Posts Tagged → Assets
Investing for Small Business
Whether a sole-proprietorship, partnership, or a limited liability corporation, all small business owners know that they are already investors in their own business. With so much involved in the day-to-day operations of running a business, many small business owners place investing in the back of their minds. However, this can be a dangerous way to operate. After all, when you’re the boss, you’re also in charge of your own retirement plan and in finding ways to reinvest in the company without damaging the capital you’ve already built.
Here are a few key tips in small business investing:
- Your business is part of your portfolio. When deciding on an investment strategy for your small business, do not neglect to consider your business as a part of your investment portfolio, since you may be able to tap into some of your existing equity or value in order to make new gains.
- Tone down the entrepreneur. When considering your investment strategy for your small business, consider risk. While the entrepreneurial spirit can make a person a successful business owner, it may also make them a horrible investor by encouraging them to take on too much risk. Slow down and understand when and where to be aggressive in your investments.
- Strategize for capital preservation. While your personal portfolio may be built around simple growth, your small business investment portfolio should strategize for capital accumulation and preservation. That way, when lean economic times come, your small business can lean on its portfolio to help generate income.
- Diversify outside your business. Small business owners may want to invest in their industry; after all, it is the industry they know best. But try to avoid putting all of your investments in one industry. If the industry falls on hard times, your business and your portfolio will both take a beating.
- Allocate your assets. It may be tempting to put all of your money in one place, but you need to properly allocate your assets to make them work for you. Stocks can make you a lot of money in the long term but can be risky short term; bonds are less volatile than stocks but also have a lesser yield, and cash in the form of savings and money market accounts do not earn much in comparison. Talk to a financial planner about properly allocating your assets to make your money work best for you and your goals.
This last step, talking to a financial planner, is probably one of the most important you can make. When making decisions on how to build your small business investment portfolio, consult someone who is as good as his or her job as you are at yours. Your financial planner can look at your business, manage risk, and help you to define goals that make sense for your business. Talking to a financial planner will ensure that you create an investment portfolio that makes good financial sense now and for the future.
Deficiency Judgment After Foreclosure? Is It Likely The Lender Will Sue You
Foreclosures are on the rise, and so are judgments from lenders to people that have gone through a foreclosure. While there are several reasons to try to avoid a foreclosure such as your credit, future buying power one of the main concerns is if the lender can sue you for a deficiency judgment. A lender, in most cases, has the right to sue a homeowner whom has lost their home to a foreclosure, however in most cases there is little danger for the former homeowner to be sued in the event of a foreclosure.
Understanding how the foreclosure process works will also help you understand how a deficiency is created. The liens that are affecting the property are paid off by way of a sheriff’s sale, or foreclosure action. The proceeds that are generated during the sale are used to pay off lien holders that have interest in the property. In many cases, the first mortgage holder ultimately purchases the property, and buys the house back. By making the minimum bid on behalf of them, the first mortgage holder and the most vested, wins the auction. However, when this happens they do not pay the loan off in full, this presents an issue of a remaining outstanding balance on the loan. If the proceeds do not cover the entire loan amount and therefore you have a difference between what is owed and the actual sales price this does not mean that you are responsible for the difference.
First, in order to responsible for the difference, the foreclosure laws in the state where the sale was a held have to allow the lenders to sue the previous homeowner for the deficiency. Not all state permit the lenders to do this, you will need to check your local laws for each particular case. If in the event that the state does not permit this action from the lender, then you are perfectly safe from being sued, you have nothing to worry about, the lender will not be able to take other assets such as cars, or wages from you, and they simply have to take the loss.
In the case where the law does permit the lender to sue, it is rare that they will take legal action to do this. Think about it, people that have lost their homes to foreclosure are usually in a financial position that enabled them to make the payments and lose their home in the fast place. Therefore, most lenders have the same thoughts; they are worried about how they would ever collect the money, even if there were a judgment against the previous homeowner. IN just about all case, they do not have the money to pay it back anyway so a judgment is worthless. Victims of foreclosure generally file a bankruptcy shortly after, because they are having financial difficulties and a bankruptcy is a way to help clean the slate. The fact of the mater is, lenders are not likely to pursue you personally, as in most cases it is simply a waste of time and money, and the will not recapture there loss anyway.
Therefore, in conclusion, you almost never have to worry about a lender suing you for a deficiency from a foreclosure, even if the law allows the lender too. Lenders can try to get the outstanding balance, but the additional costs to pursue it and the unlikely chance they will recoup the loss makes it highly unlikely that they will try to make you pay for the deficiency after a foreclosure. Most lenders will accept the loss, and leave the previous alone so that all parties involved can move forward.