0% Brokerage in Real Estate Sectors and Adviser Model to Grow Property Business

First time in India by Property on Wheel (POW) there is an option to buy a property on the 0% Brokerage. There is an introduction of the company which provides 0% brokerage services in the real estate sector. It offers different portfolio for the sellers If a seller who is repeat customer of the company. Repeat customer means, a person who is selling or renting his property again and again through the company channel. Then his profile is added in its record and his identification is his mobile number. If next time he wants to do some business through the company channel and he is calling from the same mobile number then he will be a repeat customer for the company.

The company charged some breakage from the seller because it has some overheads like – Managers Salaries, Petrol expenses, backend call center overheads etc.

Program for the Local Brokers:

Local Brokers plays an important role in real estate sector. There are many brokers in real estate who works in a particular area and he is the only person who has the knowledge about a particular area. You can say he has the advance information about the property. A broker can tie-up with this company to follow these terms and conditions:

• Tie up with the local brokers.
• Part of Property on Wheel.
• Convert his vehicle into POW and provide the kit and install the vehicle tracking system.
• Integrate his mobile number with the company system send or receive the requirements through SMS.
• Minimum overheads and Maximum output.
• Local Broker can also deal or generate leads outside the local market (outstation).
• Pay a minimum amount to join the company as an adviser or broker.

After the Tie up with the Property on Wheel (POW) now he can generate leads and provide information across the India. It means his business is extended.

Adviser Model:

The Adviser is a 100% pure part time or full time property business. The cost of this model is just Rs. 6999+Taxes and he has to provide at least 50-100 references of his friends or relatives. The backend call center of the company will contact to that references. The company charges Rs. 20 per reference on credit basis, credit means it would be adjust this amount in his payout.

It is a unique program with 0% brokerage for buyers. It means if you are sending someone to buy, the company does not charge anything from buyer either for rent or buy or any short of investment in properties and free property visits instantly with the help of property on wheels on competitive rates.

How Adviser Work:

When any individual join the program then the company installed GPS software in his mobile. Now he can take photo of the property, provide property related information and send it through his mobile. That property will be added in his account and will also update his account.

There is another model for adviser that is referral model (MLM). This is basically a chain business network in which you have to make pair below your network.

How Adviser Earn:

Adviser can earn from the both ways first one is generate the leads and send it to the company. If deal is completed successfully then adviser will get 20% breakage amount. This is being described in below figure—

The Second one is Referral program (MLM) the adviser can earn unlimited revenue from this model by making the pairs below his network. He will earn Rs. 1000 per pair.

Company Details:

The company is based in India in the real estate sector. It is trusted company and India’s 1st real estate retail chain. It provides services for buyers on 0% brokerage. It is PropertySensex. It has given its services for many major clients like – TATA AIG Life Insurance, Max Life Insurance, Bharti AXA Life Insurance, Religare, Aviva, Subhiksha, Spencer Retail, Vishal Mega Mart, Wall mart etc. on 0% brokerages in commercial property, commercial space, lease space, office space, rent space, show room space and residential flats across India.

Marginal Costing and Break-even Analysis

Do you know that “marginal costing” is the gift of British? OK, with the chapter of we will deal about the marginal costing and break-even analysis.

Objectives:

Meaning of Marginal Cost and Marginal Costing

Concept of Contribution

Break-even Point and Margin of Safety

Break-even Charts

Applications and Limitations of marginal costing

About the definition of Marginal Costing ICMA London has defined as, “The ascertainment of marginal costs and of the effect of profit of changes in volume or type of output by differentiating between fixed costs and variable costs.”

In another word ICMA London define about marginal costs, “the amount at any given volume of output by which the aggregate costs are changed if the volume of output is increased or decreased by one unit.”

Formula of Marginal costs:

Marginal cost = prime cost + total variable overheads

Or

Marginal cost = total variable cost.

Concept of Contribution:

Contribution called when selling price and marginal cost (variable cost) difference comes together.

Formula can be:

Contribution = selling price – variable (marginal) cost
Or Contribution = fixed cost + profit (or-loss)
Or Contribution – fixed cost = profit (or loss)

Thus,

Sales = Variable cost + fixed cost + profit (or – loss)
Sales = Variable cost = fixed cost + profit (or – loss)

In this chapter we have to read about P/V (Profit Volume) ratio also so here is P/V ratio calculation:

P/V = contribution/sales = S/C

Or = [Fixed Costs + Profit/sales] = [F+P/S]

Or = [Sales-Variable Cost/Sales] = [S-V/S]

Now, we will discuss about the Break-even Point:

Break-even Point is the representation position of that volume of sales or production which has no profit no loss. It means total sales are just equal to total cost.

The formula of the calculation of Break-even point is:

Break-even Point (units) = Total fixed costs/Contribution per unit [F/C per unit]

Break-even Sales = Total Fixed Costs x selling price per unit / contribution per unit
[F/C*S]

Fixed Cost/P/V Ratio [F/P/V]

Break-even chart shows the graphical representation of cost and revenue of inter-relation at different volumes of output.

About the advantages of Break-even chart no doubt that it helps to determine the selling price to give a desired volume of profit.

It shows costs and profits and different volumes of productions. But along with there are limitation of break-even chart also. About it people says that it always not shows true chart.

At last we can analysis about break-even and can say that it is the level of operations which is the position of cost and revenue equilibrium.

I think now, it is enough for marginal cost and break-even analysis from financial books. I will elaborate it more deeply with the further discussion where I will put some more examples also from finance and accounting books.

Understanding Cost from Financial Books

To explain about cost we start from the meaning of cost. According to Institute of Cost and management Accounts (ICMA) London in 1982, “the amount of expenditure (actual or national) incurred on, or attributable to a specified thing or activity.” According to the definition it is clear that cost may be the actual expenditure of national chares.

After the definition of cost we will go with the classification of costs:

1. Nature or Elements
2. Functions or Operations
3. Traceability
4. Variability or Behaviour
5. Controllability
6. Normality
7. Managerial Purposes

Now, we will explain about the costs along with graphs:

Fixed Cost graph:

Total Fixed Costs:

Unit Fixed Costs

Variable Costs known as also Linear Variable Costs. Variable costs graph shown as:

Linear Variable Cost

Non-Linear or Curvilinear Variable Costs graph:

Convex – linear Variable Cost

Concave – Linear Variable Cost

Semi-Fixed and Semi-Variable Costs

Semi-fixed Cost

Semi-variable Costs

Now, in the end of the chapter we can say all the things are clear which are in the chapter of costs. Most things are clear with the graph of costs. With the help of above mentioned graph we can conclude some decision in an organization. Cost is a part of CFS also in the financial chapter.

Cash Flow Analysis from Financial Books

About the cash analysis we can say that it is the lifeblood of any business. In an organization we can see many activities to get the cash from sales, debtors, sale of assets, investment etc. like this the company spend also the cash in some areas – payment to salaries, rent dividend, interest etc. Lastly, we can say that cash flow reveals the inflow and outflow of cash during a particular period.

Objectives of Cash Flow Analysis:

Meaning of Cash Flow Statement

Uses of Cash Flow Statement

Steps in Preparing Cash Flow Statement

Distinguish between Cash & Fund Flow Statement

Compute the Cash from Operations

I have already mentioned about the meaning of Cash Flow Statement that it reveals the inflow and outflow of cash during a particular period in a particular organization. From the management point of view it is also important tool of cash planning and controlling.

Main objectives of Cash Flow Statements (CFS):

To show the causes of changes in cash balance between the balance sheet dates.

To show the factors contributing to the reduction of cash balance in spite of increasing profit or decreasing profit

Now, after knowing about the CFS objectives we can discuss about the uses of CFS:

It is for explaining the reasons for low cash balance

CFS shows the major sources and uses of cash

It helps in short term financial decisions relating to liquidity

From the past year statements projections can be made for the future

It helps the management in planning the repayment of loans, credit arrangements etc

If you want to prepare CFS then use these:

Opening of accounts for non-current items

Preparation of adjusted P & L Account

Comparison of current items

Preparation of Cash Flow Statements

Cash Flow Statements Formula:

Net Profit + Decrease in Current Assets - Increase in Current Assets
Increase in Current Liabilities Decrease in Current Liabilities

A format of Cash Flow Statement:

In the summery I can say that CFS study in the chapter is not in more details but all the understanding, uses, steps and meaning are clear. For more example and definition I will let you know further.

REBUTTALS for UK Mortgage Sell

Are you selling me something?

No sir, I’ m not selling anything. I am calling to make you aware of the fact that interest rates are quite low at this time and we can help you save your money over existing mortgage arrangements.

Where did you get my telephone number from?

We have a research department and have the phone numbers of all the residents in the country.

What is the name of your company and where is based?

It’s a network of independent financial advisers based in London. We deal on behalf of all the major Banks and building societies.

I won’t give my personal details to a stranger over the phone? How safe is it to give you my details?

Sir/ Madam we are registered under the Data Protection Act and all these details will be kept under the strictest of confidence and not used for any other purpose as we are bound by the law.

Send me something through the post, I wan written quotation?

Sir/ Madam First my financial adviser will call you to discuss your specific requirements and then provide you with a written quotation.

What is the interest rate that you will offer?

Sir, It will completely depend on your personal circumstances and the product you choose. But let me assure that with so many products available you will definitely find a better deal for yourself.

If I want finance I can directly approach a Bank?

We are dealing with most of the major bank and building societies and thus can provide you with more choice and options. As we are completely independent, we also have access to some special deals which are not available directly.

I am planning to take loan/ Mortgage but after few months?

Sir/ Madam the interest rate are quite low at this time and they might go up in the future and if you are planning for any loans then this is the best time.

I am tied with my lender for few years; else I have to pay the Penalty.

Sir/ Madam if we are able to help you save a large amount of money, it can take care of your redemption penalty. By the way, how much is the redemption penalty. If equal or less than 1000 continue with the call.

I requir4e finances, but my credit rating is not good?

No problem sir/ madam we specialize in such case and will definitely provide a very good deal.

Give me your number I will give you a call?

Sorry sir, this is an outbound call center and incoming calls are not possible. Moreover, the adviser local to you will provide you will all the details.

I don’t know you why should I talk to a stranger?

Sir/ madam we are completely operating under the UK laws and can help you in saving a lot of money. We close more than 2000 loan and mortgage applications a month.

I don’t do any business on the phone?

Sir we cannot complete the business over the phone. My financial adviser will call you to discuss all your requirements and then send a written quotation if you are satisfied, we will underwrite the deal.

I cannot give you my annual income?

Sir unless we have this information, we cannot determine the maximum loan amount that we can offer you.

If the Customer is a pensioner/ retied

We can offer only personal loan to these prospects, provided their situation meets with the criteria.

If the customer is on income support/ unemployed

Say thanks for your time and end the call

Secured Loans and Unsecured Loans Overview

Secured Loans

The amount borrowed is secured against your property and is usually repaid over a shorter period than the life of any existing mortgage. These loans generally have a very competitive rate of interest, depending upon your circumstances, as the lender has the security of your property if it is not repaid. You must remember that your property may be at risk if you do not keep the repayments to a secured loan.

UK Secured loans often offer two main advantages- due to the security they to the lender they are easier to obtain and often have more preferable interest rates.

The main disadvantage to the secured personal loan is the most obvious one that the loan s secured upon your property and if you fail to keep up repayments then your property will be at risk and could be repossessed.

Unsecured Loans

This loan can be used for any purpose. To obtain a unsecured loan, you have to have a good credit history. Unsecured loans usually have a slightly higher interest rate, as there is more risk to the lender if the loan is not repaid.

UK Unsecured loans are more difficult to obtain than secured loans, and you must usually have a good credit record in order to obtain one.

EMI for 20 lakhs loan for home differ from one lender to another

There are several types of loans available in India. Among those, home loan is the one that can be taken either to build a home or to purchase a home. Some of the lenders also offer home loans to renovate your old home.

Though the interest rates and repayment modes of home loans vary from one lender to another, they have some unique features and conditions that are mentioned by all the lenders, who sanction these loans. One should mention the purpose of taking loan on the application form clearly. As per the rules and regulation of all the home loan lenders, depending on the income, eligibility and repayment capacity, the borrowers can get the loan amount. As loan for a home comes under the classification of secured loans, the borrowers should submit any one of their properties as a security against the loan amount. Fixed interest rate and floating interest rate are the two popular types of home loan interest rate.

Quite evidently, everyone expects high amount of home loan at a very low interest rate. To fulfill the desires of the borrowers, who want to get home loan at low interest rates, the public sector banks have recently announced interest rates cut of home loans. According to PSU banks, now the borrower can avail up to 5 lakh loan amount at the interest rate of 8.5 percent, where as the 5-20 lakh loan amount borrowers have to pay 9.25 percent interest rate. Moreover, these banks do not collect any such type of processing fee from the borrowers and also provide insurance coverage without taking money.

EMI a.k.a Equated Monthly Instalment is a mode of payment through which the repayment of loan is done in a much smoother and hassle-free manner. The concept of EMI has been chiefly concocted to ensure that the burden of repayment of loan, does not get to the head of the borrower. These days, finance organisations make sure that they offer attractive and easy EMI plans to the prospective borrower, ultimately brightening their future business prospects. However, the borrower is advised to make sure that the EMI plan offered to him in the offered loan (in this case home loan) is on the extreme transparent lines.

EMI for 20 lakhs loan for home differ from one lender to another. Depending on your repayment capacity and monthly income, you can select any one of the repayment modes that are offered by the lender. Most of the home loan borrowers get confusion to select the best EMI mode. To clear their doubts, the users can visit reliable Internet websites for EMI calculation. It helps them to know the total amount of interest rate that they have to pay over the term of the loan.

To find the best EMI deal for 20 lakhs loan for home, you can take the assistance of the Compare loan feature that allows you to compare the interest rates and equated monthly installments of all the home loan lenders at one place. If you follow some tips, the EMI calculation will be easy for you. To calculate EMI for 20 lakh home loan, Just open any of the reliable EMI calculator websites and select the 20 lakh term work sheet. Then, enter the principal loan amount (the amount of loan that you want to take) and rate of interest that is decided by your lender. Immediately, you can see the total amount of EMI and the total amount of interest rate that you have to pay up to end of the loan period.

New EMI Calculation for Home Loans on lower interest rates in India

Nowadays, in the Real Estate sector there is a revolution for mortgage loan. All the news paper and magazine are with full coverage of lower interest rates for home loans, lower EMI on home loans, lower mortgage interest rates etc. But what is the actual situation have to justify.

According to the SBI calculation on fixed 12% interest rate the EMI will be 867.82 now upto Rs. 5 lakh on per lakh for every month. Old EMI was 1,101.09 upto Rs. 5 lakh for per month on every Rs. 1 lakh. It means, your saving is about 233.37 up to Rs. 5 lakh for every month on per lakh.

For the Rs. 5 to 20 lakh new EMI will be 915.87 per month for every Rs. One lakh rather than 1,101.09 old EMI. It means, your saving is Rs. 185.22 for per one lakh amount if you get the home loan for Rs. 20 lakh for the 20 years tenures.

Overall your saving will be Rs. 185 to 233 for per lakh on the home loans for 20 years. It was the calculation on the basis of 12% fixed interest rate by State bank of India.

What is the reality of these loans? For example you borrow a loan amount of Rs. 20 lakh for the 20 years then what will be EMI?

According to the new EMI calculation you have to pay per month about Rs. 17356.4 if all the circumstances don’t change. However, your older calculated EMI was for Rs. 20 lakh per month – Rs. 22021.8.

You can just imagine that if you buy a home on the amount of Rs. 20 lakh then you have to pay total in 20 years Rs. 41,65,5,36. It means just double amount for that Rs. 20 lakh in 20 years.

So, in the Indian context you can imagine who can buy the flats to take loan by banks! It is the revolution of Indian Real Estate sectors and income and investment of Banks.

Another story says that you can borrow whole amount by banks on 0% down payment. Is it crisis or investment? However, the home loans or mortgage loans trends has been not increased as year of 2006-2007.

Total deduction in the percentage of interest rates is 1 to 1.5. The actual interest rates will follow with the monthly EMI on the basis of loan amounts and loan terms.

All the activities is the result of government pressure on banks due to economic crisis for the liquidate the capital in the consumers.

Re-Mortgage : take advantage of lower rate of interest

Re-Mortgage

A recent survey has estimated that homeowners currently spend $720 million per annum too much on mortgage payments because they were unaware they can get a better deal from another lender. The financial services industry is arguably the most competitive it has ever been and because of this consumers can get fantastic saving on their mortgages as companies compete with each other for business.

Why to re-mortgage?

To take advantage of lower rate of interest or to release the equity that has built up in your home, to extend or reduce the term of mortgage or even to consolidate the debts. You may also want to release money to buy-to-let a property.

Personal Loan

A personal loan is an agreement between a borrower and a lender such as a bank, building society or loan company, allowing the borrower to be lent a specified amount of money according to certain terms and conditions. The loan is usually dispensed as a lump sum and then repaid by monthly installments. Personal loans usually start at about $500 and can go up to beyond $20000. Customer will agree to pay back the loan over a predetermined period of time, referred to as the term of the loan, in monthly installments. Loan terms can very between six months and twenty-five years; but it depends on the individual lender as to their requirements and conditions.

This charge is calculated as a percentile of the borrowed amount and accrues with the length of time for which the money is borrowed. This is called interest.

UK Personal loans are usually available for almost any purpose. You might want to fund your dream holiday, pay for an extension on the house, or buy a car. Personal loans are available for almost any amount you require, though lenders will usually only provide loans between certain brackets.

Mortgage Products Overview

Variable Rate Mortgage

Variable Rate mortgage is based on the standard rate of interest set by the lender. The monthly payment goes up and down, generally in line with Bank of England bade rate.

Discount Mortgage

The rate of interest charged is the variable rate less an agreed discount for a period of years. The rate charged will still very but will be below the standard variable rate by the agreed discount. Sometimes penalties are imposed if the mortgage is redeemed within the discount period.

Fixed rate mortgage

The rate of interest charged is fixed for a given period of time as agreed with the lender usually between 1 and 5 years but can be for the term of the mortgage. Your monthly payment will not change during this period. At the end of the fixed rate period your mortgage will revert to the variable rate. During the fixed rate period penalties are normally imposed if you redeem all or part of the mortgage early.

Capped mortgage

A capped rate mortgage is variable rate mortgage which has a fixed upper rate limit to which it cannot go above. It can, however, go down if the variable rate falls below the capped rate. The capped period is normally between 1 and 5 years but can be longer penalties may be payable if the mortgage is repaid during this period.

Flexible mortgage

Interest is calculated daily or sometimes monthly, unlike the traditional mortgage where interest is usually calculated annually. The interest charged is generally variable. Overpayments are allowed and payment holidays are allowed. By making overpayments, if one have a repayment mortgage, it is possible to reduce the term of the mortgage considerably. Most lenders normally offer, within the package, are reserve fund can drown upon for any purpose. Flexible mortgages are normally penalty free.

CRTB

The right to buy means you can buy your home from a local authority, a non-charitable housing association or a housing trust. Usually a “right to buy” mortgage will cost less than on the open market because as a tenant you can obtain a discount on the loan. Under the right –to buy scheme, council tenants are entitled to a 32% discount on the value of their house after they have lived in it for two years, followed by a further increase of 1% for each additional year, up to a maximum of 60% For flats the available discount rise to 70%.