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Percentage Leases - Real Estate Investing
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Short Sale
There are two types of short sales. One deals with stocks and the other with real estate. This article will deal with the real estate short sale. The real estate short sale can be looked at from the seller's perspective, the buyer's perspective and the bank's perspective. All three parties will have a say in the short sale process.
If you own your house and are having a difficult time p... Read real estate article
Cash Flow ARM Payment
Cash Flow ARMs
A cash flow ARM is a minimum option payment mortgage.
This means the mortgage allows you to "choose your monthly payment" from one of several options.
The payment options are usually to pay your mortgage as if it were a 15 year mortgage, or pay it as if it were a 30 year mortgage, or pay it as if it were an interest only mortgage, or pay a minimum pa... Read real estate article
Percentage Leases - Real Estate Investing
Multiple tenant commercial real estate buildings that house retail shops or shopping malls are usually leased to the different tenants. They operate several diverse businesses under the same roof using a percentage lease. In a percentage lease, the owner is paid a base rent plus a percentage of the tenant's gross receipts. The rent is determined by the amount of business done by the lessee. This type of lease is used most commonly by a single entity that rents or leases a multiple tenant commercial building leased to numerous retail shops or shopping malls, as they are more popularly known. Investors see percentage lease as benefiting both the owner as well as the tenant.
The owner has superior returns, whereas the tenant has the advantage of a lower rent structure. The percentage charged is usually 10% to 12%, and is paid annually, semi-annually or quarterly. Some other owners demand even on a monthly basis. It depends on the type of property, the location, its desirability and the sales volume of the lessee. This type of lease requires that the tenant periodically keeps furnishing the gross receipt to the owner, which may be a deterrent and may cause tenants to change their mind about agreeing to the lease. They have to produce their sales books, IRS form attachments or their sales tax records.
Types of Rent Discrimination and Percentage Leases; The one main advantage of a percentage lease is the risk sharing by the landlord and the tenant. The landlord will benefit if he discriminates in charging rents to different tenants. In simple rent discrimination, the landlord charges each tenant under the same tenant classification such as boutiques a particular rent and other such classifications of tenants' different rents as per the nature of the business. In perfect rent discrimination, each tenant is charged a different rent to ensure the landlord gets the maximum profit.
The tenants do generally not prefer percentage leases but they will comply if the owner of a desirable, well-suited and well-located property demands it. The tenants have to comprehend the terms of the lease before they sign it. They have to be very specific in making clear what accounts for the gross receipt, which can exclude some items such as returned goods, delivery and installation charges, sales tax, mail order sales etc. and other such deductible items as per the nature of the business.
Percentage leases are also used in the farming sector where owners receive a percentage of the crop grown and harvested; the owners make profit by selling his percentage of the crop. The normal percentage lease usually charges 30% to 40% depending upon the quality of the farmland. The percentage lease is therefore not a very popular type of lease.
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Investing With Bad Credit
If I had a dollar for every email I was sent, message board post I have read, or telephone call I have received asking how to invest with bad credit, I would have retired 10 years ago. If most of these individuals would learn some age old truths, it would make their investing lives so much more productive.
The truth of the matter is, there are ways for a wannabe investor to begin investing with bad credit. There is wholesaling, flipping, subject to investing and a host of other guru related theories and techniques. The ultimate thing that will happen though, at one point or another, is that they will run into a wall where credit will be needed. If they really want to take their investing to the next level, they need to be the ones financing the properties and realizing the nice gains. Are there mortgage companies that will lend to poor credit clients? Sure, as an owner occupant. Try getting a 90-100% ltv loan for an investor property with a poor credit score...It just ain't gonna happen kids! Ah yes, but some wise person will point out that they indeed do have a program that will do this. Great! So, what is the interest rate and how many points are rolled into this and can I hear what the closing costs will be? Exactly my point. These loans, if they do exist, would be so expensive, that most all deals would not work using them.
Why not take a proactive approach and get yourself cleaned up "creditwise" before you attempt to do any investing? Yep, it can be done and yep, it will take some time, but it will make a huge difference in your financial future. By cleaning up your credit first, you will have the time necessary to gain the knowledge and direction that you want to head once you are ready to begin. It will open up a world of opportunities that are now closed off to you due to your credit. Once you make the intelligent decision to restore your credit first, you must then take a closer look at how you should accomplish this.
Let's step back and take a look at the big picture for a minute. Forget all the hype that you hear, both positive and negative, and let's face the facts. There are ways to clean your credit. 90% or more of all credit files have errors and these errors are NOT in your favor. There are also old debts that should drop off due to statue of limitations as far as how long something can be on a report. There are people that had filed a bankruptcy and all of the negative items were not included, there are things listed twice, collection companies that are no longer in business and will not verify the debt. The list goes on and on. The bottom line here is that you need to either learn how to get things removed off of your credit files yourself, or have a competent company that follows the law to the letter, do it for you. Do note that if you are going to do it for yourself, it is much more than sending in letters and waiting for items to magically drop off. You will want to arm yourself with knowledge of the laws: The Fair and Accurate Credit Transaction Act of 2003, Fair Credit Reporting Act, removal via section 609, the HIPAA and the Fair Debt Collections Practice Act. You will also want to be knowledgeable of what it means to validate a debt, as this is much more than a creditor verifying that they have a debt on record. Validation makes them prove the fact that a debt is owed (used properly, this technique can remove a great deal of items not known to be your debts).
For those individuals that opt to have their credit cleaned by an outside agency, there are a few things that you should consider. Contact the companies and actually interview them. Before you actually begin the questions, see if they are hiding behind the net. Ask them: Will they review your credit reports for free, BEFORE you sign up with them or pay them any money? If they say yes, go on with the following questions:
Do they only send dispute letters to the three credit reporting agencies, or will they dispute directly with creditor, collections agencies and courthouses if necessary? If so, is this at no extra charge?
If they charge a continuous monthly fee, what is their incentive to repair your credit quickly? How many accounts will they work on at one time? ,
If you are going to hire a Law Firm, will they be representing you or sending the letters on your behalf?
Do you have to fill out your own disputes on-line?
Do they offer a TRUE 100% money back guarantee?
Do you have 24 hour, 7 day a week access to your account?
Remember...Do not EVER let a credit repair company pull your credit reports for "free"! They do not have a permissible purpose and it will count as an inquiry against you. It will actually LOWER your credit score.
You will be amazed at the amount of so-called professional companies and firms that will fail these questions miserably. Do not give up though. Once you find a company that answers these questions correctly, then guage your comfort level when speaking with them. You will be conversing with them for the next few months, so make sure it's a good fit. You will also want to feel that the company you choose truly has their clients needs as the #1 priority. Finally, you should remember one main point. There is NO MAGIC BULLET that will clean your credit report overnight. Ask yourself this question: How long have you had bad credit? I would imagine that it has been a year or so if it has been a day. Wouldn't it be crazy to think that it can be erased overnight? It will take some time (3-6 months generally), but it is worth it when done correctly.
Make the right decision, learn a little patience, and get your credit restored before you attempt to enter the real estate game. Take the time to learn what it is you want to gain out of this amazing field, and do it the proper way.
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Percentage Leases - Real Estate Investing
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