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How to Fix Your 'Fixed' Expenses

All businesses have the well-known "contingency" line item in their budgets. We all are familiar with the "unknown" items that may crop up from time to time in our daily course of business; things we don't expect but know will happen ... and along with that comes the necessity to budget for unforeseen expenses.

We have found, however, that Tax Lien Companies - those who purchase and service tax lien assets - often find themselves with larger than normal "contingency" budgets.  Those who are familiar with the industry can readily understand why:

1. Unexpected, administrative and operational costs for liens that were sold or purchased in error

2. Unforeseen legal fees to remedy title issues or to process REOs/foreclosures that are "out of the norm"

3. Additional costs of collection for those hard core assets that don't appear ready to redeem anytime soon....This list just goes on and on. As any seasoned tax lien investor will tell you, this can all add up very quickly and balloon into profit killing "contingency scenarios."

Most seasoned tax lien investors out there have already identified these and other "hard costs" which become readily apparent to anyone who has been through a lien cycle or two. However, that is not what this article is all about. We wish to share with you all some of the other, unexpected "fixed expenses" that lien investors often encounter. These are unforeseen costs which are not so readily "seen" or "identified" but which can also have devastating impact upon profits, rates of return, and portfolio performance.

Our business is all about lien software technology and SYSTEMS.  All lien companies are held to a high degree of accountability - they MUST record, track and process massive amounts of data and details in order to efficiently track, record, and collect their portfolios. Each tax lien parcel can have dozens of different attributes and characteristics which all need to be accounted for and accommodated in order to not only MAXIMIZE the rate of return, but to also PROTECT the investment from being derailed during the end stages of its life cycle.

Here is what we often see:

Most tax lien companies manage their tax lien portfolio data in SEVERAL, disparate (not connected) systems.  These "systems" often take the form of Excel spreadsheets, Microsoft Mail Merges, Google Docs, and maybe even an Access database or two thrown in on the side.

When you have different, disconnected systems that do NOT talk to or interact with each other you end up storing the same data MULTIPLE times in multiple, different places.  This means that you are entering the same information not once, not twice, but multiple times to keep your records current and "in sync."

There is a Golden Rule in Software and Database Technology:

"He who enters data more than once shall make a mistake at least twice!"

That is just a poetic way of saying that the more times  you enter the same piece of data into a "system" the more prone to error you are ... which can have devastating effects.

For example, we all know that one small "slip up" of entering the wrong property address, or the wrong owner of record, or incorrectly flagging on account sold in error can easily cost you a 5-figure fee down the road ... and that is only for a single tax lien parcel!  Courts tend all too often to rule on the side of the property owner in such cases where there are "discrepancies" in the file or a failure to properly notify.

One company we recently spoke to admitted that one rather "mundate and simple clerical error" cost TENS OF THOUSANDS of dollars when it came time to foreclose.

We all know mistakes happen. It's part of life. However, why would we all not seriously consider how we can mitigate such operational risks which are bubbling right under the surface of our daily operation?  Why would we not want to know about hidden "holes" which are ready to appear within the mission critical core of our business and profits?

Looking the other way or simply saying "we don't have that problem" is only putting off the inevitable. Murphy's Law is alive and well when it comes to tax lien data. Just because it has not happened "yet" does not mean that it will not happen at all.  Any tax lien portfolio is only as good as its data and data integrity.  Period.

Our research has found that most tax lien companies can easily incur additional costs anywhere between $20,000 and $50,000 ANNUALLY from such "mundane" and "simple" data misfires.

Here are a few summary points to keep in mind as you contemplate your own "systems" (or lack thereof) in managing portfolios that are worth millions and millions of dollars (your dollars):

1. Automate Data Entry.  Unbeknownst to you, your staff is manually entering information and values that can be automatically imported. Not only does this cost man-hours, but potential loss of credibility and dollars through comman human errors.

2. Remove Redundancy.  Nearly all investors track their funds using disparate spreadsheets used by different people in different ways. Consequently, transactions that can be entered once into a central system are wastefully repeated over and over, increasing the chance for error and loss.

3. Make Reporting Instant.  Reports can and do come with a click!  The old days of "running" a report are over, and systems can deliver immediate analytics to your tablet or smartphone in a touch.

Give us a shout.  We'd love to show you how to streamline operations and reduce expenses.  Visit LienApp.com or call us at 877.823.2700 today.

Profit-Making Tax Lien Technology

Tax Lien Investors face increasing competition and shrinking returns. Savvy competitors utilize technology to increase the efficiency of their thousands of transactions, translating to greater margins on every invested dollar.  Technologies include software and online systems that reduce errors, reduce data entry, and automate costly back office transactions.



Click here to open the Tax Lien Technology presentation given at the Tax Lien Talk Annual Conference 2016 held in Nashville, TN.

The Forbes Insights report 'Seeing Beyond: Unlocking the Long-Term Opportunities in Wealth and Asset Management' dated October 2015 revealed strong consensus from over 400 executive wealth and asset managers:

83% agree or strongly agree they face significant competitive pressure
49% say they believe their segment is undergoing significant change
56% are in hot pursuit of greater operating efficiency and cost reductions with technology

VADAR clients utilize our industry-leading software and systems to drive down operating costs, boost operating efficiency, and realize greater profits and returns. The VADAR tax lien servicing system LienApp delivers more than operating efficiency for tax lien investors: it also uses automation and algorithms to improve report accuracy, reduce data entry costs, and mitigate risks of data loss or security breach.

"Once you buy your first tax lien, you enter the servicing business." As an alternative investment class, tax liens are particularly cumbersome to comply with a myriad of statutes while administering volumes of paperwork and processing thousands of transactions. This costly, error-prone tax lien servicing is composed of Portfolio Management, Collections and Payments, and Analysis and Reports.  When portfolios grow beyond 100 tax liens manageable by spreadsheets, investors face 3 tax lien servicing options:

Outsource Tax Lien Servicing
Build Servicing Systems
Buy Servicing Systems

Outsourcing the back office transactions to their parties allowes investors to focus on investments rather than operations, and often provide peace of mind, but 3rd party servicing comes at a price. Typically a $1 million revolving portfolio costs $85,000 annually to outsource servicing.

Many investors are tempted to build servicing systems to manage their operations in house, but mistakenly believe such systems must be custom designed and built.  Consequently, the average busines owner spends 180% more than budgeted for a design that is a mere 33% of scope ... and 200% later than scheduled. (Bloomberg Software Research Group, 2014)

VADAR offers tax lien investors the #1 cloud-based enterprise system LienApp for managing portfolios in house for the lowers cost and maximum profitability. LienApp benefits from 20 years of tax lien industry experience and 5 years of professional IT development. Standardizing 1 platform across thousands of municipal statutes, LienApp optimizes tax lien servicing without the need to hire experienced IT or tax lien professionals.  Consider the many benefits and features LienApp offers at a fraction of the cost to outsource your tax lien servicing:

1-Click Reports
IRR Time Machine™
Automated Noticing
Big Data Intelligence
Purchasing, Payments, and Collections

To learn more about how LienApp streamlines your servicing costs and empowers you with  greater returns on every invested dollar, contact us for a free consultation and demonstration today.

Budgeting and The Chart of Accounts

With budgeting season near, thoughts move to spending for next year, despite recently ending the last. While everyone else is thinking dollars, the accountant is thinking about their chart of accounts. Typically now is not the time for a change, but budget preparation sometimes leads to contemplation about how or where your chart might be improved. Budget preparation often uncovers chart deficiencies or future requirements that may be hard to fulfill with your current structure.
 

Let’s get this out of the way: no one is fully satisfied with his/her chart of accounts, and no chart is perfect or will meet every need. Your chart is often a compromise between manageability and a reasonableness of detail. You can’t deny your chart is critical to tracking and reporting your finances accurately with the budget a large part of it. Plus, there’s the never ending "battle" to keep pace with competing requirements. So to answer the question in the back of your mind, you’re not the only one struggling or wishing your chart was different, expanded, simpler, and/or more consistent. But what can be done?
 

Step one: Embrace Change
 

In many ways your chart of accounts is a paradox. It’s a fixed number of segments and codes while your needs and reporting requirements constantly change and evolve, often unpredictably. Can you prepare next year’s budget report request for the Finance Committee Chair by combining fuel expenses into a single cost code, while tracking it by each department in the current fiscal year? Maybe, maybe not. But, do you have to?
 

"Give a man a fish and he eats for a day. Teach a [Insert dept. head name] how to read a ‘Budget to Actual’ report…"
 

Is it possible your chart is not the problem? Stakeholders in Town or City Hall will have different accounting and reporting needs. Further, each comes with differing backgrounds or experience in finance. A little information goes a long way when it comes to account coding and usage. Educating your counterparts regarding how their accounts are coded, structured, and used benefits everyone. Budget season could be a good time to begin this education. At the very least, these "users" must know what they are looking at. It’s not a matter of training "accountants" as much as it is creating better consumers of the information you work hard to provide on a regular basis. Make them partners in the process and give them the resources and information to succeed. There is both give and take regarding what makes sense for these users, what you need, and ultimately the needs of "higher-ups". All interested parties may have different needs, but they need not be competing or at odds. A coordinated effort to use and understand your chart of accounts, by the people who depend on it could help alleviate many conflicts and questions you deal with on a regular basis. However, no amount of education can overcome some fundamental chart and account limitations.
 

A chart of accounts is truly a balance between simplicity and need in the short term and with an eye to the future. Do you have it, or can you get it? Make the most of your chart in the present while planning and laying ground work for future change. Then, you’ll realize its full potential. If you do think that a fundamental overhaul of your chart is something you need to do, now is the time to begin thinking about those needs and possibly laying the groundwork with everyone affected. Changing your chart is possible, and may be necessary. Success, in a large part, can only be guaranteed with a lot of design and planning. If you have the need and are up to the task, next time, we can delve into some different options for "making" your chart what it needs to be.

Phone Wars: Finale

In our final installment, it's time to decide, which smartphone is right for you?  FYI before we get going, Amazon is rumored to be jumping into the smartphone market so that could be an intriguing option to consider, too.  They have a press conference scheduled later this month to unveil a secret new device.

With that out of the way, let’s start with a quick recap of the answers you need before you start looking.  Are you a mobile warrior who is on your phone all day, during work and off hours?  Do you need just the basics – calls, texts, email?  Or are you all over social media and want to be ultra connected to everyone in your network?  Do you play a lot of games, stream music, and/or watch a lot of videos?  These are all important questions to help narrow down the options once you answer the most critical question – which ecosystem is for you?  Do you even care?  Your “user type” may impact your choice, but typically people dabble in a couple ecosystems at first and naturally gravitate to one.

To give you some real world results, I asked around the office, to find out how folks here decided.  Nine of us have smartphones with five on Android, three with iPhones, and one has a Windows Phone.  Even in such a small sampling, no big surprise in the breakdown.  The reasons also weren’t surprising.  Android users cited an affinity for Google, the market leader position, and the greater variety of phones.  For our iPhone contingent, being an early adopter, brand loyalty, and a heavy investment in the Apple ecosystem drove the decision.  Lastly, for the one, i.e., me, Windows Phone user, boredom/frustration with Android and a lukewarm opinion of Apple/iOS led me to look at Windows Phone with an open mind.

While the numbers and the reasons weren’t surprising, the overall satisfaction level with each was a bit.  Most surprising was how iPhone owners felt.  Usually they’re the biggest fanboys.  Of the three, only one is very satisfied with his selection.  He cited the iPhone “look and feel and interface”, small form factor, and his general affinity for Apple and Apple products.  A second checks in as “satisfied”.  He doesn’t necessarily love his phone but it was “the easiest to use” and had “the best feature set at the time” he first got a smartphone.  Since then he’s invested in Apple with multiple iPads for his family and he feels he’s in too deep with Apple to make a change.  Overall, he’s not dissatisfied, which for a lot of Apple early adopters is enough to keep them from switching.  The third iPhone user is clearly indifferent about it.  His response to whether he’s happy with his phone was “neither completely satisfied nor completely dissatisfied.”  Battery life, the keyboard, and the rigidity of iOS were his primary complaints.  On the flip side, he really likes the intuitive interface and integration with iTunes, which is common among iPhone users.  The one common theme I noticed among the three is the belief they’ve invested so much into Apple products, switching doesn’t make sense.  Simply put, that’s how Apple drew up the game plan.

Android users, as expected, provided a wider range of responses.  One switched from Blackberry to a Samsung Galaxy S3 a couple years ago because the reviews were favorable and her son recommended it because he’s a fan of Android.  Another is a first time smartphone user who liked the larger phone selection and larger screens.  Two others with Samsung Galaxies cited integration with other Google products, the ability to “unlock” the phone, and a dislike of iOS for their choice, now and in the future.  Only one Android user gave a tepid endorsement and appears open to changing in the future.

That brings us to the lone person using Windows Phone (WP): me.  I’m a recovering Android user, having switched to WP in February after spending 4+ years on Android.  While I’ve never owned an iPhone, I have spent quality time with them and I just don’t get the hype.  If you are willing and able to objectively evaluate your options AND you don’t believe you’re so deep into a particular ecosystem that a switch is impossible, try a Windows Phone.  I’m a big fan.  It’s a controlled experience, similar to an iPhone, with a ton of room to personalize and customize.  The Live Tiles are not only cool and unique they provide a wealth of information on a single screen.  Wait until the end of this year when (hopefully) the first Microsoft/Nokia phones with 3D Touch are released.  The rumor is we’ll see the full potential of Live Tiles.  Coupled with the updates in 8.1 including an interesting approach to a personal assistant, it’s a shame Microsoft didn’t get their act together earlier.  While Apple and Google are iterating, Microsoft is aiming much higher.  They are the only major player with an official “end-to-end” vision and strategy to unite your devices for both work and play.  There’s still a lot of anti-Microsoft sentiment, not to mention that pesky distant third place position, they need to overcome but new CEO Satya Nadella appears to be the right person to give them a puncher’s chance.

So that’s a wrap on our smartphone series.  Answer a few basic questions, decide what’s important to you, do a little homework, ask around, and then go shopping.  It’s tough to find a store rep who is knowledgeable AND without an agenda so be an informed buyer!
 

CO and NJ tax liens - the straight scoop

Interested in facts, not opinions, about investing in tax liens in Colorado and New Jersey? Here's a recap of VADAR CEO Frank Natale's well-received presentation from the NTLA conference earlier this year. There are separate summaries, one for Colorado and one for New Jersey.

Phone Wars Part 4: Contender or Pretender?

Promising to level the playing field with Android and iOS, Windows Phone 8.1 Developer Preview is now available for anyone with a Windows Phone and the official carrier releases will be rolling out this summer. Does it deliver and more importantly, will it matter?
 

Pros: After thrashing about for a number of years, Windows Phone finally found solid footing with the release of Windows Phone 8. Unfortunately it still lacked some basic features, such as a unified notification and alerts center, the competitors have had for years. Coupled with tepid developer support and a lack of apps, Microsoft struggled to make inroads in the smartphone market. It’s too bad, because while it’s a closed operating system and feels more, ironically, like an Apple experience than an Android, it’s arguably the easiest to customize for the average user. Fast forward to last week and the release of the 8.1 Developer Preview. In most meaningful ways, Microsoft has leveled the playing field, delivering the eagerly anticipated notification center along with a number of updates which make the experience feel more like a full version upgrade than a ".1" revision. Looking to go toe-to-toe with Apple’s Siri and Google’s Google Now, 8.1 includes Cortana, a personal assistant who shows a lot of promise. Combining Siri’s personality with Google Now’s proactive and anticipatory behavior, Microsoft may really be onto something. Despite officially still in beta, Cortana feels more complete than Siri, which has always felt like a glorified voice search engine to me. Cortana includes a notebook style interface where she keeps track of your interests and favorite places. The latter allows for cool geofencing capabilities, such as a reminder to do something when you get somewhere or auto turning on Wi-Fi when you get home. Now this isn’t groundbreaking, Siri and Google Now have been doing it for a while, and Google Now still probably does it better. But Cortana isn’t far off and Microsoft has teased the long term capabilities as she "learns" about you. Plus, Windows Phone has a lot of good stuff already, starting with Live Tiles.  These allow you to not only add quick launch app shortcuts to your Start screen but to also display information which updates regularly. For example, you can have a weather app showing the next few days forecast next to a news app tile with the latest headlines below a calendar tile showing your appointments for the day. You control the size, appearance, and info the tiles display, allowing for a ton of customized information without needing to open individual apps. Think of Live Tiles as a way to slice and dice your screen into "mini" screens, based on what you want. Spend a few minutes with a Windows Phone and you’ll not only better understand Microsoft’s intent with Windows 8 in general but you’ll wonder why everyone isn’t doing the same thing. Plus, 8.1 introduces transparent tiles which allow a photo to be used as your phone’s background underneath the tiles. It also allows a cool parallax movement feature when the user scrolls, letting you "see through" the tiles.  Windows Phone screens pop and stand out. Here are a couple screenshots.  On the left is the first level of the Start screen and on the right, how it looks as you scroll down.




But Windows Phone is more than a pretty face. For business users, and those who support them, it offers the tightest integration with many enterprise applications such as Office, Exchange, and OneNote. For home users, there’s the same tight integration with the Xbox platform so if you’re heavily invested in that ecosystem, a Windows Phone makes a lot of sense.
 

Cons: There’s no arguing the facts. Microsoft is a long shot to even be competitive with Apple and Google. Their late-to-the-game strategy coupled with negative PR ranging from the Vista debacle to the botched Windows 8 launch to their ever changing and confusing licensing models, Microsoft put themselves in a tough position. App developers were slow to embrace the platform because the user base is a fraction of that of iOS or Android. Many consumers were slow to embrace it because many go-to apps weren’t available for it. So a classic chicken and egg dilemma emerged. Those looking for a large user community are scared off and will often opt for the safer choices, betting iOS and Android will be around for a long time.

Conclusion:  I won't give much away from the final installment of our Phone War series but if you want a good alternative to the standard Android and iPhone options, give Windows Phone a look.  You won't be disappointed.  Next time, we'll wrap up with the results of the VADAR office survey including who's using what and why, plus final thoughts to help you choose a new smartphone.



 

The next entry is almost done but we want to include hands on impressions of the big Windows Phone 8.1 Developer Preview which was released today.

The next entry is almost done but we want to include hands on impressions of the big Windows Phone 8.1 Developer Preview which was released today.  In the meantime, here's some info which may be helpful i you have ever dealt with a wet phone.  The key is to prep now!

Phone Wars Part 3: The 800 Pound Gorilla

In less than five years, Android has become the dominant global market leader, with some studies saying close to 80% of the world’s smartphones run it. And from the beginning, it’s been positioned as the anti-iPhone. It’s the most open operating system with a vast array of makes and models.  There are multiple flavors of Android and the overall experience is very dependent on the phone manufactuer/wireless carrier combo. The same phone on Verizon will be a little different on AT&T. It’s not night and day but Android is an inconsistent experience across devices and carriers, and that's probably the biggest knock.  
 

Pros:  Android occupies an interesting position and appeals to the entire user spectrum. If you’re a tech hobbyist who tinkers with every aspect of your phone, then Android is probably your first choice. But you're also looking at it if you’re buying your first smartphone, even if you don't care about all the technical specs and capabilities.  For more basic requirements such as size, form factor, weight, battery life, and screen size/quality, Android offers many more options across all the carriers.  Add in their non-exclusivity hardware model and a developer friendly ecosystem, Android tries to be everything to everyone.  And it does it remarkably well.  Unlike iPhones and Windows Phones, you can root your phone, which is a process that allows you to attain privileged access to the sub-system. For tech geeks who like to tear apart and rebuild their devices, it doesn’t get any better. This openness leads to variations which allow manufacturers and carriers to tailor it for a better fit within their product lines. An ecosystem as robust as Apple’s and the market leader position should give any customer confidence his/her purchase will hold up well for the life of the phone.  
 

Cons: The wild west of mobile operating systems. Many people don’t need privileged access to their phone sub-system and a more limited, or closed, system will work just as well, maybe better. The openness also means inconsistent experiences across different wireless providers and devices. Android on Samsung is not the same as it is on Motorola and Samsung on Verizon isn’t the same as Samsung on AT&T.  For some folks, especially those switching from an iPhone, Android can appear more complicated and less intuitive.  It's partially true; the more you understand about gadgets/computers in general, the better you'll do with Android.  A complete novice may feel overwhelmed but it's not a super steep learning curve.  The various flavors can also be frustrating.  More so if you're supporting many devices and trying to ensure compatibility within the enterprise.  For the home user, it's less of an issue but one that's creeping into the picture...
 

Conclusion:  You're not the dominant mobile OS for no reason.  Android launched at the right time and offered exactly what the industry wanted.  The sales numbers prove it and it's actually shocking how big a lead it is.  With that said, my unscientific analysis is Android users generally fall into a few categories: 1) The anti-Apple contingent. 2) Those who want more options when it comes to the phone themselves. Whether it’s the best screen for gaming or a certain size or the longest battery life, you have much more to choose from. 3) Then there are those who simply like betting on a winner and in the bet for being the ubiquitous mobile operating system of the next ten years, the smart money is on Android.

Next up is Windows Phone, the dark horse in the race.

Phone Wars Part 2: The Granddaddy

Funny to think how back in the mid 90’s Apple was on the fast track to irrelevance. In 2013 they moved up to 6^th on the Fortune 500. First came the iPod but the real break through was the iPhone. From day one, it defined the modern smartphone. Over the past few years, our personal and professional lives have been converging at an astonishing rate. More than 50% of us check our phones "while lying in bed" - before going to sleep, in the middle of the night, or as soon as we wake up. We’re connected like never before and Apple timed the iPhone perfectly. It was also cool and this factor can’t be understated. Many people decide they want one before they even know what they’re getting into. They don’t evaluate other options or even what they plan to do with it. Well played, Apple, well played. But what their innovative marketing drives is a simple message: It's easy and you need one. There’s good reason, too. Apple has always had simple yet elegant designs, clean interfaces, and products which work out of the box. No muss, no fuss, just plug-n-play. There’s a reason they have some of the most rabid fanboys.
 

Pros: If you already own multiple Apple products (Apple TV, iPads, Macs), or plan to, then the iPhone is the obvious first option. You’re probably already leaning towards it and that makes sense, especially if you’re not a tech hobbyist and don’t care about the number of processor cores and megapixels and AMOLED vs. LCD displays. The iPhone is a safe option. It works well, whether you’re doing the basics or you’re all about apps/social media/games/whatever. It has arguably the best camera and the hardware always feels durable and looks sleek. That moves us to the ecosystem, where you get all your content - apps, games, music, video, etc. Good question, and sure, you can use multiple ecosystems. I do it, I'm an eco-dabbler. I like my Pod but it’s the only Apple product I own. While there's nothing constraining you to one, if you own multiple devices (and who doesn’t nowadays?), you get the best value sticking with one. And Apple’s is easy to get into and tough to leave. Almost magically people who had iPods and wanted their first smartphones became Apple lifers. From a vast library of music, apps, and games to an Apple store 15 minutes from your house, they make it easy to get what you want and you’re also cool while doing it!
 

iPhone cons: If you’re prone to screen envy, then the iPhone may not be for you. It’s a crisp display but it’s not the largest. The phone itself is smaller on average and depending on your point of view, that may not be a bad thing. The iOS platform is nothing if not simple but it also feels a little "cartoony" and "toyish" which is why iOS 7 was such a big overhaul. It’s also the most closed ecosystem. Apple makes and controls everything: the phone, the operating system, and the marketplace. This is another instance where point of view is important. It may be a pro for some who like the consistent experience and don’t mind fewer options in general with the phones themselves. For others, that’s their biggest gripe. It comes down to what are practical vs. a philosophical issues and only you can answer.
 

Conclusion: Remember the old saying, "No one was ever fired for buying IBM"? That’s how I feel about the iPhone. It’s been the most popular among friends and coworkers for a while. That cuts across a pretty wide spectrum from folks old and young who don’t know much about computers/technology to software developers and engineers to executives. If you’re already invested in Apple products and comfortable with iOS and the overall Apple "model", then you probably don't need to look further. But for those who are really into their gadgets and aren’t drinking the Apple Kool-Aid, there are options which may be better suited for you. Next time, we’ll take a look at Android and Google, one of the only companies making both Apple and Microsoft nervous...