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There are usually two kinds of loans: secured loans, and unsecured loans. Unsecured loans are the ones which do not require any kind of security that is to be assured to the loan lender. However, a secured loan is the one where the potential borrower would have to secure a guarantee or security against which the lender will lend money. Usually, secured loans are the better choices among the two because they come with many large and small benefits like lower interest rates – but you need to put one of your valuable assets as collateral. But you can easily avail a homeowner loan without using your property as mortgage. So, how do these homeowner loans work? In this article, we will discuss:

What is an unsecured homeowner loan?

How does it work?

Features of an unsecured homeowner loan

Why should you apply for it?

How to choose the right loan?

What is an unsecured homeowner loan?A homeowner loan can be taken by those who have a home in their name. With an unsecured homeowner loan, people can get a loan for a certain amount of the total value of the property without having to guarantee their property to the lender. One needs to be above 18 years of age and also should have a regular income source for being eligible for the unsecured homeowner’s loan. How does an unsecured homeowner loan work?Homeowner loans are very common these days as come with certain benefits, which are beneficial for the debtors. The borrower who has taken the loan has to repay it along with the interest charge in monthly instalments. The interested party should check the availability of the loan along with the market conditions before taking out an unsecured homeowner loan. They should also make sure that they can pay off the loan every month. Loans can be requested on different types of property like flats, bungalows, cottages, houses, etc. Some of the things that the lender usually takes into consideration are the age of the applicant, the loan term they can pay for, the value of the property, the income of the applicant and their credit record.Also, the rate of interest for these loans are either fixed or a floating rate of interest depending on the lender. Variable-rates of interest can be a bit expensive as compared to the fixed rate of interest in which the repayment instalments remain the same throughout the tenure of the loan.Some of the important features of homeowner loans The value of the loan will be a certain percentage value of the entire property which is negotiable in terms.

The tenure of the loan will be stretched from 1 year to 7 years, depending on the value of the loan.

The interest rate is either fixed or floating.

There will be a thorough affordability check considering income and credit score, and then a determination of eligibility of the homeowner loan.

Usually, there will be certain lenders who might take a certain amount as fees for finalizing the loan. Research can be done before selecting the lender who is not charging any extra fees.Some of the fees which are included in the homeowner loan are:

Legal Fees

Broker Fees

Disbursement Fees

Valuation Fees

After a lender and loan have been selected, several steps are to be completed before the loan is finalized. Usually, these steps can take 4-5 weeks, after which the loan amount will be transferred to the debtor’s account.

The lender will check the credit record and make sure that the loan can be paid.

The lender will then check the current pay stubs to determine an income’s regularity.

They will then check the registry of the house to confirm the ownership.

Lastly, they will calculate the property’s value and equity before finalizing the loan amount.

After the loan is granted, the monthly EMI’s of the loan will need to be paid. If you are paying off the loan early, a certain early redemption or repayment charge would be administered. Homeowners can also take a payment holiday with the lender’s approval, but in such cases, the cost of the loan will increase.Why should people apply for homeowner loans?Some of the reasons why people take homeowner loans are mentioned below:

Funding: The money that you receive can be used to fund a large expense or a smaller one, depending on your needs. Also, you can use it for your wedding expenses or to fund your dream holiday.

Business: They can start a business with their loan and invest in it with the amount. This will make the repayment of the loan easier because the returns can be used from the business to repay the loan and can also successfully secure the future of your business by investing in it.

Home improvement: Renovations and improvements can be made in the home because usually, these renovations are expensive. To increase the value of the home, timely renovations and improvements can be very helpful to enhance the overall property value.

How to select a homeowner loan?Searching for the right kind of loan can be difficult as there are many options to choose from. Some of the steps that should be taken while choosing a loan are:

First, decide the amount to be borrowed for this loan.

The next step is to calculate the value of the property according to the current real estate trend and by calculating the mortgage value that is still outstanding.

After this, decide the number of instalments that can be paid every month and according to that, decide the term of the loan.

Next, keep records like house registry, credit report, etc. available because these are needed by the lender to make their decision.

Lastly, talk to a broker for getting a market viable homeowner loan on the property

When your business is in its starting phase, you need a loan to grow it. Yes, there are ways for you to start your business with very little capital, but even in the age of the internet you need loans for the growth and expansion of your business. Oftentimes, startup and small business owners are scared of taking loans because they believe returning the same loan with interest on it will hinder their growth. The fact is a loan is not such a big liability if you have done your homework before getting it. Hastily getting a loan without researching the market and knowing your business’ growth potential can be detrimental to the business.Your Business Plan Matters Big TimeIt does not matter how experienced your management team is when your business plan is weak. When you ask for a loan from lenders, they are trying to find reasons to forward you the desired loan. They want to be sure that the loan they forward is returned in time and according to the terms and conditions set at the time of loaning. Lenders will seldom gauge the potential of your business to return the loan based on what you speak. What they want to see is a solid business plan and that’s why you need to have an impressive one. A strong business plan will consist of the following and some more.

The company description

Management role and experience

The product description

Strategy for marketing

Financial projections

An executive summary

Documented cash flow

Keep in mind that banks often look at the cash flow in the documented form, and their scrutiny is not limited to what your projections are for the future but more importantly how you have managed things in the past. They will look at your company’s cash flow records for past couple of years to see if you should be given the loan you are asking for. So, keep your business plan in mind and make sure you have worked on every aspect of it to present something impressive to the investors.Your Loan Options Are ManySometimes, you have a solid business plan and everything else is in place, but your understanding of loan options is not at its best. Many small business owners live with the impression that the only institution available to them for obtaining a loan is a bank. That’s far from truth because there are dozens of other ways to obtain the loan or investment for your startups that’s much easier to manage than a bank loan. Some of the options available to you include SBA loans from the government, invoice financing, business equipment financing loans, etc. If you are just a startup and none of those options seem viable to you, there is online fundraising.Online fundraising has become quite a popular method of getting investments for your startup from individuals who trust in your idea and concept of the business. Using funding website you have access to hundreds of thousands of investors located all around the world that are willing to help if you can convince them with your business plan and the team that’s behind your project. So, avoid making the mistake that many small business owners make when they think bank is the only place for them to get any money for their businesses.Your Timing to Apply for a Loan Is ImportantThis is a huge mistake that small business owners often make and pay the price in the form of not being able to obtain the loan they want at the terms they want. See, you will always be told to have a strong business plan because that’s the only way investors will trust you as an entrepreneur or businessperson. When you create your business plan, you are not just jotting down random numbers on a piece of paper. Your plan should give you an idea of what your business’ needs will be in the coming times. That’s when it makes sense to apply for loans well in advance and not at the eleventh hour.When you apply for a loan at the eleventh hour, you are seen as a business in trouble. Most investors will see your business as the sinking ship and they will never want to get on it. Obtaining a loan in these circumstances can become close to impossible. This is the reason why you should apply for a business loan in advance and not at exactly the moment you need it. You also have to keep in mind that loan approval process takes time too. If you need the cash on an urgent basis, every day that passes during the approval process will be causing more damage to your business.The Right People Can Make the DifferenceDelegating responsibilities to the right people is an art and skill that not many business owners have. Oftentimes, small business owners rely too much on their own skills and are scared to trust any other person to do things for them. This can be a grave mistake because you cannot be the jack and master of all the trades at the same time. For example, you might be great at crunching numbers and making accurate projections for the business but not very great at sales and pitching ideas. If you have to pitch your business idea, its marketability and scope to the investors, choose the person who can best present it. Despite your great business plan, you will fail to obtain a loan because of your nervousness and lack of confidence when it comes to acting like a clever salesperson.You have to bear in mind that investors are not investing only in your business, they are also investing in you. It is very important for them to like your personality to invest in your project. Appearing unprepared or nervous in front of them will send an impression that you are not fit to lead the project, your decision making is faulty and that you cannot create strong teams.A Well-prepared Presentation Can Win HeartsIt does not matter who is giving the presentation when the content is boring and does not address the points that investors are most curious to know. First, get your numbers straight and bring them into the presentation at the right points. Be the investor in your mind and think of the questions you would ask if someone presented the same product/service to you. Have your accountant, advisor and business lawyer by your side when preparing the presentation. You don’t want to give wrong figures during the presentation and fall for a bad deal at the end of it. The most important thing is to explain your business idea as clearly as possible. Many times the presentations are so all-over-the-place that investors can’t make heads and tails of it. If they don’t understand your business, they will never invest.So, bear in mind that obtaining a loan is not that big of a challenge. Most of the times, it is just some small mistakes in the areas mentioned above that become the cause of lost opportunities to get the right loans for your business. Create a solid business plan, choose the right people to represent your business and use all the options that are available to you at the right time to grow your business at the pace you want.

Consulting arrangements can do wonders for a business. They can provide a boost to your business by utilizing a consultant’s focused expertise and their years of experience in similar venues, and they can give a business a good old-fashioned shot-in-the-arm.Consultants are distanced from the daily politics of your business. They can provide you with unbiased opinions and fresh perspectives. The thing is, they can only do this if you allow them to do it.I’ve done the consulting gig for years. In the process, I observed and experienced clients using my services well and not using my services well. I have listened to associates’ stories of how clients work with them, too. Sometimes the clients get great value for their money, and sometimes they get less than that.How to Make the Most of Your Consultant DollarIsn’t the most important thing about working with a consultant that you get valuable results for your money and build a meaningful business relationship at the same time?In order to do this, you must go into a relationship with your consultant with ‘collaboration’ in mind. The two of you must work together in order for the consulting relationship to work. As the client, you must be a willing participant in the business relationship with your consultant.In order to get value for your consulting dollar, you must allow your consultant to learn and know about many aspects of your business.If you go to a doctor with a pain in your side, but then refuse to let the doctor look at it and test it because you’re too modest or afraid of what he will tell you, the doctor won’t be able to help you.Several years ago I consulted at a company to help them use software to create reports they needed. They did not want to show me their existing reports, however. How could I help them create the new reports if they refused to show me the existing reports? Like a patient who was afraid to show the doctor the pain in his side, this client was afraid to show me their reports. Two people at this client actually clutched the reports to themselves like patients holding their hospital robes closely.After some explanations and coaxing from me, they finally let me see their pain and allowed me to help them. (Just for fun, I’ll tell you that this company is an underwear manufacturer, and leave it at that!)A consultant’s role is to give you business information that you need in order to make informed decisions. They do not have the responsibility to make your business decisions, nor do they have the control. The responsibility and control (which go hand-in-hand) are yours.Before You Decide to Work with a ConsultantFirst of all, know what you want. Define it before the consultant agrees to work with you. Write it down. List quantifiable and/or tangible objectives. Write out what you think you want the consultant to do.
What goals do you want to accomplish? What is the scope of work? What results do you want the consultant (and your business) to achieve? What do you think is the timeframe? What is your budget for this project?
As You and the Consultant Agree to Work TogetherDiscuss how the consultant works. For example, what methodology does she use to gather information, process it, draw conclusions, and make recommendations? There is no magic answer to this question. Most consultants, over time, will develop their own methodology to perform their work. Just make certain they have a plan that is the basis for their methods.State the scope of work: what the consultant will deliver, when they will deliver it, and how they will deliver it.State who will do the work (if there is a team of consultants). Also state where the consultant(s) will perform the work.Agree on the timeframe, money, and invoicing.List points of time at which you and the consultant will touch base to discuss where the project is at, how it is coming along, and if adjustments need to be made. It’s a good idea to schedule regular meetings or conference calls so that issues do not become surprises.What Else to Look For?”The worst consultants believe their companies are smarter than their clients, instead of recognizing that they’re extensions of their clients’ resources. Junior consultants in several well-known firms especially show this trait; it’s part of their firms’ core cultures,” writes Peter Keen of Computerworld. He continues, “Arrogant cultures make lousy partners and are in the rip-off business without realizing it. Because they believe they’re so much smarter, they make many mistakes that the more collaborative and respectful consulting firms don’t make.”Look for consultants who want to form a collaborative effort with you and your business. Likewise, you must collaborate with the consultant in order to get the most bang for your buck.Two More Do’s and Don’tsTreat consultants as consultants, not as employees.If you treat consultants as insiders rather than as outsiders, you will not receive the benefits of having them work with you. This is more of a mind process for you as the client. If you think of your consultants as an extension of your employee base, you may not be able to hear them when they tell you important information. Remember, as outsiders they are able to skip most of the politics and inefficiencies of your company in order to unearth diamonds in the rough. These are the hidden diamonds you are paying them to find. If you treat them as if they are employees, you will hinder that creative process for which you are paying them.Treat consultants as adults.Believe it or not, sometimes clients treat consultants as if they were children. This happens most often when consultants are told to not contact certain people for information, even though the contact and the information is important for the consultant’s work. I’ve also heard about consultants being scolded as if they were children.On the surface, the reason that consultants should not be treated like children is obvious; no one wants to be treated like that. It’s humiliating. The deeper reasons are the same as for not treating consultants like employees: clients who treat their consultants like children will not get the benefits out of the consultant that they are paying for.In ConclusionWorking with a consultant can be rewarding for your business. It’s up to you to define your goals, how you want a consultant to help achieve those goals, participate in a collaborative relationship, and let the consultant do their work in order to give you value for your consultant dollar.

Real estate investors instinctively pass on deals presented to them simply because the numbers don’t work. This is quite understandable, however sometimes a little more digging can uncover a simple reason for the property’s lack of cash flow. This issue often comes down to incompetent ownership which results in mismanaged properties.Mismanaged properties or properties which are “underperforming” can be a virtual goldmine if you know how identify and capitalize on the true potential another investor simply is not realizing.Owner incompetence typically comes down to six major issues. In most cases these issues can be remedied simply with a combination of good management practices, an understanding of fair market value pricing and rents in your neighbourhood and of course, injecting a little cash.The following examples generally pertain to smaller multi-families (2 -20 units) however the principles can be applied to larger multi-families.Below market value rentsThis common faux pas stems from a lack of knowledge of fair market value in the area, resulting in a cash flow issue. If a property is at +/- breakeven cash flow at 100% occupancy, any vacancy results in the property owner having to cover any shortfall.The solution is clear. Raising the rents even $100.00 per unit (depending on the number of units) can turn an apparent cash flow issue around. This can be more difficult process however, based on which province the property is in, and the Landlord/Tenant board guidelines of the particular province.As the new buyer of a property, you have the option of requesting vacant possession. This allows you to reset the rental amounts at whatever the market will bear. It is not until you have set the rental amount that you are bound by most provincial Landlord & Tenant guidelines as to how much of an annual rental increase you are allowed.It does need be said that by requesting vacant possession, you must abide by provincial laws which clearly state you must be either moving into the property yourself (or a family member) or you are intending to do significant renovations.Absence of good property managementLack of this skill is one of the biggest downfalls of any would be investor. This encompasses everything from improper screening during the tenant interview process to the daily aspects of running the property. Neglecting any of these areas will result in an underperforming property.Without a rigid system in place to screen the tenants, owners subject themselves to delinquent rents, frequent vacancies and potentially large repair bills. Lack of initial tenant qualification, absence of urgency in collecting rents and not having proper eviction procedures in place are common characteristics of a mismanaged property.Using property management or self – managing is another factor to consider. The novice investor often self manages to save money, however lack of efficiency is typically equated with the lack of time the investor has to dedicate to property management and ultimately the property suffers and becomes an underperformer.Hiring an incapable property management company can also create an underperforming property. Property managers have been known to have poor screening procedures because they only get paid when a unit is tenanted. This is more common than you may expect. The bottom line is low rents and high turnover.Often property managers also outsource repairs and “pad” the bills as extra income. If the owner was in control of the management, they would know exactly what the repair was, the cost of materials and labour necessary to fix the repair, not to mention the name and number of people in their database to do the repair.If the property you are looking at is part of a condo corporation or strata, there could also be mismanagement of reserve funds. This is common and results in excessive monthly fees. Being on the condo/strata board and having a hand in how money is being spent can potentially bring down the monthly fees, thus enhancing the bottom line.Ultimately by leaving the management to someone else or not managing the manager will often lead to underperformance. Negative results stemming from poor property management is also the main reason why many incompetent investors get out of property ownership.Lack of routine maintenanceLack of response to tenant requests of routine maintenance is the number one reason for turnover and vacancy. This obviously results in negative cash flow which contributes to underperformance. This issue is very easy and inexpensive to correct. Hiring a caretaker instead of a property manager who has handyman skills allows payment of an hourly wage instead of an overall percentage rate and “padded” repair costs. A caretaker can show units, perform tenant interviews, enforce leases, collect rents, deal with tenant issues and repairs as well as oversee more significant repairs to ensure they are done satisfactorily in terms of budget, schedule and quality workmanship, especially if you are an absentee owner.I also make sure my tenants get a repair request sheet which forces the tenant to document each repair and creates a paper trail. This helps avoid any hearsay if an issue arises and gives the landlord incentive to get the repairs done within a reasonable amount of time. This goes a long way in creating long-term tenants, which in turn creates an efficient property.Letting properties become rundown by neglecting routine maintenanceThe properties being referred to are neighbourhood eyesores. Common characteristics are unkempt landscaping, clearly visible overdue repairs to even a makeshift car (or appliance) repair/storage facility on the driveway (or front lawn).Not only does the incompetent investor have an undesirable looking property but probably thousands of dollars of renovations. These properties ultimately attract the type of tenant that nobody desires.The good news is they can often be purchased for great deals and turned around into highly functioning properties with good tenants and great cash flow. To understand if it is worthwhile to get involved in such a project, it is important to ask yourself the following questions:a) Is this an ugly property in a good area?b) Are the repairs required cosmetic?c) How much will the repairs cost?d) If I do repair the property, will I be able to raise the rents enough to offset the costs?e) At the proposed new rental amount, how long will it take to retrieve my capital expenditure?f) If I do the repairs and raise the rents accordingly, will this property attract the type of tenant who will want to live in the neighbourhood and afford the “new” rental amount?Not taking initiative in your eviction processAn incompetent owner who allows delinquent rent to perpetuate for months or is not familiar with the landlord/ tenant guidelines can create an inefficient property producing negative cash flow and tenants who often take over the property.These owners can be very accommodating when it comes to negotiation for purchase as they are often looking to get out fast. Properties do not have to be in a bad area to get to this state, they simply have an inexperienced or neglectful landlord.By demanding vacant possession, doing the necessary repairs and creating a new tenant base, these properties can be turned into gems.Records mismanagementPoor record keeping of rental income, repairs, employee payments, property management documents and even lack of formal lease agreements can “catch up” are signs of an incompetent owner. It is surprising the number of owners who run their business with cash and little documentation. This type of owner eventually must “wake up and smell the taxman”. A business can only survive like this for so long before the owner must change their ways or sell.Repositioning PropertiesRepositioning means turning a property into its highest and best use, which is what we have been talking about this far, essentially ensuring the highest potential earning capacity of a property. Let’s touch on the repositioning process.A property that is very accessible to all amenities and transportation could be categorized as an “A” area, but the property could be older, run down and may have significant vacancy, therefore categorizing it as a “B” or even “C” property. A cash injection to improve the property to the standards of the “A” area may allow significant rental increase. Once the building is renovated and can justify higher rents with less vacancy, it is easier to refinance to get most or all of your renovation capital out, allowing you to repeat the process on another property.Unfortunately we can’t reposition all properties. There are many building where the cost of improvement is excessive compared to the increased income expected, or perhaps the area just doesn’t warrant the effort. Proper diligence is everything.When repositioning a property, implement a strategy for both the repairs and the management simultaneously. For the repair phase, make sure to:a) Get at least 3 repair quotes to formulate a budgetb) Hire a project manager if the repairs are extensive; otherwise hire handymen who specialize in particular trades. Make sure they have referrals of past clients you can call, proper insurance and are willing to work within a schedulec) Schedule the maintenance with the contractor or handyman for the quickest turnaround time and put the expected timelines in the contract, including bonuses for being on or under budget and time or penalties for being overd) Base your contract on materials and labour separatelye) Make cosmetic improvements to create a safe and pleasant environment maximizing curb appeal. This will attract better tenants to the property and command a higher resale profitFor the management phase:a) Hire a reliable caretaker or property manager; making sure they have referrals (call the referrals!)b) Create a marketing plan to attract higher income tenantsc) Create a screening system and a tenant retention program for your caretaker or property managerIf you are keeping existing tenants, have your new manager:a) Notify each tenant of the new management and give them a schedule for the upcoming renovations to their unit and the groundsb) Give each tenant a repair request sheet(s)c) Give the tenants a copy of the new “house rules” outlining expected behavior of both tenants and guestsd) Collect any rents which are in arrears and begin immediate eviction proceedings on those who refuse to complye) Alert the tenants of new rental rates on all renovated units. You can get exceptions from some Landlord/tenant boards to raise your rents higher than the annual allotment based on significant renovations or additionsf) Pay any non-compliant tenant a “moving” fee to leaveg) Begin new leases with all compliant tenants if possibleRepositioning properties is kind of like becoming the new coach of a losing sports team ¾’s through the season. (Sounds like the Leafs!) Use your skill and experience to inspire and help coordinate many non-functioning parts into an entity which has chemistry and gels.