some life insurance companies are portfolio lenders. These lenders require the borrowers to provide a personal guaranty for the payment of the loans. And thus these loans are recourse loans.3. Conduit loan or CMBS (Commercial Mortgage-Backed Securities) loan. This was a very popular commercial loan program prior to the 2007 recession where its market size was over $225 Billion in 2007. It was down to just a few Billion in 2009 and is making a comeback with issuance of almost $100 Billion in 2015. Many individual loans of different sizes, at different locations are pooled together, rated from Triple-A (Investment grade) to B (Junk) and then sold to investors over the world as bonds. Therefore it’s not possible to prepay the loan because it’s already part of a bond. These are the characteristics of conduit loans:
The rate is often lower. It is often around 1.2% over the 5 or 10 year US Treasury rates compared to 1.85-3% over the 5 or 10 year US Treasury rates for portfolio loan. Some CMBS loans have interest only payments. Since the rate is lower and borrowers are required to pay interest only, the LTV can be over 75%. Low rates and high LTV are the key advantage of conduit loan.
Conduit lenders only consider big loan amount, e.g. at least $2M.
Lenders require borrower to form a single-asset entity, e.g. Limited Liability Company (LLC) to take title to the property. This is intended to shield the property from other the borrower’s liabilities.
The loans are non-recourse which means the property is the only collateral for the loan and the borrowers do not have to sign personal guaranty. And so these loans are popular among investment firms, REIT (Real Estate Investment Trust), TIC (Tenants in Common) companies that invest in commercial real estate using funds pooled from various investors.
If the borrower later wants to sell the property before the loan matures, the new buyer must assume the loan as the seller cannot pay off the loan. This makes it harder to sell the property because the buyer needs to come up with a significant amount of cash for the difference between the purchase price and loan balance. Furthermore, the lender/loan servicer could reject the loan assumption application for various reasons as there are no strong incentives for it to do so. The loan servicer can also impose new conditions to loan assumption approval, e.g. increase reserve amount by several hundred thousand dollars. If you are a 1031-exchange buyer, you may want to think twice about buying a property with loan assumptions. Should the lender reject your loan assumption application, you may end up not qualifying for the 1031 exchange and be liable for paying capital gain. This is the hidden cost of conduit loan.
Even when you are allowed to prepay the loan, it costs an arm and a leg if you want to prepay the loan. The prepayment penalty is often called Defeasance or Yield Maintenance. Basically you have to pay the difference in interest between the note rate of your loan and the applicable US Treasury rate for the remaining years of the loan! This amount is often so high that the seller normally requires the buyer to assume the loan. You can compute the defeasance from www.defeasewithease.com website. Besides the defeasance, you also have to pay 1% loan assumption fee. This is another hidden cost of conduit loan.
Conduit loan may be the loan for you if you intend to keep the loan for the life of the loan that you agree to at the beginning. Otherwise it could be very costly due to its payoff inflexibility.Lenders Coverage Area: Commercial lenders would do business in areas they are familiar with or have local offices. For example East West Bank will only consider properties in California. Many commercial lenders don’t lend to out-of-state investors.Lenders Coverage Property Types: Most commercial lenders would only consider certain types of properties they are familiar with. For example Chase would do apartments and owner-occupied office buildings but not retail properties or gas stations. Westford Financial specializes on church financing. Comerica concentrates on owner-occupied properties.Lenders Escrow Accounts: Most lenders require borrowers to pay 1/12 of property taxes each month. Some lenders require borrowers to have repairs and/or TI (Tenants Improvement) reserve account to make sure the borrowers have sufficient funds to cover major repairs or leasing expenses should existing tenants not renew the leases.Conclusion: Commercial loans are a lot more complex and difficult to obtain with loan approvals more unpredictable than residential loans. As an investor, it is in your best interest to employ a professional commercial loan broker to assist with your commercial loan needs. By doing so, you will vastly improve your chances of paying lower interest rates, avoid potential pitfalls and improve your chance on getting the loan approved.