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Ethical Creative Real Estate Investing

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There are rules of the road. Sometimes we call these laws and regulations but not always. The rules don’t tell you so much what to do but rather what not to do. That leaves the investment road wide open to creative ideas as long as you do it responsibly. The single largest hurdle regarding creative investing deals is the level of business acumen or sophistication that all participants in the deal possess. By definition, creative financing (or creative deals) are nontraditional. The average consumer or Joe Q. Public does not use these techniques. The result is there are fewer rules and regulations governing them. Creative deals contain more complexity.

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Bad apple investors use this lack of rules and higher complexity without scruples to defraud others. When this happens enough times, new rules and regulations are put in place to prevent it. Legitimate investors don’t benefit from more rules. For the sake of your own business reputation and the industry as a whole, it is always best to create ethical deals and even build in protections for less sophisticated investors and/or Joe Q. Public. 

Know How Sophisticated the Other Person Is

This is just plain good business sense. If the other person in the transaction has a deep knowledge of the type of deal you’re involved in and is unethical, you could be the one holding the short end of the stick. But that isn’t what I’m referring to here. This is about you being ethical when you encounter people that are unfamiliar with the type of deal that you are trying to put together. There are times when it’s better to walk away from a deal even if you could have made a killing. At times, sandwich lease options and seller financing can be these types of deals.

I’m a firm believer that sandwich lease options need to be win-win-win deals. For the seller, for you as the investor, and for the tenant/buyer. You are the sophisticated investor in the middle of the deal. Most of the time, the seller and the tenant/buyer are Joe Q. Public. They are depending you to put the creative transaction together. You MUST be sure everyone in the deal fully understands what the intended outcomes are and what the unintended outcomes could be.

Sandwich Lease Option Rules of the Road

The seller should be relatively secure in the deal since he/she holds the property title until the deal completely closes. However, this person could be highly dependent on the rental income until the deal closes. As an ethical creative investor in the middle, you have a responsibility to understand how dependent the seller is on that income and assure they receive the income – even at your own expense if your tenant/buyer doesn’t make the monthly payment. An unethical investor could force the seller to miss several payments until he/she is forced to sell for pennies on the dollar that was never the stated intention of the deal. As the investor, you should enter the deal prepared to keep the seller “whole.” If you find yourself in a position of not being able to do this, you should unravel the deal even if it means no benefit to yourself.

Understanding the sophistication of the tenant/buyer carries at least the same amount of responsibility for the investor. Failing to work earnestly with tenant/buyers is most the common cause for sandwich lease options to be considered unethical. It happens when an investor churns the large option fee. The typical lease-option buyer struggled to save most of the down payment needed (lease option fee) and is an entry-level buyer with a limited salary. But he/she can’t quite qualify for a mortgage at this time. This is an unsophisticated buyer. Investors have an ethical responsibility to assure these people fully understand the terms of the deal. Investors have a responsibility to strongly urge that the tenant/buyer seek outside legal advice. Investors have a responsibility to be sure the tenant/buyer has a reasonable opportunity to obtain a mortgage within the lease option period. This often means working with a mortgage broker and/or a respectable credit repair service. An ethical investor wants the tenant/buyer to succeed. There is no better word-of-mouth advertising than a tenant/buyer who has succeeded in purchasing the home.

Unethical Property Owners Usually Get Their Due

I was once involved with a person who grievously took control of a small portion of valuable land through adverse possession. It involved 11 feet of expensive lakefront property owned by an elderly man with Alzheimer’s. The standard lot had 60 feet of waterfront. The man with Alzheimer’s and the adjacent property owner both had double lots or 120 feet of waterfront.

The trespassing neighbor planted a hedge that angled from the common upper property line to cross over the line 11 feet at the water’s edge. This happened at about the time the elderly man was diagnosed with Alzheimer’s. He verbally complained several times about the hedge but never took legal action. Following his death, the heirs filed for the property title but the neighbor clouded the title by filing for adverse possession of the 11 feet. The heirs could not afford to pursue a legal challenge.

I purchased the contested lot for fair market value based on the 49 feet of waterfront the heirs could deliver and a promise to legally pursue the adverse possession. At a cost of about $8,000, I did pursue the case in court but lost. The legal requirement to obtain adverse possession in Washington s State is to have active possession for a minimum of 10 years. The trespassing neighbor was able to show photographs of a family event partially on the disputed property. The date of the event exceeded the statute by 3 months.

Although the trespassing neighbor received legal title to the 11 feet, he paid a dear moral price. He too was retired, elderly, and living in a small rural waterfront community. The entire community took great exception to his actions and fully shunned him. His social life ended for the remainder of his lakeside retirement. Such is the price paid for being unethical.

Please comment with your thoughts and experiences about ethical real estate investing.

Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions, inquiries, or article ideas to [email protected].

Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 12 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, near a national and the Pacific Ocean.

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Victims of SolarWinds Cyberattack Face Investigation Costs, Liability Issues

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While the customers impacted by the recent SolarWinds Corp. cyberattack are rightly being described as victims, they are nonetheless facing significant costs stemming from the incident.

SolarWinds’ customers will need to determine whether any of their data was accessed or exfiltrated. Making that determination requires a digital forensics investigation, typically involving a third-party security vendor.

First, the Forensic Investigation

The forensics bill depends on factors such as the number and types of devices and systems on a network, the geographic distribution of the network, and whether the customer already had a contract with a security vendor to provide such services in the event of a security incident.

If investigators determine that certain categories of personal information of residents of U.S. states or certain foreign countries was accessed or exfiltrated from a SolarWinds customer, the victim will need to provide notices to affected individuals. It is considered a best practice to offer credit repair and monitoring services and call centers to assist affected individuals.

Depending on its contracts, the victim company also may be required to notify its business customers and vendors and to reimburse them for expenses they incur in investigating and mitigating the effects of the breach and providing notifications. It may also be required to indemnify them for third-party lawsuits and regulatory proceedings.

The victim company may also be required to notify regulators or state attorneys general. Such agencies may issue fines if their investigations find that the company’s cybersecurity practices were not adequate or that the company did not notify within a required time frame. Additionally, the victim company may incur substantial costs in defending consumer, business partner, or shareholder derivative lawsuits.

Furthermore, after it has been determined that an adversary has accessed a network, there is a debate about whether any device on the network can be trusted and remain in use. Many IT security practitioners recommend fully rebuilding a network that has been breached by malware.

Take Proactive Steps to Address Potential Liability

Once the security incident has occurred, there are limits to what a company can do to minimize its liability. It can work cooperatively with its business partners to reduce the likelihood that they will sue. But other costs, such as class action suits, regulatory fines, or legal fees are considerably less controllable.

Not surprisingly, the best time to address potential liability for a security incident is before it happens. All companies, regardless of whether they were victims of the SolarWinds breach, should consider taking the following proactive measures:

  • Contracts with business partners should have reasonable limitations of liability and the implications of the cost of data breach provisions and indemnities should be carefully scrutinized, not just for each contract as it is negotiated, but in the aggregate for all contracts.
  • Companies should have cyber-insurance policies in place and, because the details of cyber-insurance coverage vary, they should also have a good working knowledge of what is and is not covered by the policies.
  • Companies should follow reasonable cybersecurity practices, not only to reduce the chances of experiencing a security incident, but to reduce the likelihood of being fined or successfully sued if an incident outside their control occurs.
  • Companies should regularly conduct a risk assessment and develop and update a written security plan based on the risk assessment.

In fact, many statutes and regulatory frameworks, such as the New York SHIELD Act, the Massachusetts Standards for the Protection of Personal Information, the rules and guidelines issued under the federal Gramm-Leach-Bliley Act, and New York’s Department of Financial Services Cybersecurity Regulation, require risk assessments, written security plans, and the use of reasonable cybersecurity measures.

Also, the California Consumer Privacy Act gives private litigants a right to sue if their personal information is exfiltrated as a result of a company’s failure to use reasonable security measures.

Assess Future Risk, Take Compliance Steps

What security measures are reasonable is heavily driven by the risk assessment. Recognized standards such as ISO 27001, the National Institutes of Standards and Technology Cybersecurity Framework, or the Center for Internet Security Critical Security Controls can be used to determine what is reasonable. Using an accredited outside vendor to certify compliance can help establish the proper diligence.

Common best practices include network segmentation, appropriate logging, use of intrusion detection systems, multi-factor authentication, use of current encryption standards in connection with data at rest and in transit, strong password requirements, use of password managers, regularly backing up data and testing the restoration of data, patching and vulnerability management, and regularly testing security controls and incident responses. Data retention policies also should not be overlooked , since data that a company has not retained cannot be the subject of a data breach.

Educating employees about risks and best practices is also important. Additionally, companies should foster close multi-stakeholder coordination and communication about security. Representatives from the security organization, legal, IT, procurement, and product or sales groups should be included in the discussions.

Companies have exposure to significant potential liability arising from the SolarWinds security incident and a short set of options for limiting that liability. The best time for a company to limit its liability for security incidents is before they happen.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Andrew Baer is chair of the Technology, Privacy & Data Security group at Cozen O’Connor where he focuses his practice on cutting-edge technology transactions on both the buy-side and sell-side, cloud computing, data privacy, security compliance, software, and transactions in the digital advertising ecosystem.

Christopher Dodson is an attorney at Cozen O’Connor, where he focuses his practice on privacy, technology, and regulatory law. He works extensively with clients on issues rated to compliance with the GDPR, CCPA, and privacy and data security laws.

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Lexington woman opens new tax agency in her hometown; Valentine’s Day events planned

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TRU Tax office opens in Lexington

Sharicka Holloway Sides is planning a grand opening celebration on Jan. 30 for her recently opened TRU Tax office in Lexington.

The 2008 graduate of Lexington Senior High moved back to her hometown after a stint of living in Georgia to open her business at 364 Dixon St. The local agency opened in December.

“I moved back really because I got an offer to have my own agency, and a majority of my clients are in North Carolina,” she said. 

Shortly after high school, Sides began doing her own taxes and helping family members file their annual tax forms. She worked for various tax preparation companies in N.C. and Georgia during the next several years. TRU Tax began in Georgia, she said, and now has agencies in Texas, Georgia, Alabama, North Carolina and Ohio.

“I love to help people,” she said, explaining why she began working in the tax form preparation industry. “My company will be about modifying charges and getting you the most (refund) back as possible. We have so many tools to use. If I can lower your fee or help you get more refund than you did last year, I’m all for it.”

TRU Tax also has credit repair and accounting services. Sides’ Lexington office will concentrate on tax returns, however, and has 10 employees. She said she will refer clients to TRU Tax credit repair and accounting specialists if requested.

Managing a new TRU Tax agency in Lexington is not Sides’ only job. She is also working with her husband, Kevin Sides, to open Kitchen Konects, a catering company. She first opened a food catering business of the same name while living in Georgia. More information about this business venture will be given when the opening date is nearer.

Potential clients can reach Sides or her employees by downloading the My Tax Office app and using code 8925LA, or by calling or emailing (404) 721-3349 and [email protected]

Pictured are charcuterie boards made by Chef John Wilson of Sophie's Cork & Ale for the Arts Davidson County New Year's Eve fundraiser. The arts nonprofit and Wilson have teamed up again to offer charcuterie boards for Valentine's Day featuring sweet treats.

Charcuterie boards are back for Valentine’s Day

Arts Davidson County is bringing back its charcuterie board fundraiser, but this time with sweets and wine for Valentine’s Day celebrations at home during the pandemic.

The nonprofit staged a New Year’s Eve charcuterie board fundraiser where it partnered with local artists to make the boards and local restaurants to create the food and sell the wine. 

“We sold 89 boards for New Year’s Eve,” said Amanda Murphy, events and community coordinator for Arts Davidson County. ” We had a few boards left that we did not sell, so we wanted to do this again for Valentine’s. People loved it.”

While the first fundraiser partnered with a Lexington and Thomasville restaurant, the Valentine event will feature the mostly homemade treats of one Lexington restaurant. Chef John Wilson of Sophie’s Cork and Ale in Lexington will fill the handmade boards with Chocolate pretzel sticks, chocolate-covered strawberries, candied pecans, crunchy peanut butter buckeyes, s’mores Girl Scout cookies, pistachio brittle and Nutella marshmallow fluff.

 In addition, Wilson has also partnered with three other Lexington eateries to provide treats. Those treats and businesses are: Chocolate bombs from The Factory – Coffee & Waffles, doughnut holes from Red Donut Shop and swiss rolls from Sinfully Delicious Custom Bakery.

Purchasers will select from six wines when purchasing their charcuterie board at eventbrite.com. The cost is $50. Boards and wine will be ready for pick up at Sophie’s Cork & Ale, located at 23 W. Second Ave., from 3 to 5 p.m. Feb. 13.

“It’s important to us that we are supporting local businesses with our fundraiser,” Murphy said. “…We’re trying to say stay at home and be safe and stay healthy, but you can still support the businesses in our community.”

A Valentine dinner catered by Kathleen Watson of Cuisine Kathleen is planned for Feb. 13 at The Holt House.

Valentine date night dinners planned in small setting at Holt House

The owning partners at the Holt House have planned a Valentine dinner on Feb. 13 at the historic home in Lexington.

Nia Ward, one of three local women who purchased the home in March 2020 to operate it as a wedding and events venue, said she and her partners wanted to provide a way for people to still “go out” for Valentine’s Day but in a safe, socially-distanced way.

Timed, staggered seating will be provided for two to 10 people. Tables will be set up six feet or more apart in all the rooms on the house’s first floor. A party of six to 10 will be provided a private room. There is also an option to purchase a meal and take it home.

Kathleen Watson, owner of Cuisine Kathleen catering, is preparing the meal that features beef tenderloin, seasonal salad, potatoes au gratin, yeast rolls, flourless chocolate torte and a glass of beer or wine. The cost is $50 per person and includes a floral arrangement to take home.

Seating times from 5-7:30 can be made and tickets purchased at holthoucenc.com. Guests may enjoy their private table for up to 1 hour and 45 minutes. Afterward, guests may lounge by the outdoor fire pit and patio area. 

– Jill Doss-Raines is The Dispatch trending topics and personality profiles senior reporter and is always looking for tips about businesses and entertainment events, secret and new menu items, and interesting people in Davidson County. She wants to know what people in Davidson County are talking about. Contact me at [email protected] and subscribe to us at the-dispatch.com.

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How to Find a Credit Repair Company in New York

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Your credit score isn’t something you tend to give too much thought to – that is, until you need to borrow money, rent an apartment, or sign a car lease wherein it may require a credit check.

Suddenly, the fact that you may have missed a bill here and there, fallen behind on payments, and not worried too much about your credit score, will come back to haunt you.

For many people, bad credit can be scary, especially if you’ve never experienced it before. Having bad credit can negatively affect you in all kinds of ways, not just right now, but also in the future. The good news is that this doesn’t have to be a permanent situation, as there are ways you can go about fixing your credit. One of the most effective methods is to work with a credit repair company that understands exactly what steps you will need to take, and how to improve your rating as smoothly and quickly as possible.

So, if you’re looking for a credit repair company in New York and aren’t even sure what you should be looking for, let this act as your guidebook. Here we’ll outline all the most important steps in finding the perfect credit repair company in New York.

Look for a Company with Experience

The first thing to look out for is a company that has credit repair experience. Fixing your credit is a serious matter and not something you want to make mistakes with. This means you need a company that has a proven track record of helping clients, and one that can show real results.

Does the Company Offer a Guarantee?

Besides experience, it’s also wise to ask if the company offers a guarantee on their services. Ideally, it should be a money back guarantee should they not be able to follow through no their promise or guarantee. In other words, they are unable to fix your credit score.

Does the Company Offer a Free Consultation or Evaluation?

It’s also important to look for a company that approaches each case or client on an individual basis. What works for one person may not be the best solution for you. Ask the company in advance if they offer any type of free consultation or evaluation. This gives you a chance to get an idea of the approach they would take, and you can then make a decision if it matches with your needs and wants.

How Long Will it Take to Fix Your Credit?

Any reputable credit repair company should be able to look at your current credit rating, your personal situation, and then give you a rough estimate on how long the process should take. Will it be weeks, months, a year? It’s important to get a realistic idea of what you can expect going forward. Some companies will even offer real-time status updates, which can give you peace of mind knowing that they are working to remedy your credit rating.

Ask What is Needed Of You

While the credit repair company will be doing all the hard work, you will still have a role to play. Make sure to ask what will be expected and needed of you in order for the process to move along smoothly.

What Is the Customer Support Like?

Because you aren’t an expert yourself when it comes to credit repair, there is no doubt you’ll have questions here and there. It’s important to research what the level of customer support is should you have concerns, issues, or questions that you need assistance with.

Inquire Into Various Plans

Here’s a tip you may not think of right away, but it may be helpful. Sometimes it’s not a matter of a credit rating for a single person, rather you need assistance as part of a couple. You can find a robust Couples Plan at Pyramid, a reputable credit repair company. The Couples Plan is actually Pyramid’s most popular plan and boasts a personalized service for two people and specific finance tools for couples, among other features and benefits. It’s a great way to take action as a couple and get some really positive results.

What Will the Company Need from You?

In order to do their job, the credit repair company will need documentation from you, so make sure you are given a list of all the essential items you need to gather. Without all the necessary documents they may not be able to successfully repair your credit score. This is why it’s so important to be keeping careful records at home.

When you do gather all the material for the company, they should also never ask you to lie. Even if it’s not a bold-faced lie, a misleading statement shouldn’t be used either.

Do You Have to Sign a Contract?

While some companies may try to rope you into a contract, there is no reason you have to go with them. Instead, look for a company that doesn’t have contracts or commitments so that you can feel free to leave if you’re not happy.

Asking for Full Payment Up-Front

Another red flag can be a company that asks for full payment up-front. As experts state, these are companies you want to steer far away from.

Read Online Reviews from Other Clients

Finally, you want to take a look at online reviews about any company you are considering using. Although online reviews need to be taken with a grain of salt, they can offer some helpful insight and help to ensure you make an informed decision.

Besides online reviews, you can speak to family and friends who may have worked with a credit repair company in the past and get their insight on the experience they had – both good and bad.

Finding the Company That Will Help You

While it may seem like a lot of things to be mindful of as you look to hire a credit repair company, the fact is that you want your credit score to be repaired quickly and properly, so choosing the right company is key.



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