Can a Credit Inquiry Affect my FICO Score?
There are many questions and some confusion surrounding this topic. A credit inquiry is when a consumer's credit is reviewed by a lender, creditor, or by the consumer personally. Inquiries remain on the credit report for two years. Some types of inquiries will hurt credit scores, while others won't affect them at all. This seems to be where the most confusion lies. When a third party pulls credit with the consumer's authorization this inquiry will hurt the credit score. This is called a "hard pull".
On the other hand, if a creditor pulls credit without authorization (for example, to consider a consumer for a promotional credit card offer), it is considered a "soft pull." A soft pull is an inquiry that does not negatively impact the credit score. But suppose the consumer applies for the promotional credit card? Then the creditor will undertake a more in-depth review, this time with authorization. This will be considered a hard pull, which will reduce the score.
To understand inquiries we must look at scores as well. We will take the FICO Score as an example. FICO is used by mortgage lenders when deciding a consumer's risk level. Based on the risk level, lenders decide what interest rate is appropriate for a loan or if it will be approved at all. When lenders pull FICO it is considered a hard inquiry and will negatively affect the credit score. FICO also sells scores directly to the general public online at www.myfico.com. Ordering your score and credit report directly from this site will not affect your score. In fact, even if a consumer pulled his credit and scores 80 times in one day at www.myfico.com, all 80 pulls would be considered "soft" and would not affect the score.
Consumers can also obtain their credit directly at other online sites, such as www.annualcreditreport.com, www.freecreditreport.com, www.Equifax.com, etc. without hurting their credit scores.
Monday, November 1, 2010
Friday, October 22, 2010
Retire Early with Passive Income
Most of us, well practically all of us are concerned about retirement. A savvy investor will look well into the future, determine a goal and begin to work towards achieving that goal. We have heard this all before. Saving early in life and choosing wise investments over time will provide a financial windfall – well at least some sense or security and a nice nest egg. The key to a successful financial future lies in compounding. Starting early allows the dividends or the interest earned to grow and these profits continue to grow on top of one another offering a fairly substantial return.
Apart from compounding interest, the other crucial element to a successful portfolio is passive income. Without passive income, you will be faced with a declining asset base once you retire. This is a daunting experience for every retiree. The beauty of passive income is once you stop working these investments keep working for you with little to no work of your part.
As a landlord for many years, I have witnessed this phenomenon and recently after speaking with my financial advisor, learned these small investments made years ago will play an integral part of my portfolio in the future and for retirement. These are so important that I’m compelled to share with my readers about my experiences.
Getting started –
This is by far the most difficult part of every journey and like everything else in life is where you must take on a student mentality. When I began learning about real estate my initial goal was to learn everything there was to learn. There is so much information on the internet today and this is a fine place to start, but it’s not where I began. Every time I heard someone mention real estate I became involved in the conversation.
I was fascinated to learn of the “No Money Down” scenarios and even more determined to understand what made sense and what provided a less risky and rewarding investment. In order to be successful at something it helps to be passionate about it and to emerge yourself and to learn as much as you can. Reaching out to real estate brokers and mortgage brokers is a great place to start. Ask them as many questions as you can and find out what they know.
Beginning with the profit picture is the most critical aspect and you can do it right from your very own home. Many home buyers and investors spend a great deal of time looking at properties prior to understanding whether is makes financial sense. If you are like me, wishing for more hours in the day determining your purchase power and the rate of return (cap rate) and GRM (gross rental multiplier) first will save you a great deal of time and energy. Also, you will become good at determining the true value of a property quickly. It helps to be able to understand a few quick models so you can determine whether looking at the property and finding out more makes sense.
Most of us, well practically all of us are concerned about retirement. A savvy investor will look well into the future, determine a goal and begin to work towards achieving that goal. We have heard this all before. Saving early in life and choosing wise investments over time will provide a financial windfall – well at least some sense or security and a nice nest egg. The key to a successful financial future lies in compounding. Starting early allows the dividends or the interest earned to grow and these profits continue to grow on top of one another offering a fairly substantial return.
Apart from compounding interest, the other crucial element to a successful portfolio is passive income. Without passive income, you will be faced with a declining asset base once you retire. This is a daunting experience for every retiree. The beauty of passive income is once you stop working these investments keep working for you with little to no work of your part.
As a landlord for many years, I have witnessed this phenomenon and recently after speaking with my financial advisor, learned these small investments made years ago will play an integral part of my portfolio in the future and for retirement. These are so important that I’m compelled to share with my readers about my experiences.
Getting started –
This is by far the most difficult part of every journey and like everything else in life is where you must take on a student mentality. When I began learning about real estate my initial goal was to learn everything there was to learn. There is so much information on the internet today and this is a fine place to start, but it’s not where I began. Every time I heard someone mention real estate I became involved in the conversation.
I was fascinated to learn of the “No Money Down” scenarios and even more determined to understand what made sense and what provided a less risky and rewarding investment. In order to be successful at something it helps to be passionate about it and to emerge yourself and to learn as much as you can. Reaching out to real estate brokers and mortgage brokers is a great place to start. Ask them as many questions as you can and find out what they know.
Beginning with the profit picture is the most critical aspect and you can do it right from your very own home. Many home buyers and investors spend a great deal of time looking at properties prior to understanding whether is makes financial sense. If you are like me, wishing for more hours in the day determining your purchase power and the rate of return (cap rate) and GRM (gross rental multiplier) first will save you a great deal of time and energy. Also, you will become good at determining the true value of a property quickly. It helps to be able to understand a few quick models so you can determine whether looking at the property and finding out more makes sense.
Thursday, October 14, 2010
The Chairman - Part 2
Written by Ven Sorkin
I woke up to the sound of Ave Maria playing on the Penthouse sound system. With considerable effort, I opened my eyes. Sunlight was streaming through the window. Keeping my eyes open for longer than 10 seconds was painful. Nonetheless, I stumbled over to the window and pressed the button for the tints to activate. Within a few seconds, it was night again. Mondays are tough, but when you own a very large corporation and have a considerable amount of people working for you, you are afforded a certain degree of flexibility in your working hours. Simply put, I got back into bed and did not wake until noon.
When I finally did wake up, however, it was time for work. Tanya, the maid, had already prepared breakfast; judging from the warmth of the waffles, she was more in tune to my sleeping patterns than even I was. When I was younger, I relished having a routine to follow every morning – I enjoyed cooking my own breakfast and picking out my clothes. However, as I got older I gradually realized that having other people do things for me is, simply put, easier. I cannot concentrate on multi-million dollar transactions if I also have to cook myself an omelet at the same time. Besides, who doesn’t have a maid on the Upper East Side?
Today, however, I was not going to think about multi-million transactions – I have highly overpaid analysts to do that. The task I have before me today is much less dull.
I crack open the leather bound binder on my desk. Inside are four folders, each with a name and a number typed on the top right corner. The name was important, but it is the number that was the real distinguishing factor between the folders. Let me initiate you into the co-op process of my board. I have been chair for ten years, and for nine of those years I have been implementing a rating procedure. After the initial review of their finances and letters of recommendation, each candidate is given a number. The number is broken down as follows: finances (6 possible points), workplace position (6 possible points), letters of recommendation (5 possible points), and the x-factor (3 possible points). While most of those are quite self-explanatory, I am going to go into the last one a little bit. The x-fact, a term coined by a younger member of the board, is a factor that makes a candidate particularly appealing. Every candidate starts off with 0 points in that category. If everything else checks out, the maximum number they can get is 17. Usually candidates lose a point or two for less than desirable debt to income ratio, or an inadequate time on the job, or any other number of factors. Thus, the typical candidate must have at least 13 or 14 points out of 20 to get invited to an interview.
The x-factor, however, can add up to a substantial three points. Assuming a candidate is financially qualified, but only has a 10/20, an x-factor of 3/3 can bump him into interview-zone. The x-factor itself can result from any number of qualities. As I said before, it is a measure of desirability. The 26-year old stock broker from 3G only has his apartment because of his x-factor – someone on the board did some research into him and found out the broker’s parents were oil magnates down south. In another case, a younger woman had an initial number of 22/20 - she is a celebrity journalist and having a connection with the local newspaper is always a good idea.
The four files in front of me were rated as follows: a 12, a 15, a 23 and an 8. I put the two extreme files aside – those were probably the fun ones. I was left with two files. The numbers were subject to change, and were simply preliminary ratings assigned during the initial review of the files.
I opened up the 12. Man, early 30s, works as an agent at a talent agency. Income is $230,000 a year, probably with a $50,000 bonus if previous years are anything to judge by. He attached a list of his clients to the file – some actors even I have heard of, a few burnt-out B-listers and two young upstarts. He was applying to rent a $5,500/month apartment, a nice 2bed/1.5bath on the fourth floor. The guys that went over his file gave him a 4 on the finances, which surprised me. A $5,500/mo rent necessitated a yearly income of $220,000. He barely met the requirement. Additionally, as far as I knew the entertainment industry, jobs were always in danger. I was about to cross out the 4 and replace it with a three when I saw his bank statement. The kid had over 30 million in a bank account, accruing interest at .5%. Additionally, he had another 40 million sitting in CD’s and equities. A brief glance assured me of my suspicions – his father was a giant in the industry, with a client list much more impressive than his son’s.
When he died in the late 90s, he left the son everything. I did cross out the 4 but replaced it not with a 3 but with a 6. I read through the letters of recommendations from his current boss and his former roommate. Both letters were… well… unique. In fact, his boss wrote, and I quote “Nathaniel’s face displays considerable displeasure when asked to do even the simplest of tasks. He is condescending to his colleagues and I am quite sure he does not have an ounce of respect for any of them. Unfortunately, he is the most sociable and gregarious agents I have – his people skills are absolutely unparalleled. He has worked at the company for 2 years now, and has consistently been the highest earner. I guess the apple does not fall far from the tree.” Nathaniel’s roommate was even more cryptic; “Nathaniel is a reliable, trustworthy person. He does have a habit of disappearing, weeks at a time, but when he is home, he is a model roommate.” I could not help but laugh. The kid was obviously talented, and I saw in him something that even his boss missed – Nathaniel was bored of his job and, I suspect, of his lifestyle. I was sure that neither his boss nor his roommate was aware of Nathaniel’s veritable fortune stashed away in the best financial institutions. His attempts to lead a more-or less normal lifestyle were admirable. I closed the folder, crossed out the 12 on the front cover and replaced it with a 20. Then I called Linda, my assistant and told her to schedule an interview with Nathaniel at his convenience, I also told her to inform Nathaniel that he was approved and that the interview was merely a formality.
More files to be reviewed next week…
Written by Ven Sorkin
I woke up to the sound of Ave Maria playing on the Penthouse sound system. With considerable effort, I opened my eyes. Sunlight was streaming through the window. Keeping my eyes open for longer than 10 seconds was painful. Nonetheless, I stumbled over to the window and pressed the button for the tints to activate. Within a few seconds, it was night again. Mondays are tough, but when you own a very large corporation and have a considerable amount of people working for you, you are afforded a certain degree of flexibility in your working hours. Simply put, I got back into bed and did not wake until noon.
When I finally did wake up, however, it was time for work. Tanya, the maid, had already prepared breakfast; judging from the warmth of the waffles, she was more in tune to my sleeping patterns than even I was. When I was younger, I relished having a routine to follow every morning – I enjoyed cooking my own breakfast and picking out my clothes. However, as I got older I gradually realized that having other people do things for me is, simply put, easier. I cannot concentrate on multi-million dollar transactions if I also have to cook myself an omelet at the same time. Besides, who doesn’t have a maid on the Upper East Side?
Today, however, I was not going to think about multi-million transactions – I have highly overpaid analysts to do that. The task I have before me today is much less dull.
I crack open the leather bound binder on my desk. Inside are four folders, each with a name and a number typed on the top right corner. The name was important, but it is the number that was the real distinguishing factor between the folders. Let me initiate you into the co-op process of my board. I have been chair for ten years, and for nine of those years I have been implementing a rating procedure. After the initial review of their finances and letters of recommendation, each candidate is given a number. The number is broken down as follows: finances (6 possible points), workplace position (6 possible points), letters of recommendation (5 possible points), and the x-factor (3 possible points). While most of those are quite self-explanatory, I am going to go into the last one a little bit. The x-fact, a term coined by a younger member of the board, is a factor that makes a candidate particularly appealing. Every candidate starts off with 0 points in that category. If everything else checks out, the maximum number they can get is 17. Usually candidates lose a point or two for less than desirable debt to income ratio, or an inadequate time on the job, or any other number of factors. Thus, the typical candidate must have at least 13 or 14 points out of 20 to get invited to an interview.
The x-factor, however, can add up to a substantial three points. Assuming a candidate is financially qualified, but only has a 10/20, an x-factor of 3/3 can bump him into interview-zone. The x-factor itself can result from any number of qualities. As I said before, it is a measure of desirability. The 26-year old stock broker from 3G only has his apartment because of his x-factor – someone on the board did some research into him and found out the broker’s parents were oil magnates down south. In another case, a younger woman had an initial number of 22/20 - she is a celebrity journalist and having a connection with the local newspaper is always a good idea.
The four files in front of me were rated as follows: a 12, a 15, a 23 and an 8. I put the two extreme files aside – those were probably the fun ones. I was left with two files. The numbers were subject to change, and were simply preliminary ratings assigned during the initial review of the files.
I opened up the 12. Man, early 30s, works as an agent at a talent agency. Income is $230,000 a year, probably with a $50,000 bonus if previous years are anything to judge by. He attached a list of his clients to the file – some actors even I have heard of, a few burnt-out B-listers and two young upstarts. He was applying to rent a $5,500/month apartment, a nice 2bed/1.5bath on the fourth floor. The guys that went over his file gave him a 4 on the finances, which surprised me. A $5,500/mo rent necessitated a yearly income of $220,000. He barely met the requirement. Additionally, as far as I knew the entertainment industry, jobs were always in danger. I was about to cross out the 4 and replace it with a three when I saw his bank statement. The kid had over 30 million in a bank account, accruing interest at .5%. Additionally, he had another 40 million sitting in CD’s and equities. A brief glance assured me of my suspicions – his father was a giant in the industry, with a client list much more impressive than his son’s.
When he died in the late 90s, he left the son everything. I did cross out the 4 but replaced it not with a 3 but with a 6. I read through the letters of recommendations from his current boss and his former roommate. Both letters were… well… unique. In fact, his boss wrote, and I quote “Nathaniel’s face displays considerable displeasure when asked to do even the simplest of tasks. He is condescending to his colleagues and I am quite sure he does not have an ounce of respect for any of them. Unfortunately, he is the most sociable and gregarious agents I have – his people skills are absolutely unparalleled. He has worked at the company for 2 years now, and has consistently been the highest earner. I guess the apple does not fall far from the tree.” Nathaniel’s roommate was even more cryptic; “Nathaniel is a reliable, trustworthy person. He does have a habit of disappearing, weeks at a time, but when he is home, he is a model roommate.” I could not help but laugh. The kid was obviously talented, and I saw in him something that even his boss missed – Nathaniel was bored of his job and, I suspect, of his lifestyle. I was sure that neither his boss nor his roommate was aware of Nathaniel’s veritable fortune stashed away in the best financial institutions. His attempts to lead a more-or less normal lifestyle were admirable. I closed the folder, crossed out the 12 on the front cover and replaced it with a 20. Then I called Linda, my assistant and told her to schedule an interview with Nathaniel at his convenience, I also told her to inform Nathaniel that he was approved and that the interview was merely a formality.
More files to be reviewed next week…
Thursday, October 7, 2010
Historic & Modern Merge - Maff Studio
Cool architectural designs where traditional and modern merge; this is an absolute gem – The Maff Studio. It’s a masterpiece housed inside of a refurbished townhouse and designed by RDKA. Located in the center of The Hague, the Maff studio resides in between historic buildings, and thus juxtaposes the modern with the historic. The house features a private entrance, heated flooring. The ground floor has all the amenities needed for private life, with a completely modern kitchen, a washer and dryer, as well as all the standard appliances needed for a home. An open staircase leads up to the first floor. The first floor has a lounge featuring a Dutch 3-seater sofa, an entertainment unit and the master bedroom. You will be amazed at the different custom designed lighting selection in the Maff Studio – some eye catching and mood setting choices.
The beauty of the apartment, however, lies in its interior design. Maff uses three separate open spaces, each with a unique feel and character. Together, the three spaces instill a feeling of peacefulness and contentment in anyone. The designer crafted furniture and lighting provide the inhabitant with modern surroundings, which go in stark contrast to the neighborhood where the building is located. However, the contrast only serves to further underline the uniqueness of the home. The industrial-looking metallic railing on the upstairs lounge is a nice touch, bringing in a bit of roughness to the otherwise tranquil interior design. In fact, most of the metal in the apartment is unpainted stainless steel, coming together at strong angles. One thing is certain; one would never get bored of living in the Maff Studio.
You can find more photos of the Maff Studio RDKA’s website as well as on the website of the Maff Studio itself.
http://www.rdka.eu/Werk/W_Studio-Maff.html
http://www.maff.nl/fotos_villa
If I ever decide to return to den Haag, the Maff Studio will surely be my preferred choice of accommodation.
Cool architectural designs where traditional and modern merge; this is an absolute gem – The Maff Studio. It’s a masterpiece housed inside of a refurbished townhouse and designed by RDKA. Located in the center of The Hague, the Maff studio resides in between historic buildings, and thus juxtaposes the modern with the historic. The house features a private entrance, heated flooring. The ground floor has all the amenities needed for private life, with a completely modern kitchen, a washer and dryer, as well as all the standard appliances needed for a home. An open staircase leads up to the first floor. The first floor has a lounge featuring a Dutch 3-seater sofa, an entertainment unit and the master bedroom. You will be amazed at the different custom designed lighting selection in the Maff Studio – some eye catching and mood setting choices.
The beauty of the apartment, however, lies in its interior design. Maff uses three separate open spaces, each with a unique feel and character. Together, the three spaces instill a feeling of peacefulness and contentment in anyone. The designer crafted furniture and lighting provide the inhabitant with modern surroundings, which go in stark contrast to the neighborhood where the building is located. However, the contrast only serves to further underline the uniqueness of the home. The industrial-looking metallic railing on the upstairs lounge is a nice touch, bringing in a bit of roughness to the otherwise tranquil interior design. In fact, most of the metal in the apartment is unpainted stainless steel, coming together at strong angles. One thing is certain; one would never get bored of living in the Maff Studio.
You can find more photos of the Maff Studio RDKA’s website as well as on the website of the Maff Studio itself.
http://www.rdka.eu/Werk/W_Studio-Maff.html
http://www.maff.nl/fotos_villa
If I ever decide to return to den Haag, the Maff Studio will surely be my preferred choice of accommodation.
Monday, September 27, 2010
Rental Inventory - Facts and Myths
Myth – it is absolutely impossible to get a rental.
Fact – rental inventory is really tight right now, but a smart renter with a good broker will take advantage of any opportunity and can find an apartment with relative ease.
Myth – unit availability is on a decline, fewer and fewer units are available.
Fact- while it may feel like inventory is declining; the figures given in the recent rental market report released by The Real Estate Group NY indicate an upward trend of rental unit availability. In fact, availability is up 1.7% for doorman units and up 3.6% for non-doorman units all across NYC.
Myth – inventory statistics are hard facts that the renter should live by.
Fact – inventory statistics are almost always estimates. As any broker will tell you, there is no one central rental tracking system in New York City. Even though you can now get more information than ever from online sources, rental inventories are still in their dark ages. Until New York City landlords agree to a central rental tracking system, inventories will always be incomplete.
Myth – landlords often over-report their inventories. All inventories in New York are over-reported.
Fact – Most inventories are very under-reported. A large portion of mom-and-pop rental agencies have units that aren’t even tracked in the first place. Manhattan is a large city with an incredibly large number of landlords, and the units of the smaller landlords are very rarely fully represented. Furthermore, bigger landlords often do not fully represent their inventories in fear that a large availability will lower prices across the board. It is in their interest to show less of their supply to up the demand and to keep prices high. If people think there are few available units, they will be more likely to pay more for those units.
Myth – when searching for a property, it makes sense to go online, look up a large number of listings and send them to your broker. It makes even more sense to attempt to handle the negotiations alone once you find the right property.
Fact – you employed a broker for a reason. Odds are, most the listings you will find on Streeteasy, Craigslist or similar web sites are already rented out or are simply not available. An experienced broker will filter through those situations and only provide you with real possibilities. You are not an experienced broker, and will likely not be able to decipher the realities from old or fake listings. Sending him listings may give him an idea of your preferred criteria, but typically these listing are misleading and this simply slows the process down. Your broke has access to all of the current listings in the city and if he finds something good it is important to make time so someone else doesn’t beat you to the punch.
Myth – as a potential tenant I am looking on line and seeing some listings before my broker sends them to me. It doesn’t seem like he is looking out for my best interest. I have a better selection on line and am able to gain access just as quickly as a broker.
Fact – each landlord has their own marketing plan. Some landlords will send their listings to the brokerage community instantly and others will hold them for a few weeks put them up on their own websites (sometimes these web sites re scrapped or getting direct feeds) before they share the listing with the brokerage community. The number of landlords that do this is small but they each have their own approach to pricing, incentives, internet marketing and working with the brokerage community. Brokers have access to almost all of the listings and receive them in a very timely manner. If you are seeking something specific and/or want to have an edge over other renters seek a good broker to represent you.
Myth – it is absolutely impossible to get a rental.
Fact – rental inventory is really tight right now, but a smart renter with a good broker will take advantage of any opportunity and can find an apartment with relative ease.
Myth – unit availability is on a decline, fewer and fewer units are available.
Fact- while it may feel like inventory is declining; the figures given in the recent rental market report released by The Real Estate Group NY indicate an upward trend of rental unit availability. In fact, availability is up 1.7% for doorman units and up 3.6% for non-doorman units all across NYC.
Myth – inventory statistics are hard facts that the renter should live by.
Fact – inventory statistics are almost always estimates. As any broker will tell you, there is no one central rental tracking system in New York City. Even though you can now get more information than ever from online sources, rental inventories are still in their dark ages. Until New York City landlords agree to a central rental tracking system, inventories will always be incomplete.
Myth – landlords often over-report their inventories. All inventories in New York are over-reported.
Fact – Most inventories are very under-reported. A large portion of mom-and-pop rental agencies have units that aren’t even tracked in the first place. Manhattan is a large city with an incredibly large number of landlords, and the units of the smaller landlords are very rarely fully represented. Furthermore, bigger landlords often do not fully represent their inventories in fear that a large availability will lower prices across the board. It is in their interest to show less of their supply to up the demand and to keep prices high. If people think there are few available units, they will be more likely to pay more for those units.
Myth – when searching for a property, it makes sense to go online, look up a large number of listings and send them to your broker. It makes even more sense to attempt to handle the negotiations alone once you find the right property.
Fact – you employed a broker for a reason. Odds are, most the listings you will find on Streeteasy, Craigslist or similar web sites are already rented out or are simply not available. An experienced broker will filter through those situations and only provide you with real possibilities. You are not an experienced broker, and will likely not be able to decipher the realities from old or fake listings. Sending him listings may give him an idea of your preferred criteria, but typically these listing are misleading and this simply slows the process down. Your broke has access to all of the current listings in the city and if he finds something good it is important to make time so someone else doesn’t beat you to the punch.
Myth – as a potential tenant I am looking on line and seeing some listings before my broker sends them to me. It doesn’t seem like he is looking out for my best interest. I have a better selection on line and am able to gain access just as quickly as a broker.
Fact – each landlord has their own marketing plan. Some landlords will send their listings to the brokerage community instantly and others will hold them for a few weeks put them up on their own websites (sometimes these web sites re scrapped or getting direct feeds) before they share the listing with the brokerage community. The number of landlords that do this is small but they each have their own approach to pricing, incentives, internet marketing and working with the brokerage community. Brokers have access to almost all of the listings and receive them in a very timely manner. If you are seeking something specific and/or want to have an edge over other renters seek a good broker to represent you.
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