Foresight Commercial Finance

Posted By Mark on August 23, 2010

Those who know me will be surprised to hear humility but I am just a finance guy. I rely on experts to explain everything to me. Today I found an expert who also has the  gift of communicating to the lay man.

http://sonykumar.wordpress.com/

I will say Sanjeev wrote it so I can understand it but economics is a bit of an avocation for me so I shall try to make what he says a little simpler.

China as a result of their economic stimulus (much larger then the U.S. has been growing at a very rapid rate. Some of the easy money was put into real estate and there is a danger of a bubble. Being more responsible than the U. S government China wants to put the breaks on the economy before either inflation or a bubble becomes a concern. China is tightening its money supply and will only grow at 9%,half the rate of last year.

That is good for China but bad for the rest of the world. Exports to China have kept the world economy afloat. Germany and Brazil will be particularly hard hit but so will the rest of the world including the U.S.

This slow down has the potential to drive the U.S. into a double dip recession. The U. S. Fed seems aware of the danger and is taking efforts to keep the money supply loose but its tools have been depleted by decades of irresponsible loose credit.

So it seems likely that the recession will continue. This is actually good news for people in certain industries. Typically candy, tobacco, alchohol, entertainment and low priced luxuries like women’s shoes.  People enjoy treating themselves with low poriced comforts when the economy is in a down turn.

In other industries one must consider both cutting cost per unit and attempting to grab greater market share. Fewer customers mans that only the strong will survive and of course the company that grabs market share now will retain it when expansion returns.

So one should be careful but also invest because those who don’t will cease to exist.

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Posted By Louise Pooley MBA on July 6, 2010

During a presentation I gave recently I was asked to explain the difference between, a bookkeeper, accountant and a Certified Public Accountant (CPA).  It is important that you know the difference when hiring someone to assist you with your accounting and taxes as each position has different levels of education and experience.

A bookkeeper may have no formal college education, some college accounting courses or an associates degree.  They may also be members of either the American Institute of Professional Bookkeepers or the National Association of Certified Public Bookkeepers. These organizations both offer a bookkeeping certification qualification that requires extensive testing.  In addition to their educational background a bookkeeper may also have several years experience working as a bookkeeper.

An accountant has a more formal education and has usually obtained an undergraduate degree in accounting.  They may have work experience in the accounting field in a corporate or non-profit organization. For the most part they will have an understanding of general accounting practices.

A CPA has 150 hours of college credit with accounting classes comprising 33 of those hours.  Recent CPA candidates may have a graduate degree as well as an undergraduate degree.  Once an individual has completed the necessary college credits they must also pass a four part exam and prove they have work experience to meet the requirements for licensure. CPAs typically specialize in a particular area of accounting such as tax or audit and industry such as food service, manufacturing, real estate or healthcare.  CPAs are found in public practice and industry.

For additional information on the services provided by Pooley Accounting Services please contact us at 314 260 7808 or info@pooleyacctg.com.

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Tags: accountant, accounting, audit, bookkeeper, certified, CPA, experience, finance, tax

Posted By laura sherman on June 11, 2010

The Investing Insider:  “STOP contributing so much to your 401(k)!”

(From Laura Sherman, Director of Business Development, Capital Management Services, Inc., in Manchester, Missouri.)
Uh, … what?

That’s right.

That headline no doubt grabbed your attention, if you’re reading this part, now!  But you may be a bit bewildered that anyone would encourage you to ratchet-BACK your 401k contributions, right?

Well, there are several profound reasons for that.  And it’s not because anyone should shovel LESS money towards his or her retirement security!

Read on, and deploy this information in your own life and your own investing activity.

Most corporate 401k plans offer a ‘company match’ – that is, they’ll match you, dollar-for-dollar (or close to it) for your contributions to your account, up to a certain percent.

It’s GREAT, and highly-recommended, that you DO contribute enough to get the company match, as that match is simply ‘free money’, isn’t it?  GO FOR IT, up to the match.

But, contributing BEYOND the match?  NO way.  Don’t do it.

Why not?  Isn’t a little ‘forced savings’, direct-deducted from your paycheck, a good thing?

Well, not in this manner.  Not entirely.  NOT above the match.

In 401k-Land, there are many, many restrictions.  When you contribute ABOVE the match in your 401k, all you are doing is handcuffing yourself to these restrictions … instead of putting your money better at-work, elsewhere.

Among the many deficits in a 401k are:  VERY limited investment choices … more than you’d ever guess; often severe fund ‘hold time’ restrictions; inability to do things like going ‘short’ (betting that the Market will decline); and the list goes on and on.

So, what’s an investor to do, instead, that is just as convenient … but has none of the above-mentioned drawbacks?

Easy:  Divert that ‘excess’ money you would have put into your 401k, into a professionally-managed IRA, instead.  This can even be done directly from your company payroll checks, in many circumstances, through an investment advisory such as CMS.

And, by the way, if you’ve got a 401k held hostage at an FORMER employer, somewhere?  The same rules apply, naturally.  Roll that old 401k over IMMEDIATELY into an IRA, and reap the same benefits.

‘Liberate’ these monies and put them to work in a much, much better way.   (You may contact Laura at laura@cmsadvisors.com, or at 636.207.5829 or 314.954.0544.  Please see the CMS website for more information at www.cmsadvisors.com).

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Tags: 401k, accounting, Investing, ira, matching funds, restrictions on 401k

Posted By Mark on May 29, 2010

Faithfulness to God means having the courage to take bold initiatives, in pastoral life, family life, and business, to be creative, even entrepreneurial, to express our gratitude to God for all that He has given us by making it grow.

http://www.crossroadsinitiative.com/library_article/800/Parable_of_the_Talents.html

I just liked this and thought I would share.

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Posted By Louise Pooley MBA on May 28, 2010

In my last blog, I mentioned that a common mistake business owners make is a failure to manage their cash flow. As a result, they end up having insufficient funds to meet their obligations.  Why is this important?  Businesses fail due to their inability to pay their bills not because they aren’t making a profit.  In start-up and growing companies, it is important to have a strategy for funding the early years and subsequent growth, whether this is through the owner paying in extra capital or seeking funding from a bank or investment group. In the planning stages of opening your business, calculate your potential cash flow – if sales meet expectations, exceeds expectations or don’t meet expectations – so that you can anticipate shortfalls in available funds and find additional funding if necessary.  Having these calculations will show lenders you are serious about your business. Once you have begun operating your business, continue to complete these short-term cash flow projections on a regular basis based on the receipts and payments you know you will need to make.

For assistance with managing your finances or projecting your cash flows, you can contact me at Pooley Accounting Services at 314-260-7808 or info@pooleyacctg.com

To discuss financing options for your business, please contact Mark at Foresight Commercial Finance.

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Tags: accounting, banks, cash, cash flow lending funding accounting business, finance, linkedin, loans

Posted By Mark on May 24, 2010

Mark,

Good questions!  Thank you.

In today’s lending market where loan dollars are scarce and difficult to secure, an Argus analysis is almost always required by lenders to secure a loan on any multi-tenant income producing property.  Having an Argus “run” to present to a lender up front in the application process is not only sure to give your client a heads up in the competition for available funds but it will also expedite the lenders decision making process.  Additionally, its a great internal budgeting tool and benchmark if your client just wants to get a better handle on the management and performance of their property.

Not having an Argus run is like trying to row a boat across a lake in a storm with no oars or lights to steer or see the way!  You don’t really know where your going and can’t really tell if you’ve been there before!

In short, an Argus run produces a “Discounted Cash Flow Analysis” in that it typically creates a 10-year forward looking projection of financial performance for the property based upon historical property information and specific market derived assumptions.  The Argus run then discounts those annual cash flows back to a current present value under the time value assumption of money.  This is the predominant method of valuation used by lenders and is most heavily weighted in the lenders final determination of loan value.

Most often, an Argus run can be created in just a couple of days.  All we need are copies of existing leases and any historical income and expense statements your client may have available.  Even if the client doesn’t have these documents readily available, I can usually go off of just a rent roll.  Additionally, Argus is pretty easily updated as new data is made available.  Of course, all of this information is held highly confidential and either returned to the client or destroyed once the Argus run is complete as the client instructs.

I hope this information is helpful! Please feel free to ask any other questions that may come to mind.  I’m a numbers guy and love to help people get a better grip on the financial performance of their property.

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Tags: Argus, budgeting, commercial finance, difficult finance, Discounted cash flow analysis, Income property, multi tenant income producing, muylti tenatn, time value of money

Posted By Mark on May 23, 2010

With the lack of liquidity in today’s market, lenders demand you have solid numbers to back up the value of your assets. Trusted by banks around the globe, ARGUS Valuation – DCF can help you unlock the true value.

Understandable and audit worthy, ARGUS Valuation – DCF documents your assumptions and supports your financial conclusions with its standard reporting of all input data, property and portfolio level summary reports and detailed tenant-by-tenant supporting schedules. ARGUS Valuation – DCF provides reliable transparent results that are easily understood and dissected by reviewers.

For more information on how Bart Zucker can perform your Argus analysis thus adding value to your proposals and appraisals call Bart at 916-509-1604 or email bzuck1@gmail.com

Category: Good Stuff | 2 Comments »
Tags: Appraisals, Argus, banks, Financial Analysis, Income property, Rental property

Posted By Mark on May 22, 2010

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Tags: accounting, Best Ten Days in the Market, Capital Management Services, Investing, Investing myths, Laura Shaerman, Stock market, stock market analysis

Posted By Mark on May 7, 2010

Last week I was in one of St. Louis more conservative ex-burbs. As I dropped by the businesses I was repeatedly lectured on the evils of borrowing. Several times I was told,”People who borrow get into trouble.”How is this different than saying,”People who drive cars get in to accidents.”? Just as not knowing how to drive a car is a severe handicap so is not knowing how to manage money.

Our schools do a terrible job of educating people in money management. In my opinion every 8th grader should be able to explain opportunity cost and the time value of money. Only by knowing these economic principles can one achieve economic independence.

Opportunity cost is the loss that one incurs because of the inability to take advantage of an investment opportunity. Let me restate the money you would have made if you have the money today. Thus if some one in your industry is retiring and selling good equipment cheap,: Your loss is both the discount you could have gotten plus the profit you would have made with the new equipment. Lack of cash caused you to lose profit.

Imagine you own a gas station C store and your slurpy machine is broken. The broken machine is costing you 15 slurpy sales daily. I am not a slurpy machine expert but for argument the machine cost $1000. You don’t have $1000 on hand so you lose 15 sales a day plus some of your regulars have started going down the street for gas where the slurpy machine works and you may have lost those customers forever.

The cost of the slurpy is the syrup plus the running of the machine. So maybe 30 cents syrup0 plus the cost of running the machine which is about $2.00(electric) divided by 15 or 14 cents plus the cost of owning the machine for its life which we will say is 5 years, $200 per year divided by 365 days per year or 55 cents divided by 15 slurpy sales oir 4 cents. Plus 10 cents for the cup. We will add another 10 cents for miscellaneous.

So the cost is .30 + .14 +.04 +.10  in cost or 68 cents and it sells. for $1.99. Thus not having the machine cost 1.99 minus .68 times or $1.31 times  fifteen resulting $19.65 dollars a day. $7172.25 a year.

The person who fears borrowing will tell you that I am neglecting the cost of funds. Fair enough. To borrow unsecured with an SBA loan currently carries a rate of 7 3/4 percent. The origination fees are between one and two percent. For our purposes we will use 2 percent. So a thousand dollars cost $20 plus $7.75 annually. So the fellow who did not borrow is actually only losing 7144.50.

A pittance why that will only pay half of your property tax. You don’t need that money.

All the smart people who have read this article can apply for funding here. Be sure to ask how you can get a rate of 6% rather than 7 and 3/4’s

Coming soon will be an article on the time value of money so you can figure out what your loan is really worth.

Category: market conditions, money management | No Comments »
Tags: borrowers, c store, cash, economic independence, economic principles, gas station, how to manage money, investment opportunity, money management, net profit, opportunity cost, slurpy machine, time value of money, value of money

Posted By Louise Pooley MBA on May 5, 2010

Hi Everyone, my name is Louise Pooley.  Mark has invited me to participate on his blog as a guest blogger so I will be posting items I hope will be of interest to you from time to time.  First, I’d like to introduce myself.  I am the President of Pooley Accounting Services, a company that I founded in 2007 after working for over 15 years in corporate and non-profit accounting.

Someone recently asked me about the most common accounting mistake we see small business owners make.  A couple of things immediately came to mind – co-mingling personal and business funds and failing to manage cash flow. Today I would like to discuss the first of these two things.  What is co-mingling of funds and why is it a problem?  This occurs when business owners utilize personal checking accounts and credit cards to pay for expenses incurred in the business’ name.  It can also occur between businesses that have shared ownership and one business pays the expenses of another business or receives a deposit that is intended for the other business.   The first problem with this is it makes it very difficult to track all your business expenses because you are not consistently using the same checkbook or credit card.  It also becomes a recordkeeping nightmare for your accountant or CPA as they need to ensure the transactions are recorded appropriately in your financial records.  Whilst you may not realize it, the additional entries involved can often lead to increased accounting costs.  Co-mingling your personal and business records could lead to the IRS deciding to look at both your personal and business returns in the event of an audit as you have linked them together as a result of your co-mingling.  If you need to contribute personal funds to finance your business, make lump sum transfers in to your business checking account and then pay the expenses with your business checking account or credit card.  Finally, and most importantly, utilizing personal funds to pay for business expenses can also lead to you losing the legal protections provided by the corporation you established in order to do business.  Attorneys refer to this as piercing the veil as it allows them to pursue personal assets as well as those of the corporation when filing a lawsuit against you.

If you need assistance with managing your finances please contact Pooley Accounting Services at 314 260 7808 for a free consultation.

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Tags: accounting, cash, co-mingling, CPA, Louise Pooley, mistakes, piercing the veil, Pooley Accounting Services, small business