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Home Page > Finance > Real Estate > How Can Some Property Investors Profit From the Nca and is it Morally Right to Do So??

How Can Some Property Investors Profit From the Nca and is it Morally Right to Do So??

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Posted: Oct 18, 2007 |Comments: 0
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The country is starting to face the repercussions of the new credit act. Lending is getting tighter and everyone’s affordability has been dealt a double blow with increased interest Rates. Many people are not so happy about the new set of circumstances they find themselves in. For many property investors, months of long strategic planning seems to have been for nothing. As most investors go back to the drawing Board, we ask, “Can one profit from such events?”

The answer will be yes or no, depending on your perspective. If you are a property investor the answer should be yes. We’ll explain why in this article. If you are a speculator, you would be more likely to disagree.

So for the property investor we say the answer is a definite yes. Yes, if you can capitalize of the fact that, in lean times, many people will run to ground. Yes, if you are able to remain completely emotionally detached and yes if you see no moral wrong in taking advantage of the misfortune of others.

All industries experience good and bad times. Markets go up and down all the time. Most people are comfortable in an up market, doing a roaring trade with a fearless appetite, feeding off market confidence. Yet, not many are comfortable when the market turns down and the drip of market confidence is turned off.

For many South African property investors, this is the first time they are having to face a downward market. Many feel lost and are not sure what to do next. The natural reaction to this situation is to freeze, stop buying, hibernate, bunker down and batten down the hatches until the clouds disperse and the sun comes out again.

Sounds logical, conservative and safe, doesn’t it?

Such investors could take a word of advice from investors that have already been through this before. Older, more experienced, investors know to well that if you can profit in the up market, you can profit in the down market. Younger investors just need to learn how, for the reality is that investors capable of trading in a down market can profit and profit they do.

So the NCA is one of the main topics of the day and seen to be a major contributor to a downward turn in market conditions. Lets see how property investors can profit from the NCA, and even be bold enough to look at the morality of profiting from such unpleasant events.

In recent years buy-to-let investors have purchased large amounts of properties on 100% and 110% bonds with significant shortfalls. This leaves many very tight budgets and little or no room for further purchasing. They are what we call “Over Exposed”. When taking into consideration that most also have a primary residence Bond to service, car Finance, credit cards, miscellaneous loans and general living expenses. Most would find it difficult to refinance simply to improve their current homes, never mind getting additional bonds for property investments. Especially in light of the NCA.

This leaves a large amount of people unable to buy and faced with many month of treading water as hard as possible to stay afloat. Many will not have the stamina to stay the course of a market downturn. As pressure builds, any turn in market events that negatively impacts their situation could result in some very interesting opportunities for those investors with reserves.

Such investors do exist and have been holding capital in reserve for just such a day. Many have not made any significant purchases in the last year, buying only significant bargains or small caps with good cashflow but little or no Equity growth. If you ask most how they felt during the boom, they would say it was extremely frustrating to sit on their cash while everyone was buying, buying, buying. Yet, sit they did and focused on other things, all the while keeping one eye on the the market. What they knew was that, when the market turns, their gearing will be low and cashflow high at a time when bad fortune will abound.

As the market turns, these investors are starting to venture out more aggressively that they have in the up market. They start investigating more deals as the market cools down. They watch as estate agents frantically market properties and one bond application after the next falls through. They track the problems and when time is right the swoop down for easy pickings.

They know that in these circumstances they can make offers that suite their investment strategies. They ooze with confidence in the knowledge that they are in the bargaining position of strength for in almost every case they are the only substantial Person interested at the bargaining table.

However, being the only buyer at the bargaining table, with a desperate seller, and taking advantage of their unfortunate circumstances is viewed by many as immoral. Such investors are then often likened to vultures circling and coming down to feed when their prey is either dead or too weak to struggle.

Is it wrong to act in this way? Let’s see.

Assume that such investors did not exist, that the market cooled down and a seller desperately needs to sell, but there is absolutely no one to buy for any price. Viewed in this light, could the acts of such investors look less like the acts of a vulture and more like the acts of a clever business person?

How will this situation benefit the market? It most likely will not. More insolvencies and sequestrations will be inevitable. So, lets ask the question again. Is it moral to save someone from their current situation when there is no one else that can do that? Or is it better to let them go to their unpleasant fate on moral grounds?

If markets did not have opportunists that can arrive at the right time to save what is left of the day, what would happen to all those that need a buyer at any price?

Having said this, we feel it is safe to say, that investors trading in down markets, can be viewed as the sellers “saving angel”. Not because they save the seller, but because they “save” the money to spend it when the seller needs it most. When taking a closer look at such circumstances, an ironic balance starts to emerge. The seller spent while the investor saved, to save the seller from their spending at the right point in time. It is a win-win situation despite the fact that one person is trapped in an unpleasant situation.

In the end, investors that invest in down markets can definitely profit from the NCA and in the process save some spenders that had no foresight. Furthermore, it can be argued that it is not only moral to do so, but a duty to help out those that are trapped, simply because they can and therefore should make a win-win situation for all parties involved.

And so, as the NCA continues to deplete the market of buyers, take heart in the fact that it is opening a treasure chect of opportunities. Just be patient, circle and swoop at the right time.

Happy pickings.

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Sean Wheller -
About the Author:

Sean is a property investor and estate agent in Johannesburg South Africa. He is the founder of Property Investor Network a community knowledge portal. He also owns several other property related businesses and associated websites, including REPOSSESSION-STOPPER a service front-end for people wanting to avoid repossession.

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Home Page > Self Improvement > Advice > Finding Your Match: The Art Of Meeting The Right Investors

Finding Your Match: The Art Of Meeting The Right Investors

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Posted: Apr 30, 2006 |Comments: 0
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In my practice, I meet with many entrepreneurs. Listening to their stories is a poignant reminder about just how difficult it can be to find the investment money they need to grow their businesses. Many often ask me about the best ways to raise money for their businesses. Believe it or not, often times my answer begins with a story about my dating life. It goes something like this:

Although I was not blessed with Brad Pitt’s good looks or the best conversation skills, thankfully, I did catch the height gene and measure in at about 6 feet, 2 inches. Now, by Midwest standards, this is no significant thing, but in New York City, for whatever reason, it was one way to differentiate myself from many of the other guys in the singles scene. So, when I went to parties or out with friends, instead of competing with every other guy for the attention of the same group of women, I would try to meet the women who were taller than most of the men in the room. Knowing my dating limitations, I played the odds that were most favorable for me.

For me, the strategy was a success. Last year in November, I married a 6-foot tall brilliant and beautiful woman!

Finding the investment money you need to grow your business is not that much different than my dating story (albeit, maybe a little less fun). To be successful, you first have to put yourself out there and meet a lot of people. But, then, and perhaps most importantly, if you are aware of your company’s limitations and you focus your efforts on the funding strategies where you have the greatest odds for success, you will find more money, faster and with less effort.

For some of you who will have immediate positive cash flow and assets you can afford to use as collateral, a bank loan may be the best, and certainly the fastest, way to get started.

For those of you who have a business model that is scalable into the 9-figure range, with principals who have prior entrepreneurial success, and/or businesses in the latest hot industry, VCs or angel groups may be a viable option.

For the rest of you (who incidentally represent 99% of the people who come through my office doors), serious consideration should be given to finding a Joint Venture Partner or executing an “extended” friends

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Stephen Furnari is a securities attorney with Furnari Levine LLP (http://www.furnarilevine.com). Stephen helps young and growing companies obtain the funds they need to grow their businesses and accomplish their financial goals. He also teaches entrepreneurs how to avoid costly and avoidable legal mistakes.

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Home Page > Business > Entrepreneurship > Venture Capital or Private Investor – Which One is Right for Your Business?

Venture Capital or Private Investor – Which One is Right for Your Business?

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Venture Capital or Private Investor – Which One is Right for Your Business?

By: Entrepreneur Investor Network

About the Author

One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country.Log on to the website today. You will not be disappointed.

(ArticlesBase SC #922662)

Article Source: http://www.articlesbase.com/ – Venture Capital or Private Investor – Which One is Right for Your Business?

If you are looking for capital for your business, you may be confused as to who to get it from – a venture capital company or private investor. Make no mistake, there are several fundamental differences, and you’ll need to educate yourself before making your decision.

A Venture Capital company is comprised of a corporate entity. They invest in businesses that are well established. They raise their money by pooling public and private resources. They have extremely strict criteria for being approved for funding and it could be a long process. They don’t usually take an active role in your business, or offer any sort of mentoring service to the businesses they invest in.

Private Investors, also known as business angels, are individuals who are independently wealthy and are business owners and entrepreneurs. They use their own money to invest in ventures. Private investors usually prefer to invest in businesses that are in the early stages; even if it’s just at the idea stage. They will take an active role in your business, also offering mentoring services. They will share their skills and experiences with you, and answer any ongoing questions or concerns. They usually require part ownership until such time that you are making a profit, and they get their return on investment. Private investors can be found in any country around the world.

Both venture capitalists and private investors will require an exit strategy to be put in place before partnering with you. This means that once they have achieved their ROI, and your business is running successfully they will take their profits and end your partnership. If you partnered with a private investor, you will have learned all skills and knowledge you need to continue running your business successfully for many years to come, regardless of economic conditions. They also both require extensive information before handing their money over. You will have to present a business plan, along with complete financial information so they can analyze your situation. Whichever option you choose, do your homework and meet with several different investors before signing anything.

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Entrepreneur Investor Network -
About the Author:

One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country.Log on to the website today. You will not be disappointed.

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What benefits can an angel investor offer?

The benefits of getting an angel investor to raise money for your business are multifold. First of all, angel investors are veteran businessmen who have one or more successful businesses already running. So, if your business makes profits, you can rest assured of regular investments in your venture. Besides, angel investors can act as excellent business mentors, using their skills and experiences to teach you the tips and tricks that you will need to know in order to make your business a success. Besides, they will use their strong client/ consumer base to boost the revenue earned from your business substantially.

Are the angel investors philanthropists?

Not necessarily. When an angel investor provides you with the capital for your business, he/ she will own a percentage of your venture. Typically, this can be anything between 5% and 25% of your total business. The angel will get all the revenue earned from that percentage. Even when you approach an angel investor, you must have a good business plan ready for investment, as well as a strong management team. Otherwise, you cannot be sure that the investor will entertain your request. Your business plan has to intrigue them by the profits projected by it.

The best way to find an experienced angel investor is to get online and look in websites. One of the best websites is EntrepreneurInvestorNetwork.com.au, which aims at uniting angel investors with entrepreneurs.

Who are angel investors?

Angel investors are veteran businessmen who run successful businesses of their own. They help out entrepreneurs by investing in their businesses. The assistance is not free of cost, though. The angel investor will own a percentage of the business that he/ she invests into. Obviously, he/ she will also get to keep the profit made from his/ her percentage of the business. However, it is a very small price to pay, considering the benefit your business can get from an angel investor. You should always approach angel investors who live near the location of your business. This is because angel investors always prefer investing in businesses that operate near their homes or offices, so that they can visit the place often. Typically, the distance between the business investor’s home or office and the location of the business in which he/ she has invested should not be more than 50 miles.

How to find an angel investor?

There are some agencies that can help you to get in touch with an angel investor. However, the prices for their services are often sky-high, and almost impossible for budding entrepreneurs to bear. There are solutions to this problem, though. There are many websites on the internet that can help you find angel investors looking for new investment opportunities. One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country. Log on to the website today. You will not be disappointed.

Ensure your online trading costs are low

Even before you start investing online, you need to consider trading commissions. Trading expenses can be all over the place when dealing with online brokers. Costs can run anywhere from $5 all the way to $50 and more. If you plan on investing small amounts of money into stocks then you need to make sure your online broker has low trade expenses of under $15 or these costs will eat up all your account balance and wipe out any profits.
When investing online you should also be aware of account fees and account minimums. In order to protect any profits that you make you need to make certain that your account has low account maintenance fees, preferably an account with no account maintenance fees. Numerous online investment companies also have a set minimum account balances. If you account falls below that minimum balance required, you will get charged a fee. Over time these fees can take your balance down to $0! It is crucial to make certain that the online brokerage company you choose has no minimum account balances.

Familiarise yourself with basic online investment terms

Before you start investing you definitely need to understand Basic Stock Terms. The more terms you know, the better your stock market vocabulary and the faster you can learn. Here is a list of basic terms involved with stocks and their definitions, in plain English.
Ticker – The unique symbol used for a company on a stock exchange. For example, Microsoft’s ticker symbol is MSFT.
Share Price – Price you have to pay to buy 1 share of stock.
Shareholder – A person who owns shares of stock in a company.
Commission Fees – The fee you have to pay to place a trade to buy stock.
Dividends – A cash payout from a company to its shareholders. This payment is based on the amount of shares you own, the price of the stock and the dividend amount. The payment is usually every quarter.
Risk – The probability of losing money from owning a stock. Risk is usually classified as Low, Medium and High. Or Conservative, Moderate and Aggressive.
Volatility – The amount of price activity of a stock. A stock, whose price goes way up or way down daily, is volatile. You can guess what not volatile is, right?
Prospectus – A detailed financial document a company publishes, for shareholders to see what they are getting their selves into.
Bear Market – A time when the stock market consistently drops.
Bull Market – A time when the stock market consistently rises.
There are many more terms used but these should help you get a basic idea of stock investing. OK, so you got some basic info about investing in stocks. It is time to learn how to buy shares of a stock.

The right way to buy a stock online

The first thing you should do before buying online stocks is find out how many shares you want. Then take the current share price of the stock and multiply it by the amount you want to buy. There are many places you can look to see what the share price is. Google will recognize most ticker symbols if you just enter them in the search box. Once you know the amount you need to spend to buy the shares you want you can place a trade with your online broker.

Diversify your portfolio to minimize risk

Understanding the basics of risk is simple. High risk means there is a higher chance you will lose money from the stock and low risk means there is less risk you will lose money. Controlling risk is the key element in online investing. There are various different strategies for minimizing risk. The most common and easiest one is to diversify. To diversify, means to buy a mixed group of stocks with different levels of risk. This will decrease your chances of losing money.
There are many resources out there to help you pick stocks. Don’t listen to any of them unless you do research for yourself first. Luckily for me when I was in college we had a class on E-commerce which talked about the best online business models to follow. They mentioned a company of self made millionaires called The Motley Fools. They went in full detail of how they were successful in their online business of picking stocks. I have been using them ever since and trust their advice. Their philosophy is in long term value investing, which is a much less riskier style of investing.

Angel investors generally have differing areas of expertise, motives and personalities. You will have to do some research to find which one best fits your needs. Generally, angel investors can be grouped into three main categories:

1) Core: These are individuals who have built a successful business and have an extensive amount of experience. They have accumulated their wealth over the course of their business life and are very committed. They involve themselves with all areas and sectors of business, despite the investment risk, these angels are wonderful mentors and advisors.

2) Technology: These people invest in the latest technology trends. They don’t mind the high risk and enjoy the idea of bringing something new to the market. They may or may not want to be involved in the business on a daily basis and take a more hands off approach.

3) Return on Investment: They want a high return for their high risk on investments. The motivation here is all about how much they are going to profit from your business once it’s up and running. These guys usually stay away from investments when the market is poor. They also usually require an active involvement in the business that they’ve invested in.

You will want to meet with several investors to get a feel for which ones will be a good fit for you and your business. If you have a new invention that is high tech, you may want a technology angel. If you want someone to learn all the ins and outs of business management and start up, then a core angel may be a good fit. If you need someone to teach you the daily process of running a business, a return on investment angel may be best.

Investment angels come from all different sectors and backgrounds. Some are entrepreneurs, some are corporate executives, some are born wealthy, and some are simply investors who want a high rate of return. Know which type you want to partner up with before you seek them out. This will give you an idea of what they expect of you and ensure you get the start up capital you need.