Real Estate Investing Scams – 10 Tips To Safeguard Your Money In Partnerships

Real estate partnerships- have you ever been involved in one? They can be a good vehicle in certain situations but they can ruin you too if you fall for a real estate investing scam. Take these tips and use them and hold on to your money.

Successful real estate investors protect themselves from potential scams. Just because someone speaks in the language of real estate does not mean he or she has good intentions with your money. When I first started investing I had two men approach me about partnering in some real estate deals. They showed me comps with all of the sales data, estimated repairs etc. and because they painted such a great picture and seemed to be very knowledgeable about real estate I fell in the trap that cost me over $30,000 US Dollars. You don’t have to make the same mistakes. Now you can follow 10 simple steps that will limit your risks while you invest.

1. Take counsel from a professional investor group.

In the wild the animals that survive are the ones that stick together. We should apply that same principle. But make sure that the investor group is honest and willing to give counsel when ever you feel something seems questionable or too good to be true. You want to look for a network that does not just sell you deals, they should be investing in the deals with you. Now that is putting your money where your mouth is.

2. Know your partners.

Never partner without knowing your partner. If you are considering partnering with a person that appears to be a pro make sure to have your attorney look him up to make sure he is clean. Your success will always be influenced by the people you surround your self with. If the people you partner with are successful and trustworthy you will grow. If your partners are scam artists you will be perceived to be just like one of them.

3. Have an attorney on you power team.

Make sure your own attorney represents you in every partnership and property investment. Having legal paperwork done right will keep you out of trouble and protect your interests if you need to go to court. Trust me when I say that the cost of working with an attorney is far cheaper than an ugly lawsuit because you did not do things according to the law.

4. Secure your money.

Keep any deposits for an investment in an escrow agent account until you move forward with the project because you will be able to retrieve your money if things go south.

5. Do your own due diligence

Obtain comparable sales and market research from your own sources when you are not sure the areas value. Drive by if necessary. This would also be a good time to speak with your mentors regarding the project you are considering. If your numbers work then take action.

6. Be insured at all times.

When investing in real estate title insurance is meant to protect you from any surprises. When purchasing apartments or any commercial property also ensure that you have umbrella coverage. Trust me when I say that you only need one deal to go south to pay for two lifetimes of insurance policies.

7. Use the right contingencies.

When investing, you should incorporate contingencies to protect yourself. This is when that attorney can work wonders. Give yourself plenty of room to walk from the deal if something goes wrong. The last thing you want is to get stuck with a deal that will ruin you and you can’t get out of that agreement. Addendums are your friend!

8. Use money sources you can trust.

You can build these relationships before you start investing. The key is making sure that they have a strong reputation by others. Ask for referrals and when you find the one that you can trust use them regularly. You can also ask your mentors and they can referee you to the people they do business with.

9. Stay in control of your investments.

Successful investors are not afraid to stand up for their interest when things seem to shift. A balanced portfolio strategy will make it easier for you to spot when something does not fit your plan. Your contract addendums will help tremendously. No one, even a “partner” should control YOUR investments.

10. Keep relationships alive.

When you pull off an investment with someone that was trustworthy continue doing business with them. Make sure to preserve those productive relationships. You don’t know how important it is to have a strong team in the market place until you are standing all alone when you fall in a trap.

I hope these tips will empower you to invest smart. Don’t allow the dangers of life to keep you from pursuing your vision. So minimize your risks and move forward. And like my mentor says “May God hold you in the palm of His hands.”

New Business Credit Cards to Help Your Business Grow

It is significant for every business owner to keep their credit in good status. There is much to be enjoyed when there is adequate credit line that gives more agility in getting the essential funds it requires. A bigger credit line is deemed necessary as your business eventually continues to grow. It helps a company regulate its cash flow and keep up with the demands of the business.

For ways to fund your business, one has to qualify for an unsecured line of credit. For the future growth of your business, this is a valuable preparation. One can be confident that getting a loan or obtaining additional funds for you business plans will not be difficult, if one has a strong business credit to back you up.

Some of the better known business credit cards that help boost your business is the Advanta Platinum Business Card. Because of its soaring credit limit which is up to $50,000, you can be sure that you will get the best deal the business credit card has to offer. It has $0 fraud liability and once you are a card holder of this business credit card, you can have a personalized card with the name of the company and logo on the card.

Chase Visa Platinum Business Card. This is a highly valuable option for any business man who wants to take advantage of the introductory offer, the multitude of benefits, and to travel with business-related discounts that this card offers. Plus a 0% APR on purchases and balance transfers for up to 12 months. And if you purchase an item, there is a long term extension warranty for the purchases you made. Aside from its travel accident insurance, lost luggage insurance and auto rental insurance, Chase Visa Platinum Business Card also offers business related discounts on computer equipment, car rentals, hotel rooms and more. Therefore, if you love to travel more, business credit card is the right card for you.

Discover Business Card. This card is designed for any business man who holds with exceptional credit scores and is aiming for a cash reward credit. For a growing business, you don’t have to pay the annual fee, and you can be sure that you will be protected against fraud and online bill payment. For every purchase of office supplies and gas you will receive cash back bonus which will help you save on expenditures. Plus, you get to customize the employee cards by limiting their credit limits and you can monitor their spending. It has no yearly limit on the amount of rebates earned and the rebates do not reach expiration as long as the account is active.

Have you decided yet on the business credit card that you’ll own? From the moment you launch your business, make it you goal to establish your business credit and make it a point to keep it in good standing. The right choice of business credit card will determine your success. I hope you find the perfect business credit card to suit your business needs.

Five Ways to Protect Yourself When Selling Your Business

I read with interest a report of April 23, 2008, entitled “Millions involved in local business purchase scam” published in the Christian County Headliner News. As a certified public accountant that has represented buyers/sellers in business sales transactions and also as Managing Partner of Sunbelt Business Advisors – a business brokerage firm, I thought it beneficial to write about the many red-flags that were present in the article. Red flags that others should be aware of and protect themselves against as they attempt to either sell or buy a business.

SMALL BUSINESSES ARE NORMALLY SOLD AS AN ASSET PURCHASE AND NOT A STOCK PURCHASE. This transaction appears to have been a stock purchase and not an asset purchase. This should have been one of the first very large red flags. Small, privately held businesses are almost never sold as a stock purchase. A stock purchase means the current owners legal entity-the company, continues on instead of the new buyer creating a new company. In a stock purchase the new owners get everything the sellers business owns – bank accounts, receivables, any potential and actual liabilities. This includes contingent liabilities the new owner may not even know about. Additionally, a stock purchase does not allow a new owner to get stepped up basis of the company furniture, fixtures and equipment. The stepped up basis of the FF&E could mean thousands of dollars in tax savings to a new owner that would be very beneficial the first few years of ownership. A buyer walking in and immediately wanting to purchase the stock of business and assume all liabilities, potential future liabilities – known or unknown and leaving the additional depreciation on the table is almost unheard of. A normal asset purchase agreement (not a stock purchase) would have generally excluded cash and bank accounts of the prior company. The new owners in an asset purchase agreement, unlike a stock purchase would not have been able to transfer funds from the company accounts. They would need to open new bank accounts in their new company name.

AT CLOSING, BUYERS FUNDS SHOULD BE AVAILABLE. Apparently this deal closed without confirmation or having actual funds from the buyer. No business purchase transaction should close without having funds available and present at closing. This would be the same as selling your house to someone, closing the transaction, but the buyers not having loan approval yet. You wouldn’t do it and neither should sellers of small businesses.

ALWAYS USE A QUALIFIED CLOSING ATTORNEY. The sale of a business should be closed by a qualified closing attorney. Qualified closing attorneys will have their own space and normally not need to use others. A qualified closing attorney will make sure all legal documents are in order; make sure funds are available to pay the seller and file all required legal and IRS documents. Anyone selling or purchasing a business should insist upon having a qualified closing attorney conduct the closing. The absence of a qualified closing attorney should be a red flag.

USE A QUALIFIED BUSINESS BROKER – DON’T TRY IT ALONE. Not using a qualified, professional business broker is another red flag. Can business deals be completed without using a business broker? Certainly! One can also write their own contracts without using an attorney or prepare their own tax return without using a CPA, but it isn’t necessarily the smartest thing to do. Especially when talking about the sale of a business which is probably one of the largest if not the largest asset a person owns. Something as important as this should not be attempted alone. A qualified business broker will help educate the seller as to the process, help establish a valid market price, effectively market the business, screen buyers, and help qualify buyers, assist with negotiations, work with existing seller CPA and attorney, and work with closing attorney and overall management of the process and be there to advise the seller as to red flags!

NEVER CHANGE THE BANK ACCOUNTS UNTIL YOU HAVE YOUR MONEY. Another subtle, but yet red flag is it appears the seller changed the signature cards at the bank(s) and the names of the people allowed access. Even in a stock purchase, the current bank account holder – the seller would have to have the bank change the names and cards. Obviously, if this did in fact happen, it happened prior to the seller having funds from the buyer. The new buyer also apparently had the “keys” to the business before the seller was paid the purchase price. It is like selling your car to someone and agreeing to be paid at some future date; while you watch the “new buyers” that you just met drive off into the sunset with your car. You probably will never see your money or your car.

Most small business stories like your article remain non-public. Just like most financial frauds that occur at small businesses. People do not like to talk about the failures of small business transactions but, they are happening all the time and all across the country. It is very important that sellers and buyers understand the process of selling/buying a business, watch for red flags and use qualified professionals to help them in the process. Doing so will save them money, time and effort and make for a much better business transaction.