How Landlords Can Boost Income: It Pays to Be Sure when you Insure

March Madness is almost over and I am ready for NCIS to be back.  Well, enough of guilty pleasures, now comes more of the real “pleasure” of saving money.  I never really thought much about insurance when we first became landlords, back then it was cheap and it didn’t seem to matter.  These days the cost of everything has escalated and it is time to give the subject a review.

As discussed last time paying in split payments can help…but then, how about really knowing what you are paying for.

I have come to the conclusion that knowing about what you are buying is VITAL in any business but in ours even more so.  Do you know the difference between a homeowners policy and a DP – dwelling policy?  Well, I didn’t really and if you are buying houses or just getting the insurance your lender requires you need to know more about it. 

DP’s come in different flavors….actual cash value, replacement value, etc.  I can only speak for Florida but your regular policy may not cover wind damage and does not cover flood.

My best suggestion is to go insurance AGENT shopping.  For a long while I just purchased what the agent recommended….after all, she had my best interest at heart…right?  Well, after realizing that I was paying almost twice what I could pay in many cases I started doing some research and found an agent who would help me understand all my options. 

When you think about how an agent is paid you might see that they would recommend the priciest policy, and if that is what you truly need – great.  But understand before you pay.  Get some recommendations from people you trust, your CPA, friends in the industry and start calling around.  Make an appointment to have them review your policy and educate you as well. 

Another thing to ask is service after the initial purchase, will she send copies of the policy to your lender if asked, does she answer her phone?  These seem like little things but they can save you money and peace of mind.

Happy learning, “ til next time.

Saving Money for Landlords Tenants and Sellers

As you and almost everyone in the world knows times are tough all over and saving money is great anytime….but for many folks it is crucial now.  I came on this by happenstance and George suggested I share it with you.

Most of us have insurance of one type or another.  We have a number of properties and Citizens insure most of them.  In the past I would get my renewal bill, schedule it on bill pay and think nothing else about it (maybe with the exception of not liking to pay it at all).  I had a problem with my statement, it was marked “lienholder billed” and there is no mortgage on the property so I wanted it corrected.  In the course of talking to my agent she asked whether I made full payment on this and I said yes, why?  Well, she said, you have the option of split payments.  I didn’t know that said I rather naively.  Apparently there is another statement inside all of the insurance documents (if it is a self pay statement) and it asks if you wish to make payments.

Now I don’t know about you but some money in my pocket is better than all of it in Citizens pocket.  The deal for quarterly payments is 40% first payment plus 10.00 set up fee plus 3.00 finance charge (?) and then they bill you.

One thing I realized is that this plan has been available for some time and not one of my agents mentioned it to me.  I think it is probably better for the agency to get all payments at once.

So now, couple things to check.  If you have no escrow make sure your statement is billed to you and not sent to your lienholder.  Then look for the details in your packet of documents.  If you don’t see it call your agent.  This may not apply to all companies but I would check.

Talk to you soon…next time something called the battle of the DPs.

Real Estate eBay Lady on new eBook for Lanldords

Landlords Tenants and Peanut Butter Cookies

Seems like an odd topic for a real estate blog but I have a point to make.  George just wrote an e-zine article called “Keep your Friends Close and your Tenants Closer” which got me thinking – how do you keep your tenants closer?

 As a landlord, it seems like the times I most frequently talk to my tenants is when they owe me money.  They sometimes call me to say they can’t pay on time but more often I call them to see where their payment is or I received a code violation and they need to cut the grass.  Maybe some of you can relate to that, and what happens?  Many times I get voice mail or an answering machine, and no call back.

 Would you think that we only call tenants for unpleasant things?  Have we called to wish them a happy birthday or any other holiday or occasion?  Well here is my idea…..it’s called “ what keeps you closer than cookies? ”  My strategy is that landlords don’t always have to be calling with bad news.

 Just for fun make a big batch of cookies, use your favorite recipe (I will share mine at the end) and package them on  a plastic plate or heavy paper one and cover real good to keep them fresh.  Call your tenant and tell them you have baked and have something special to share.  Make sure you let them know  at a time when they won’t think you are trying to collect rent.  If they don’t answer the phone ask them to call you back to arrange a drop off time. I will bet they are surprised.  If you don’t bake, even some store bought cookie dough ones would be appreciated.  If it’s near St Pattys day wish them good luck.  I’ll bet your relations will improve, if only for a little while.

 My mother taught me to cook very early and our family loved to eat…this is my Mama’s Peanut Butter Cookie recipe: (I believe it was originally a Better Homes and Gardens recipe and makes about 5 dozen.)

1 cup shortening                                                         1 cup Peanut butter

1 cup white sugar                                                        3 cups flour (white)

1 cup brown sugar                                                       2 teaspoons baking soda

2 eggs                                                                           ½ teaspoon salt

1 Teaspoon vanilla

…………………………………………………………………………………..

1. Preheat oven to 350 degrees
2. Cream shortening, sugars, eggs and vanilla.
3. Stir in Peanut butter
4. Stir dry ingredients into creamed mixture
5. Drop by rounded teaspoons onto ungreased cookie sheet
6. Press with back of fork dipped in flour to make criss crosses
7. Bake 10 minutes or til light brown
8. Let cool on pan about 1-2 minutes and cool on wire rack

 Enjoy and happy tenant relations!!!!!!!!!!

Seller with a contract? Protect yourself

Today I want to talk about what many sellers would give their eye teeth for, a contract, but it may be wrong for them.  When I went to Real Estate school I had an instructor who LOVED contracts…any kind of contract and the way he taught made it fun.  I pay much more attention to contracts and you, as a seller should too.

 If you have a real estate agent you will have some help with the contract – but these points are very important for a seller on his own.

 There is more to the deal than price, although that is important.  My suggestion is to thank your potential buyer, see first how long he has given you to accept or counter his offer and then spend some time (preferably on your own) going through it.  You may decide to use a real estate attorney at this point. Another thing to consider, most attorneys can do a real estate closing but there are board certified real estate attorneys, which would be my recommendation.

 Some points to check….how much is the escrow deposit (this is the money that sort of guarantees his performance on the deal) If it is a small amount like $100.00 he may choose to walk away if any problems arise. Has he indicated where closing will be held, and has he listed a closing or title agent? That choice is typically for the seller to make.  Are there any contingencies in the contract?  Simple sounding things like financing can be a real deal breaker.  You have the right to find out what financing he has lined up.

 Another thing is to check to see if the contract is assignable, this can be a big point, maybe the Newbie Investor is assigning it to his partner, which you would want to know.  Perhaps he is assigning it to a trust, which the banks don’t like but individuals may. He may be planning to flip (kind of a bad word these days) the contract to another investor and he may want extra time to find one.  Depending on the market you may not want your house off the market for more than a month.

 You have the right to make changes as you desire but remember if you change anything you don’t have a completed deal yet. 

 Go through all the steps, ask your questions, perhaps have an attorney if you would feel more secure and then when it is all done . . . yeah!!!!!

Thinking of Selling Your House Fast? Try a Different Approach

George and I have been buying and selling houses for over twenty years and we have gotten a ton of questions in that time.  One of the recurring ones is “how can I be sure about the person(s) offering to buy my house?”

The best answer I have for you is to ask your own questions. Very often when dealing with someone, we want to talk a lot, in this case I would say to follow the example of a couple of my favorite “questioners”…..Patrick Jane on the Mentalist and Jethro Gibbs on NCIS.  They ask their question and then LISTEN…sometimes that is tough because no one likes silence.

For example….How long have you been doing this?  If your prospective buyer is a “newbie” he might tell you that he and his partner have been in the business for a gazillion years.  Let him continue to talk, if he seems to finish, just be quiet for a moment to see if he offers any more information. Your follow up question might be along the lines of “partner? I thought you wanted to buy my house.”  Again, just listen.  If you fluster someone you have a good clue that he is new.  Many times New want-to-be real estate investors partner with a seminar leader and are following a script. The more you know about this process, the more it can help you pick the best fit for your house sale.

Ask what he is willing to pay for your house and how long it will take to close. If he gives you what you consider a fair offer ask to see the contract and suggest having your attorney look it over.  Sometimes you will not get an immediate offer, he might have to discuss it with his partner and possibly come back to you with “I’m sorry, we can’t pay that much, but can pay X amount.

Depending on how much you want to sell, or how long the house has been on the market you may decide to go forward.  My upcoming blog will give you more tips if you have a contract.  Until then, Keep listening.

Questions to ask the We Buy Houses Folks

Supersize Your Lease Options for More Profits with New Trademarked Program

Lately, there have been lots of people asking me the difference between lease option, rent to own and the Famous Rent to Own on Steroids Program(tm).  I  know that there are even more people who do not know and don’t ask. I am always impressed when someone asks.  It means they are already knowledgeable,  self confident, and desire to increase their learning.

The three phrases are quite similar in what they propose to do, which is to move the title of a house from one person to another, usually avoiding the use of commercial banks and is designed to accommodate those who can not or do not want to deal with banks.  Here are some differences.

Lease option is a lease and an option.  They may be combined into one document or may be two and there are variations of them, like a lease with contract for option.  The basic lease option provides for the buyer to rent under the terms of the lease with the right (but not the obligation) to buy the property at terms and prices stated in the option document.  Normally there is something like first, last and security  to be paid for the lease.  There is also option premium (the amount you pay to buy an option) which gives the buyer the right, but not the obligation to buy.

The option will state the term of the option and the strike price or prices.  The strike price is the price the buyer can buy the house for at various periods of time.  For example, it would be possible to buy at $100,000 for 12 months and maybe $105,000 in the second 12 months and there would be a date specific at which time the option would expire and then  become worthless.

If prices of the houses go up the buyer would be more likely to exercise his option and buy the house. If prices went down, he  could simply choose not to buy.  Which means he would not have to sell the house, would not have to pay marketing and sales so costs and could simply leave as he could under the terms of the lease.

Some of the money paid usually becomes a credit for the buyer.  The lease option may or may not also provide a mortgage for the buyer and may state the terms of the mortgage.

Rent to Own is a more generic term.  Basically it means the same as lease option and is usually used for lower priced houses.  A $150,000 house might be available as a rent to own.  a $900,000 house would be more likely to be offered as a lease option.  But both terms would really be equally applicable for high and low priced houses and usage would tend to be a function of who is talking to whom.

Famous Rent to Own 0n Steroids Program™  is a specific kind of rent to own, or lease option, with really incredible features.

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George Beardsley has written extensively about finance and business starting as a financial reporter for the Chicago Tribune, covering commodity futures, stocks, bonds, banking and other financial news.  He was an editor for the financial publishing firm Dow-Jones, Irwin.  He left the Tribune to work for Merrill Lynch as a commodity broker and owned a commodity brokerage firm in Florida.  He was graduated from the University Of Missouri School Of Journalism with two degrees and was awarded the Bronze Star Medal for service as a combat intelligence officer in the Republic of Viet Nam. He has been buying; fixing and renting house in Florida for two decades and has just published a new eBook called “911 for Landlords.”  His website is http://www.1gr8deal.com.