Thursday, September 22, 2005

Facts about Renters Insurance by Brian Walker

If you rent an apartment or house, you might consider purchasing renters insurance.

Renters insurance provides coverage for damage or loss of personal property for people in rental housing. It's to insure the renter's belongings from theft or damage. In addition, renters insurance also provides liability coverage for people in rental housing if somebody is injured while in the rental place. In this case, the renter is sheltered from lawsuits or liability for the problems cause by him/her.

Renters insurance can help you if one of the following things happens to you: your apartment catches on fire and your belongings are lost or damaged; you get stolen from a theft who breaks into your apartment; a friend of you injures himself while having a party in your apartment; an electrical power surge damages your television, stereo and computer. While renters insurance has a broad coverage, keep in mind that earthquake and damage caused by food are not covered in most renters insurance policy.

Many renters think their landlord's insurance will cover them. This is not true. In general, the landlord's insurance only covers the building, but not the renter's belongings and liability.

Renters insurance is not expensive. For example, a policy that costs around $300 a year (with a deductible of about $250) could cover between $20,000 and $30,000 worth of loss or damage, plus $500,000 to $1 million in personal liability.

To shop for renters insurance, you should try getting quotes from different insurance providers in order to find the best deal. You can check with your auto insurance company to see if they also sell renters insurance and whether the will give you a discount for buying two types of insurance from them.

Renters insurance is often overlooked by people renting an apartment or house, but it's a renter's good friend and it will give you the peace of mind.

About the Author
Brian Walker is a freelance writer who has written many self-help articles. Check out more apartment living guide at Apartment Rental Finder ( ) and 101 Apartment For Rent ( ).

What To Look For In A Home by Nicole Soltau

Searching for just the right home can be very exciting. You may plan ahead for the number of bedrooms and bathrooms that you want. Or imagine preparing for dinner parties in a sun-filled kitchen. Although these things are important, there is more to a good home purchase than the rooms it contains. Following are just a few suggestions to consider. Take some time to make a list and determine which additional priorities are important to you.

Survey the neighborhood during many different times of the day and days of the week. Are you comfortable with the noise, activity levels, traffic volume, etc.?

If you have, or plan to have children, check with the local school board about the neighborhood schools. What is the student/teacher ratio? How are the test scores? How involved are the parents? What programs are available for students? What credentials and how much experience do teachers bring to the task?

Is the foundation of your new home sound? Is it well built?

Are the existing appliances sound or will they need to be replaced?

Are the home's major systems such as electricity, plumbing, heating/air, and roofing in good condition?

Is the home energy efficient?

How much major and/or cosmetic work will be required?

What will your commute look like? If possible, do a trial run during rush hour.

What is the crime rate?

What permits have been issued for new projects and/or construction in your new neighborhood?

Will you be expected to pay homeowner association fees? Are you comfortable with the covenants set forth?

Does the neighborhood provide sufficient recreational opportunities?

Will you be moving into a home or joining a community?

Is the local grocer clean and well-stocked?

Enlist the help of a good real estate agent, reputable home inspectors and others to help find a home with more than just a pretty face.

Beyond Mortgage Payments

Owning a home involves far more than keeping current with your mortgage payments. There are a number of costs associated with home ownership that extend far beyond the basics (i.e. principal, interest, taxes and insurance). Assuming responsibility for these costs can be a big financial adjustment. This is particularly true if, as a renter, you are accustomed to responding only to fixed expenses (i.e. rent) without much concern for variable expenses (i.e. broken pipes and new water heaters). Well, now you are the landlord and it is up to you to handle the mortgage, in addition to all of the variable expenses of home ownership.

Routine and emergency maintenance issues are an inevitable part of homeownership. The dishwasher will need to be replaced, the roof may begin to leak, or the furnace will give out. You can minimize the financial fallout by planning ahead and budgeting in anticipation of these expenses. Recommendations vary, but you would do well to save an amount equal to at least 2% of the cost of your home for annual upkeep and maintenance. Set aside funds toward this amount each month. In this way you will eliminate the scramble and panic of getting the funds together to get that tree off of your roof.

In addition to maintenance and upkeep, there may be other costs you will need to absorb. These include water, sewer and sanitation expense; homeowner's insurance, and property taxes. It is important to understand the full cost of home ownership before you sign on the dotted line. You can build confidence in your ability to handle these new expenses by making a trial run. Do your best to estimate the total cost of home ownership. Use that information to make a budget. Before you sign on the dotted line, live within that new budget and see how well you manage. You may find that you have adequate financial resources, that's great. If you find that you are a bit short, you may need to make some adjustments. Being proactive now may help you avoid foreclosure in the future.

About the Author
Nicole Soltau is the President and Founder of - The Leading Credit Union Directory Search, Find Join.

How To Find Investment Properties by Steve Gillman

If you really want the best deals in investment properties, you have to increase your odds by finding more deals. Who is more likely to get a cheap apartment building, an investor that looks through the MLS listings and calls it a day, or the one that uses ten resources? Here are the ten:

1. Talk. Let people know you are looking and sometimes the properties will come to you. There are a lot of owners out there who want to sell, but haven't yet listed their property.

2. Use the internet. Go to a search engine and enter the type of real estate you are looking for, along with the city you want to invest in. You never know what you might find.

3. Drive around looking for "For Sale By Owner" signs. Owners often don't want to pay to keep the ad in the paper every week, so you won't see all properties there.

4. Find abandoned properties. That's a pretty clear sign that the owner doesn't want to deal with the property. He might sell cheap.

5. Find old "For Rent" ads. Call if they are a few weeks old. Landlords are often ready to sell, especially if the haven't yet rented the units out.

6. Talk to bankers. You might get a foreclosed-on investment property cheaper if you buy it before they list it with a real estate agent.

7. Offer someone a finder's fee. There are people that always seem to hear about the good deals. Have such people coming to you.

8. Eviction notices. If your local papers publish eviction notices, or if you can get the information at the courthouse, it can be useful. A landlord who just went through the procees of evicting tenants is a likely seller.

9. Old FSBO ads. If you call on two-month-old "For sale By Owner" ads, and they haven't sold, they may be ready to deal. Owners often give up the effort, but still would love to sell. Help them out!

10. Put an ad in the paper. "Looking for investment properties to buy," might be sufficient to generate a few calls.

About the Author
Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit

Get More By Offering Seller Financing by Steve Gillman

An example of seller financing: Years ago I bought a rental property, and nine months later sold it for 15% more, without fixing or improving a thing. The easy terms are what sold it. I took $1000 down, and I still get a payment every month, with 9% interest.

Four Reasons To Offer Seller Financing

1. To get a higher price. As you can see from the example above, buyers pay for easy terms. From the buyers perspective, he gets a place for almost nothing, that the renters will pay for. He comes out okay even if he later sold it for less than he bought it for.

2. To get a decent return on your money. The 9% I'm getting is nice, but the true return was much higher, since I also sold the property for 15% more than I paid, and I get 9% on the entire balance. In fact, for a great return without the headaches of being a landlord, you can simply buy low for cash and sell high with terms.

3. To sell faster. Anytime you expand the potential market for a property, you increase the odds of selling it fast. Selling with easy terms definitely invites more buyers to look at your real estate.

4. To sell difficult properties. If you have a property that is difficult to finance conventionally, offering seller financing may be the only way get it sold, and at a fair price.

Of course the ways you can sell are limited by mortgages and other loans. I owned the rental free and clear, which meant I could sell it any way I wanted. There are other ways to use seller financing though, even if you owe on the property. There are ways to do this safely too. Those topics are for another article.

About the Author
Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit

How To Be A Slumlord by Steve Gillman

Be a slumlord? Okay, I got your attention, now the truth. I really don't recommend that anyone endanger their renters with unsafe housing. Much of what people call slumlording though, is simply providing reasonable housing for those with low incomes. It is of benefit to the renter AND the landlord.

Why Do People Rent Dumps?

People rent not-so-nice places because they can afford to. A house that needs paint, has old rusty hinges on the doors, and a dirt driveway - this is a house that cost less to buy, and therefore can be rented for less. Anything major that the landlord does to improve it will result in higher rents, and possibly drive the renter away.

In fact, this often happens. A few years ago my own town enacted its first rental regulations. The fifteen pages of new rules included many non-safety-related requirements, like a minimum of windows, to allow natural lighting, bedroom square-footage requirements, and no peeling paint.

These things are done in the name of low income renters, and yet the result is always the same: higher rent. With that and the regulations against mobiles homes, low income families are moving further away from town and jobs. I mention all this to let you know that if you offer an ugly, but safe and affordable rental, you are providing a real service.

Why Invest In Low Income Housing?

If a nice two bedroom house in a small town costs $130,000 and rents for $800, an old mobile home on a lot will probably cost $45,000 and rent for $500. Notice that the house costs almost three times as much, but the rent you get isn't even doubled. This means the mobile gives you MORE CASH FLOW. That is why old houses and mobile homes (on land) are such good investments.

It's important to note that you'll have more risk and management problems with low income housing. Repairs come up more often, and rent will be late more often, on average. This is why you deserve a higher rate of return. Otherwise, who would want to provide low-cost rentals?

Treat your renters well, and make your places safe. Do these things, and you can enjoy a good return on your investment - even if some want to call you a slumlord.

About the Author
Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit

Which Type Of Real Estate To Invest In by Steve Gillman

There are different types of real estate, and different ways to invest in them. Which way is best is for you to decide, according to your particular needs. Here are a few ways to consider, with their advantages and disadvantages.

1. Rental houses. Advantages: One of the easier ways to get started, and good long term return on investment. Disadvantages: Being a landlord isn't much fun, and you typically wait a long time for the big pay-off.

2. Rent-to-own houses. Advantages: When you buy, then sell on a rent-to-own arrangement, you get higher rent, and the buyer is usually responsible for maintenance. Disadvantages: The bookkeeping is tricky, and most tenants don't complete the purchase (this can be an advantage too, but it does mean more work for you).

3. Low income rentals. Advantages: The same as with any rentals, but with higher cash flow. Disadvantages: The same as with other rentals, but with more repairs and tenant problems.

4. Fixer-uppers. Advantages: A quick return on your investment, and it can be more creative work. Disadvantages: Higher risk (many unpredictables) and you get taxed heavily on the gain.

5. Buy for cash, sell for terms. Advantages: You get a high rate of return by paying cash to get a good price, and selling on easy terms to get a high price AND high interest. Disadvantages: You tie up your capital for a long time.

6. Buy land, split it and sell it. Advantages: It is simpler than most real estate investments, with the possibility of great profits. Disadvantages: It can take a long time, and you have expenses, but no cash flow while you wait.

7. Boarding houses. Advantages: You can get a lot more cash flow renting a house by the room, especially in a college town. Disadvantages: You can get a lot more headaches renting a house by the room, especially in a college town.

8. Commercial real estate. Advantages: Long term triple-net leases mean little management and high returns. Disadvantages: Tough market to break into, and you can lose income on vacant storefronts for a year at a time.

9. Buy, live in it, and sell. Advantages: The new tax law means you can fix it up, and sell for a big tax-free profit after two years, then start the process again. Disadvantages: You have to move a lot.

10. Speculation. Advantages: Buying in the path of growth and holding until values rise can yield large profits, especially if you buy low to start. Disadvantages: Prices aren't that predictable, you have expenses with no income while you're waiting, and transaction costs can eat much of the profits.

About the Author
Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit

Basic Things You Should Know About A Lease Purchase Contract by Amanda Shoemaker

What exactly is a contract?

By definition, a contract is an agreement between two or more parties to do, or to refrain from doing, a particular thing in exchange for something valuable. The parties can be individuals, businesses, organizations and government agencies.

They key elements of a successful real estate contract:

1. Offer and acceptance

This implies original signatures with no alterations to the contract. Don't mistake offer and acceptance for counter-offer. When the original offer is marked up and initialed by the party receiving it, then signed, you got a counter-offer and not offer and acceptance. When you come to a final agreement, you should rewrite the contract according to the agreement and this contract must be signed by both parties.

2. Consideration

Usually, money is the form of consideration people use, but sometimes, a promise to perform/pay is also good. .

3. Written contract

All real estate contracts must be in writing. In order to write a good real estate contract, you must keep in mind these things:

You must write the full name of the parties on the contract and thus identify the parties.

You must have the legal description on the contract. Sometimes, the address will do, but it's preferable to have the full legal description. By having this on the contract, you will have the property identified.

You must have the amount of the sales price on the contract.

The contract must be signed by all the parties involved, or it won't be enforceable.

Keep in mind that minors, drugged persons, mentally unfit etc, cannot sign any contracts. Make sure that all the parties involved are competent.

Make sure all parties know the essential details, rights and obligations that are stated in the contract.

What exactly is a lease purchase contract?

Lease purchase contracts combine the basic lease contract with the option to purchase and, during or at the end of the lease period, it gives the tenant/buyer exclusive right to buy the home under the terms to which both parties agree in the contract. But first, the tenant/buyer have to pay the landlord/seller a non-refundable option deposit that is applied to the purchase price of the home. Then, the tenant/buyer pays a sum that is typical to the rental amount and usually, it is done on a monthly basis. A portion of that monthly payment is applied to the purchase price of the home.

About the Author
Amanda Shoemaker owns a great directory of lease and lease purchase properties and houses for rent. Visit her site at

How To Prevent Cat Urine Odor Damage in Rental Property by Nancy E. Wigal

You have permission to publish this article electronically or in print, free of charge, as long as the bylines are included. A courtesy copy of your publication would be appreciated.

Feline owners who are renters can face challenges every time they move from one rental to another. Their cat may have the best cat litter box habits in the world, but if the new apartment has cat urine damage from the previous tenant, the cycle could be repeated. If your kitty smells the cat urine from the previous pet, she may take this as permission to use that spot for her cat litter box needs.

There are things that you, the feline owner and renter can do to prevent this. Not only do you help keep your cat honest in her litter box habits, but this also saves the rental residence from further damage.

When applying for the new rental property, ask the property manager or landlord about previous tenants' pets. If she indicates the apartment has sheltered cats, ask if the departing resident properly cleaned the place to eliminate any cat urine odors. If the landlord says no, or isn't certain, ask if you can go into the apartment for a quick look.

If you gain access, use the best piece of equipment you have: your nose. Stand still inside the door, and sniff carefully. If it smells cat urine-free, move through the rest of the apartment and repeat at intervals. If you smell anything remotely like cat urine odor, look around to see if you can find the source. If you can, great - let the landlord know. If you can't see it, but you do smell it, tell the property manager it needs further investigating before you move in.

Explain to the rental manager what problems could be set in motion if the cat urine odor is not completely removed. She needs to understand that this could be a perpetual cycle, but if she gets the cat urine odor out now, it prevents damage to the apartment and saves the property management company money.

If the landlord doesn't offer to do cleaning, see if you can negotiate a reduction in the rent deposit by offering to do the proper cleaning job yourself prior to moving in. This is a win-win situation, and many landlords may take you up on this. This way, you're ensured of having a clean residence that is cat urine odor-free. And, your kitty will continue her good cat litter box habits!

If you can't gain access to the apartment before moving in to do the cleaning, it's not too late to clean once your possessions are in. If you have an understanding friend or family members, ask them if they would board your kitty for a day or two until you can eradicate the cat urine odor yourself. If necessary, board your kitty at your local vet's office.

Then, grab your enzyme cleaner, a blacklight (to locate the cat urine spots), rags, and towels, and get to work.

Find all the spots and clean them thoroughly with your favorite enzyme cleaner. Repeat as necessary.

Welcome your kitty to her new home by setting up her food, water, clean cat litter box, and toys in a room of her own. Let her get accustomed to being in the new place by transitioning her from one residence to the next.

Supervise her movements throughout the new apartment, and make sure she knows exactly where her cat litter box is located.

By accomplishing this, you are breaking a destructive cycle of pet soiling in rental property. Your cat continues to use her cat litter box because she doesn't detect another cat's urine, and the property manager has just been handed a gift from you that will save her money from cat urine damage.

About the Author
The Cat Urine Odor Advisor helps you save money and stop the damage in your household by offering solutions that work together to eliminate cat urine odor from your home.

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Renters Have Much to Gain by Pursuing Home Ownership by Mical Johnson

Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you're helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won't benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs. There are many different types of loan programs available, including "low" and "no" down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that "home" is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.

About the Author
Mical Johnson is affiliated with Rock Financial, Inc., a Licensed Correspondent Mortgage Lender, Florida Department of Finance. Mr. Johnson hosts Home Buyer's Seminars which are open to the public each month in the TampaBay area in Florida. To obtain a free copy of Mr. Johnson's Home Buyer Handbook contact him at He is also a contributing author at

Real Estate Investors - Remember The Impound Cash by Mark Walters

Those new to real estate investing often fail to take action because they don't have much cash. The truth is that the very best investors got their start when they had little or no money.

When you start at the bottom you have to work harder and smarter. You have to make every penny count... and in doing so you learn how to put together the most profitable deals.

Right now one of the very best ways for newbies to get started is to buy property buy taking over the payments of an existing loan. It's called buying "subject to".

You generate income to make the mortgage payments by quickly leasing the property. Lease payments pay make the mortgage payments.

Here's something most investors overlook when buying "sub to" and why they lose around $1,000 each time they do a deal. We often buy properties "subject to" the underlying mortgage. That simply means we give the motivated seller a little money (if he is really motivated no cash is needed) and take over the payments of the loan that's already in place.

We have title, but the seller's name stays on the mortgage loan.

This a popular way of buying property from motivated sellers. It allows the investor to buy many properties with very little cash. It also places a severe responsibility on the investor to stay current with the mortgage payments. You must be a good landlord and some the rent payments rolling in.

Here's where most investors fail to pick up that one thousand dollar that is just waiting to be claimed.

When the investor sells that property they often are not aware that they can get a check from the original lender for the cash that has accumulated in the loan's impound account.

That is the money collected monthly by the lender to pay the taxes and insurance. It often adds up to around a grand or more and it's easy to get if you know what you're doing.

When you buy a property "subject to" the underlying mortgage, always get all the owners of the property to sign a Limited Power of Attorney giving you control of anything having to do with the house in the future. That way you don't need their cooperation later, when they've left the area and can't found.

Finally, after you've held the property while it appreciated in value, you are ready to sell and cash out.

When you have found a buyer and you are arranging the close, send the lender a request that any balance in the impound account be sent to you or your company. Always send along copies of the Powers of Attorney so the lender knows you have the authority to make the request.

Sometimes they will honor your request and sometimes they won't.

More importantly, instruct the escrow officer or attorney handling the closing of your sale to ask for the impounds. They will give the pay off instructions to the lender and the lender usually will follow those instructions without question.

On a recent deal we received a check from a lender for the impounds in the amount of $1,357.00. Yeah!.. Happy dance!

Was there a catch? The check from the lender for the impound funds was made payable to the two original sellers whose names were on the loan. It looked like this...

Pay To The Order Of: John J. Seller, Paris W. Seller c/o The Author's Investment Corp.

Was that trouble? No! Remember we had a separate Power of Attorney for each of these individuals. We took the check and the POAs to our bank. We explained the situation and here's what the bank officer had us do...

On the back of the check, we signed the name of each seller. After those signatures we wrote:

By_________________ (and signed our own name).

Then we signed our company name and again (By______) and then we signed our own name and position in the company.

That was it! An easy way to pocket $1,357.00 that too many investors leave on the table.

Now YOU will never walk away from that extra thousand or so dollars!

If you would like to learn more about buying "subject to" look here...

About the Author
About The Author: Mark Walters is an investor and author. You can find his published material at

To Buy or Not to Buy by Madan "Raja" Ahluwalia

Purchasing a home is a major emotional and financial decision. Often times, people want to buy a home; however, emotionally cannot afford to commit to the home-buying process. They are, in fact, afraid. "My payment will be too high" or "What if I lose my job," are some of the "excuses" which I often hear. People do not realize that they are able to meet all the commitments over their life span.

In any event, when everything is said and done, here are some of the major advantages of buying a home:

1. Quality of Life. Home-buying and living in your home affects the quality of life. It adds to your confidence, giving you a sense of pride and satisfaction. You have a sense of emotional well-being as well as peace of mind.

2. Tax Deductibility of Mortgage Interest. The entire mortgage interest payment is tax-deductible and the "net" cost of the mortgage payment actually puts money in your pocket.

3. Tax Deductibility of Property Taxes. Similarly, the property taxes are due and payable twice a year and may seem like a lot of waste of money. Typically, property taxes are $1.10/$1,000 of your purchase price. However, the property taxes are also tax deductible and you get it back in the form of tax savings.

4. Appreciation Potential. Typically and historically, nationwide property values have gone up in value at 7% per year. In California and some other states, properties have, in certain good economic times, appreciated at the rate of over 20% per year. At 7% conservative rate, the property doubles up in value in 10 years. So, a property worth $500,000 will be worth $1,000,000, equaling a gain of $50,000 on a yearly basis. For an average person, it is difficult to save that kind of money.

5. Deferred Capital Gain Treatment. Real estate investment capital gains can be deferred by exchanging the property for like-kind property. So, when the property appreciates and you decide to sell it and do no want to pay the capital gains tax, you can buy another property of like-kind and avoid capital gains tax. This allows you to switch properties when required, for example, an area might be facing downturn or you might be moving, etc.

6. Once in a Lifetime Exclusion. Upon the sale of a personal residence, the IRS allows an exemption and one does not have to pay taxes on a gain of $250,000, if single and up to a gain of $500,000, if married. For example, if you're single and buy a property and live there for five years and the property appreciates by $250,000, you can sell the property and not pay any taxes at all.

7. Principal Accumulation. This is strongly tied to appreciation in the property value. Payments made toward the mortgage payment help you accumulate principal which essentially helps you establish a reserve savings account which you can later tap into by obtaining an equity line of credit or getting an equity loan, if needed.

8. Pride in Your Home. It is fun to invite people to "your" home and feel good about it. It also instills confidence in your family, your children and makes them more confident individuals.

9. No Landlord. You are in-charge and do not have to deal with a landlord who might not make repairs or maintain the property as you would like.

10. Leverage. Where else can you buy this size of an investment with 0-5-10% down. You can buy a property for a personal residence for as low as zero down or an investment property with 5-10% down, if your credit is good, and watch the investment grow. This, in turn, allows the net investment return to be much higher (than the actual appreciation rate on the value of the property). To follow up on the example earlier, if the property grows at 7% and doubles in value, since the amount invested in buying the property might be only $50,000 (at 10% down payment), the actual return is much higher on $50,000 investment.

11. The Real Cost of Renting! At $700 per month, with a 6% rental increase per year, you will pay $110,719 over a 10 year period. If the rent is higher, you can count on paying much more and not getting any return or tax benefits at all.

About the Author
Madan "Raja" Ahluwalia is an Attorney at Law and Realtor. Raja possesses a thorough understanding of the real estate market and trends, based on years of involvement in real estate, both for his clients and for his own investment purposes. Contact Raja via e-mail at and at 650.430.4023.

How to make money from Buy To Let in a property crash by Peter Parsons

Over the last few years, most investors who have tried 'buy to let' (buying additional properties in order to rent them out) have profited spectacularly as the property market in most of the world boomed like never before. Historically unprecedented property prices in the USA, UK, Australia and most of Europe have made the concept of becoming a landlord look like an easy route to riches.

Of course, there really isn't any 'free lunch', and the situation now, as property markets start to crumble around the globe, isn't looking quite so good for amateur property speculators. Historically, booms of this magnitude are followed rather predictably by equally large crashes, and the smart property landlords evacuated the market over a year ago, selling at the peak to amateurs lured in by the prospect of easy money. These amateurs have typically paid way over the odds for their rental investments, and are in many cases having to subsidize their tenants (i.e. the rent doesn't cover the interest-only payments on the mortgage!). They did this on the promise that future property price appreciation would justify the monthly losses they make by subsidizing the tenant (Ed's note - a pro landlord would NEVER subsidize a tenant in ANY circumstance - yield is everything).

So what's a newbie Landlord to do? Paid too much for a property, tenant's rent not even covering the interest on the mortgage and property prices likely to slip a dismal 30% or so over the next 5 years... is it harakiri time? No! There IS a way out, a way so obvious you have probably overlooked it.

Sell the property. Simple, huh? In theory yes, but not in practice. Right now, NOTHING is selling. Solution? DROP THE PRICE. You may have to take a 15% or 20% loss on the property now in order to get rid of it. Why on earth would you do this, I hear you ask, after all, aren't you in it for the long term? of course you are. But you must also treat it as a business, so let's look at the business case for the justification.

The property market has begun the downswing. Like an ocean going tanker, the market is slow to change direction, but when it does, it's going the opposite way, and for some time. The market ALWAYS punishes 'irrational exuberance' - that's almost a definition of a market. It could be anywhere between 3 and 5 years before this downswing bottoms out, and over that time, a 30% correction is probably the 'best-case' fall one can expect (this would take prices back to the long term mean. In reality they may even undershoot and fall further). After that, it may be another 3 to 5 years before prices once more claw their way back up to the highs of 2004.

Now let's be optimistic, let's hope it takes only 3 years down, and 3 years back up. Over that 6 years, you will be subsidizing your tenant each and every month, will be responsible for repairs, taxes, finding new occupiers, and all the hassle that a person would normally expect to get paid for. And you will be doing it for nothing. Nada. Zilch. If you are subsidizing your tenant to the tune of 20% or so (a common figure at present according to industry figures) this means you will effectively have lost about 9% of your investment anyway as the 6 years unfold in all their predictability. Add on the lost opportunity cost of using your money more effective over the 6 years, and you can realistically double that figure BEORE you look at all the hassle and heartache of being a landlord. In other words, pretty much the same cost to you as selling now at what looks like a bad loss.

The alternative? You are free to get on with life, and try to find some other way to make money. Additionally, if you manage to sell now, even at a 20% loss, it will probably fall at least another 10%. This means that you can buy again in 3 years time at the lowest point of the crash, and recover your losses in the 3 years that would follow, making a healthy 10% or so whereas as things stand you will only be clawing back to break-even by 2011. And the icing? Buying at the low in 3 years time means a smaller mortgage, which means lower interest payments, which means a respectable yield!. The calculations are quite complicated, but put simply, taking your medicine now in the form a of a 20% hit could mean that in 6 years time you are up perhaps 40%. The choice of course, is yours. And even if you decide to hang on for grim life, there is always a chance that you might make it out the other side with a small profit some time in the next 10 years or so. Best of luck, Landlords!

About the Author
Peter Parsons writes property articles for , the place to get advice on how to reduce your mortgage

Nobody Loves A Landlord by Mark Walters

The typical landlord starts off life as a light hearted real estate investor. The investor is brimming with enthusiasm and is determined to acquire some single family homes that will be attractive to renters... and start down the road to financial independence.

Then... Wham! Reality smacks them right in the face! The investor-landlord is fair game for almost everyone.

Why? Because nobody loves a landlord.

It's bad enough that many renters don't quite understand that without their monthly rent payments the landlord can't make the mortgage payments on the property.

A few renters are surprised to learn that the family room of a rental home was just not designed as the place to rebuild motorcycles.

Nobody loves a landlord.

And then... how many legal hoops must the landlord jump through? In most states tenant/landlord law favors the tenant in many ways

For example:

A tenant signs a one year lease. Six months later the tenant breaks the lease and moves. Now the law demands that the landlord find a new tenant for that unit as quickly as possible.

Yes, the tenant only has to pay rent until the new tenant is found... but the burden falls on the landlord. Why shouldn't the tenant... the one who broke a contractual promise have to find the replacement tenant?

Why? Because nobody loves a landlord!

Here's the first paragraph of a story in my morning newspaper

"A huge marijuana garden of 212 plants nurtured by an intricate irrigation and lighting system worth ten of thousands of dollars was uncovered inside a West Valley rental house Saturday."

The house was vacant except for the cash crop and I can't help but wonder if the growers were getting government farm subsidy payments?

The home has an out-of-state owner. Some poor investor who thought he would cash in on the fast-rising Arizona home values.

Here's the kicker. That investor could be held responsible, because he did not properly supervise the use of the property! Many areas have such laws.

Why? Because nobody loves a landlord!

This should be a reminder to all of us that a rental house or unit is not a set-it-and-forget-it investment. Every good lease or rental agreement has an inspection clause that allows the landlord or his representative to periodically enter and take a look at the condition of the premises.

Are you doing that? You should be, because...

Nobody loves a landlord!

About the Author
About The Author: Mark Walters is a third generation real estate investor who shares his experience from his Web pages:

Investment Property Part I: How Not to Become a Slumlord by Cameron Brown

Welcome to the first part of a two part series about getting into the investment property business.

After riding the ups and downs of the stock market roller coaster for a while, an increasing number of investors are looking into property investment as a more stable alternative. With hot markets in many parts of the United States, the time may be ripe for you to get into this potentially lucrative trade. I would suggest, however, that you keep reading before you jump on the first property you find. You just might find something in this article that will keep you from breaking the bank and your back.

The hope of any investor is to build long-term wealth; this is a fairly straightforward principle and probably the reason you're reading this article. There are however, some rules to play by in the property investment game if you don't want to end up taking a shotgun with you every time rent needs to be collected. I'm talking about how to avoid becoming a 'slumlord'.

In order to best relate the rules of being a successful landlord, let me share a story experienced by some extended family members. It's a great example of what NOT to do if you want to get the most out of your investment property. After the story we'll see what rules and lessons we can learn. Names have been changed to protect the identity of the innocent.

Ben bought a beater single-family investment property in a very bad area and he his two sons, Josh and Nathan, all got busy. They put in hardwood floors-don't want to have to replace carpet every time you have turn over, right? And then they thought they'd use really good paint-don't want have to repaint every time, right? And then they decided to splurge on good cabinetry and bathroom fixtures-a happy renter is a good renter, right? And to top it off, they put in nice towels on nice racks that said, "We are Family." Renters would appreciate that, right?


The first family to move in removed the bedroom and cupboard doors for firewood, tore out the nice bathroom fixtures and sold them at the swap meet, and fired small caliber rounds through the new hardwood floors. Ben discovered this when he received a call that the roof was leaking and he should, "Get your *** down here and fix it!" He patiently tried to explain that roofs do that when you pull shingles for kindling. Other wonderful visits ensued, prompted by similar calls.

It only took eight months to get them out of the house; turns out that tenant rights as outlined by the county enumerate more rights than the rest of us enjoy collectively. As the family moved out he noticed that mom and the two older boys all sported matching shirts stitched with "We are Family." The rest carried various pieces of the house.

Ben, Josh, and Nathan began to rebuild the house, finding all sorts of interesting changes to its structure. Nothing really serious other than a supporting beam was chain-sawed out (apparently more firewood), tile pried up in one bathroom-no clear reason why, gang signs scratched into all the glass and mirrors that weren't broken and other little surprises.

While helping restring some crawl space electrical wire-later found strung in the closet for hangers-Josh found a rusted out .32 caliber handgun. Somehow the tenants had managed to pry bricks out of the chimney, which Ben needed to replace in order to meet code. Apparently someone had driven an M1A1 Abrams up the driveway; there was no other way to explain the huge cracks in a driveway that had remained perfect for 20 years.

What can we learn from this horrific, yet unfortunately true story?

Rule #1

Location, Location, Location. Ok, so this might seem a little cliché, but it's a fact that the location of your investment property will determine the kinds of tenants you will attract, and how much rent you can fairly charge. Remember, at some point in time in the future it may become necessary for you and your family to live there; what kind of neighborhood do you want to be in?

Rule #2

Don't go overboard when you're fixing up an investment property. You ought to expect reasonable wear and tear. Keep in mind that 'reasonable wear and tear' means something entirely different to a person whose renting than it does to an owner. And for goodness sake forget the, "We are Family" hand towels!

Rule #3

Know how to make basic repairs. Luckily for Ben and sons they had quite a bit of experience in various construction trades. Otherwise they may have lost even more money than they did through hiring out help. Knowing how to fix electrical wiring, repair drains, and replace windows will save you quite a bit of money down the road.

Rule #4

Screen your tenants as if they were moving in to live with you. This may be the most important step to avoid becoming a slumlord. Ask for and check references. Call previous landlords and ask questions like, "Did they pay rent on time? How was the condition of the house/apartment when they left? Did they ever disturb neighbors with loud music or yelling matches? How often would you have to make special trips for untimely repairs?" Being as informed as possible about who you rent to will make a huge difference in the profitability of your investment property.

Rule #5

Know your rights as a landlord. Be familiar with the eviction process in order to avoid long, drawn out disputes with tenants. Most states and counties provide online information about tenant and landlord rights.

Don't repeat the mistakes made by Ben and his sons. Granted, getting into the investment property business takes hard work and you'll have to put up with things you normally wouldn't put up with. At the same time there are steps you can take to limit your liability while preventing yourself from becoming a 'slumlord'.

In the next portion of this two-part article we will be discussing some of the financial aspects you should be familiar with in order to find the best deal possible on your first investment property.

About the Author
Cameron Brown is an internet marketer specializing in ranking automation . For information on Investment Property, visit Security National Capital.

Investment Property Part 2 of 2: What You Need to Know Before You Buy by Cameron Brown

Investment Property Part 2 of 2: What You Need to Know Before You Buy

Welcome to the second portion of a two-part series on investment property. In the first installment, "How Not to Become a Slumlord", we discussed a little of what it takes to own and operate a property as well as some of the do's and don'ts of the property management trade. In this second segment, we will be discussing some pre-investment principles that will help you maximize your ROI.

There are three basic principles of investment property that you should know before you buy an investment property in order to avoid overpaying:

How long do you plan on owning the investment property? As with stocks and bonds, the value of your investment may change significantly during the time you own it. While most real estate will appreciate in value over time, there are frequent fluctuations in the short-term market. If you plan on selling your investment property after less than five years, be prepared to accept the investment risk inherent in a shorter time horizon. This is especially true if you bought your property in an overheated real estate market. If this is the case, you could find yourself losing money if the market has taken a temporary downturn, especially if you've had to make major repairs to the property.

If you plan on owning the property for the next twenty to twenty-five years, it's almost certain that your investment property will appreciate in value. There's also a good chance, however, that you'll have to make major repairs like replacing the roof, wiring system, or major appliances like a water heater or refrigerator. Of course, these repairs will be offset by the fact that you've had/will have twenty plus years to recoup the cost. If on the other hand, you're only planning on owning an investment property for the next five years, buying a "fixer up'er" can eat up all the profits you would have made during your shorter investment horizon.

If you want the best deal possible on an investment property, than there are some people you'll want to be friends with. City hall clerks and bank employees may know what properties will be available on foreclosure and when they will go on the market. Real estate agents usually know everything real estate related within their respective territory. Some prospective landlords even run ads in local newspapers.

Many individuals interested in entering the investment property market may even join local landlord or investment property owners organizations. These types of organizations hold regular meetings where you can get the inside scoop on what's for sale in your area. The National Real Estate Investors Association is an online organization that provides a wealth of information and resources to potential investment property owners.

Financial Preparation
Get your finances in order. The less debt you have when you walk into your local lending institution, the better loan you'll get. This is common sense, but it's even more true for those seeking financing for an investment property. This is because lenders know that people are much more likely to default on a rental property than on their own homes. This means that the bank will demand a larger down payment and higher interest rates that you may have expected. It's also a good idea to have some extra cash left over to make unforeseen repairs should they arise.

By wisely choosing an investment property time horizon, making contacts in the investment property community, and preparing proper financial means, your investment may become a significant means of supplementing retirement and other savings accounts.

About the Author

Cameron Brown is an internet marketer specializing in ranking automation. For information on Investment Property, visit Security National Capital.

Property Management: The Good, the Bad, and the Ugly by Elaine VonCannon

Property Management: The Good, the Bad, and the Ugly

Being a landlord is not all it's cracked up to be. Think carefully of all the responsibilities that follow the purchase of an investment property for rental use. Screen your clients, run credit checks and, if you are both landlord and owner of the property, learn to deal with problems objectively, fairly and legally. Many clients will try to talk their way out of serious issues like late rent payments. Some will even present a dramatic sob story - be sure to stand firm and take care of your property the best way you know how. Any renter can and should be held accountable for rent they have agreed to pay. Tenants can be like children and will give you gray hairs. You may have to start coloring twice a month!

Make Sure You Have Time For DIY

Do-it-yourself (DIY) property management can be difficult if you have a career and a family. The responsibility of the landlord position can be incredibly time consuming. As the owner or manager of the property you will receive all tenant phone calls to report items that need to be fixed or complaints that need to be mentioned. Tenants can be very high maintenance. Be prepared for them to call often and for minor reasons. Also, take the time to complete quarterly checks every three months. Especially if you are a DIY property manager/owner, keeping an eye on the condition of the property is essential to maintaining your investment.

Ask Questions And Read The Fine Print

To find a property manager you must know what questions to ask. Write a list of the reasons you want to hire a property manager and be clear about what you will expect from the person or business that represents you. When you hire a property manager read the property management agreement thoroughly. Many property management agreements renew annually, unless you cancel the agreement sixty days in advance. Most property managers continue their management while tenants they have procured are still living on the property. The management agreement will hold in place until the tenant vacates regardless, of your desire to terminate the current relationship. Always, be fully aware of what kind of commitment you are making in these agreements.

Don't Let Management Companies Take Advantage Of You

If you decide to work with a property management company educate yourself about possible hidden fees that may be added to take advantage of less knowledgeable property owners. Extra fees like charges for acquiring work or cleaning estimates, procurement fees for finding new tenants and commission fees added to tenant sales are just a few examples of things to look for. Commission charges that are added to tenant sales are negotiable within the property management agreement. These types of concealed charges are typical in agreements created by larger companies that have a property management division. In general, the cost to hire a property management company should be a percentage of the monthly rent.

Tips To make Your Property Management Search More Successful

Always research and read your property management agreement from beginning to end. Don't sign anything until you feel comfortable. Take all the time you need to make a decision. Research and compare property managers. Ask them about their marketing strategy for the property. Find out how long the manager has been licensed and how many properties they have worked with. Ask for and contact references. The best property managers are found by referral through a trusted friend or business colleague.

Living By Example

As a property manager I try to exemplify the highest qualities in the business. I charge a percentage of the rent for my fee and promise not to add any hidden fees or undisclosed costs. I also require all potential tenants to allow me to do a credit check. I work to create the best situation for everyone involved. Since many rental properties eventually go up for sale, you are always building relationships with tenants who may be potential buyers. It is worth it to be smart, fair and reasonable in your property dealings.

About the Author
Elaine VonCannon is a REALTOR with RE/Max Capital in Williamsburg, Virginia, and she specializes in retirement and relocation in the Williamsburg area. She is an Accredited Buyer's Representative as well as a Senior Real Estate Specialist. Elaine VonCannon also works with real estate investors and home sellers.

Monday, September 19, 2005

How To Become A Savvy Real Estate Investor by Jamie Madison

If you've turned on the television lately, at some point you'll hear the experts praising the virtues of diversification. Real estate has long been considered a conservative, long-term strategy to growing wealth. While some seasoned real estate investors make it look easy, to be successful, beginners should follow some basic principles.

Learn all you can. Consider attending a seminar or talking with individuals who are experienced in real estate investing. Look for people in your area or search for investor information on your favorite search engine.

Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments. Barring exceptional circumstances, real estate does not sell at a moment's notice. It could take days or months to sell a property, depending on the strength of your local market conditions.

Consider your financial goals. It is possible to make a lot of money. However, you need to determine how hard you are going to work to do it, and how long you intend to keep each property. With each investment unit, you'll need to take into account cash flow, appreciation, equity, and depreciation. Talk with your accountant about tax liabilities and benefits.

Consider cash flow. You'll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants, repairs, property management, taxes, mortgage, etc.

Start small. Look into buying a single family home or a duplex. Leave large apartment buildings and commercial properties to the professionals.

Inquire at your local Chamber of Commerce about companies relocating into or out of the area. Company movement is one indicator of demand for rental and/or office space.

Find a property that will be in demand when you are ready to resell. Look for a moderately priced home on a quiet street with three or four bedrooms, two bathrooms, and a garage.

Research the property. The most common way first-time investors lose is by failing to investigate a property thoroughly. Look beyond the front door. Investigate the reputation of the school district, the crime rate, and plans for expanding a nearby highway or developing vacant land. Check out Ask a local real estate professional about the area, its history, and how fast (or slowly) properties are moving. Find out the tenant demand in that market.

Inspect the home you're considering for signs of water damage, such as stains on the ceiling and crinkling or gathering wallpaper; open and close every door and window; and check all electrical sockets by plugging in an appliance. Get an independent home inspection, roof inspection and termite inspection. Unexpected repair costs can eat away resale profit. Because even the best inspection can't always predict problems, try to set aside some of the rental income for unexpected repairs.

Spend time driving the streets of the community noting the condition of other properties. Are lawns maintained? Are roofs in good shape? Are homes kept up?

Be ready to make fixes quickly and respond to the renter's needs. If you're not prepared to be a hands-on landlord, consider hiring a property management firm.

Find a real estate professional who has experience in investment properties in your market. They can pass on valuable information about rental prices in your market and the sale prices of other rental properties in the community.

Remember, investing in a property is much different than living in one, and while emotion and attachment can be prime motivators when it comes to homes, it is return on investment that counts when investing in real estate.

About the Author
Jamie Madison is a former Realtor® who provides valuable advice for prospective homeowners. Get insider information when searching for a new home or applying online for mortgage loans. Claim your *FREE* Report - "99 Home-Buying Tips" at

Easy ways to get Loans, Leases and Mortgages by

There's an old saying "a bank won't lend you money if you really need it," and it's really almost completely true. Banks prefer to lend money or extend credit to people who already have lots of money, and carry the top credit cards. If you've got bread, no problem for you. But if you haven't, what do you do? Well, the main idea is to look as if you're loaded, to appear as if you have it, and that's often almost as good as having it.

Don't admit you're desperate, even if you are! Look like you couldn't care less whether they'll lend you the money, like you haven't got a care in the world. Dress really well, in your most impressive clothes, when you go to the bank. Allow plenty of time, so you don't have to rush in at the last minute, but can afford to saunter in, as if you're doing them a favor just considering borrowing money from their lousy institution. If it's a country bank, where you can be seen as approach the bank, drive up and park, be sure to arrive in a good car, squeaky-clean and highly-polished, even if you have to borrow your Aunt Martha's Cadillac just for the day.

Arrive primed with all the information the bank wants to know in order to approve a loan (lease or mortgage) for you. If you know that you've got some points in your history over the last five years that will hurt your application (such as not long enough in your present job, not long enough in your present residence, inadequate salary, etc.) try to figure out how you can improve those areas before you go to see the loan officer (to find out what questions may give you trouble, try and get a blank form ahead of time...even from another bank, if you don't want to let your bank know what you're considering).

If you've only been a few months on the job, but your company small and closely-knit, see if you can get the boss to agree to a little white lie, such as that you've been employed for two years. If you've only lived where you are now for a month, see if your mother's willing to have you list her address and telephone as the address where you've been living for the last three years.

If your salary's not high enough, but you get paid overtime quite regularly, see if your company bookkeeper will allow you to list your salary at what it averages out to, including the overtime.

If you've got an unexplained break in your job history, where you were actually out of work, don't list it that way--say you were working for yourself running a small business from your home (give it an impressive-sounding name, and list your best friend's name, address and phone number if they want to check with your employer at that time).

In short, to get credit it isn't so important to have financial stability as it is to appear to have it. Follow this rule, and getting credit should be easy.

Here are a few tips that may be of great help to you, it they fit your situation.

*If you're getting a lease, normally only a landlord is involved, and most landlords who want to rent our their property will go along with you, even if your credit rating's not so hot, providing you look O.K., speak in a decent and reasonable manner with them, and have at least the first month's rent and the security deposit.

*If a bank won't give you a loan, don't despair! Their standards for credit are very fussy. But commercial finance companies aren't so particular. They charge more interest, but they may come through with the loan.

*If the finance company won't help you, there's always the last resort, your friendly pawnbroker. He'll loan cash on watches, jewelry, furs, musical instruments, guns and everything else of value, Doesn't matter what your credit rating is!

*If you want a loan to start a new business, or increase the capitalization of an existing one, and the bank doesn't want to do it, try one of the companies that offer to lend venture capital for just these purposes. You can get a good list of a large number of these companies in this book: Venture Capital, The Source-book of Small Business Financing, edited by Leroy W. Sinclair, published by Technimetrics, Inc., 919 Third Avenue, New York, NY 10022.

Mortages-the ins and outs

Let's say you've decided it's time you got more space for your family. You don't have a lot of cash saved up, and you don't know your way around the housing market and complicated mortgage terms. What to do?

You're probably already friendly with a banker who knows you from your previous loans. Start with him. Ask him questions. Get his best guess about the amount of money you would have to put down as a down payment on a conventional mortgage. If you can't meet that, you may be willing to put up with some red tape and get an FHA or VA mortgage if you qualify-lower down payments, lower closing costs (which have to be all cash, and can run over $1,000!), and a longer time to pay the loan off (30 years, compared with 15 or 20, or sometimes 25 years, on a conventional mortgage). For more information on these Government-guaranteed mortgages, write to:

Further Reading

FHA Mortgages: Federal Housing Administration, Department of Housing and Urban Development, 451 7th Street S.W., Washington, D.C. 20410. VA Mortgages: Veterans Administration, Washington, D.C. 20420 (or your local VA Office).

When Faster is better

If you've just seen your dream house, and three other couples are also trying to buy it, you may want to get the fastest possible mortgage. But don't rush! You can make a bid for the house even if all you have is the down payment, for then you have generally 60 to 90 days before the closing date in which to come up with the rest. (If you can't get a mortgage anywhere, you still get your down payment back, so you have nothing to lose!)

Most people get their mortgages from banks, which we'll tell you about too, but don't overlook another, faster possibility-the real estate broker himself! Brokers often have friendly bankers or other mortgage lenders lined up just waiting for them to find buyers of the properties the brokers are selling. It's easier for a broker to close a sale if he can help you, the potential borrower, get the mortgage you need. So he'll help you.

Aside from broker-arranged mortgages, "conventional" mortgages, (i.e., not backed by the Government: are usually the fastest kind to get. These are available from both commercial and savings banks and from savings and loan associations. Try the savings and loan associations first-savings institutions usually require lower down payments than commercial banks, for example, 20% down at an S&L, compared with 25%-40% down at a commercial bank. The rule of thumb for the amount of money that banks will lend toward a mortgage is usually the capital amount that would result in monthly payments which will not exceed about 25-30% of your before-tax income. If you're trying to buy a house that's too expensive for you, the bank will know that, by using their rule of thumb for what they will think you can afford: one month's housing costs (principal, interest, real estate taxes, and insurance) should not be more than one week's salary (after you deduct any other debt payments from your weekly salary figure). Know what the figures look like before you walk in asking for a mortgage-if you look like you know what you're doing, the bankers will be much more cooperative, and maybe stretch their requirements, especially if they know you as a person who has been a responsible borrower of theirs before!

Further "points" about mortgages

Sellers sometimes help out potential housebuyers, even when the mortgage is financed by a bank. This can occur in two ways, first, if the mortgage lender (bank, S&L, other) adds "points" to the cost of the mortgage. Technically, these points are percentage points that the lender charges the seller, to make the interest rate higher. (Most States have usury laws, which make it illegal for mortgage and other interest rates to go above a certain level, like 81/2%. If interest rates in unregulated areas are higher, the bank is going to get that higher rate one way or another!). So the lender deducts, for example, five points or five percent from the amount he is really willing to lend to the borrower. Either the seller has to take a lower price for his property than he expected, or the buyer has to pay 5% more than he expected. Depending on how anxious the seller is to sell, and how many buyers there are for his property, he may take the lower price (pay the points himself) or split the cost with the person who wants to buy his house, or else insist that the buyer pay the points all by himself.

In numbers, points work like this: 5 points charged on a $20,000 mortgage means that the lender is not really going to lend $20,000, but only 95% or $19,000. Since the seller wants $20,000 (in addition to the down payment) as his price, the buyer must pay the extra $1,000, which is about the same as adding an extra 1/2% to the rate of interest he is paying.

More help from the seller!

Sometimes sellers are anxious to sell their houses, but find it difficult to do so-either the banks aren't making many mortgages at that time, or the seller's price is too high, or the neighborhood is "transitional" and potential buyers are reluctant to invest. So the seller may offer a mortgage of his own to a buyer! This can be either a first or a second mortgage, (the second is in addition to and subordinate to the first that you got from the bank) especially if the bank won't lend you what you need. If your dream house costs $40,000, with a $10,000 down payment, but the bank will only lend you $20,000 to put with your ready $5,000 cash, don't despair. The seller might be willing to give you a so-called "Purchase Money" mortgage (money with which to purchase his house) for the missing $15,000, to be paid back to him over the next ten years in monthly installments. (Sellers sometimes like to do this as a way of getting an annuity, or annual income, for themselves or to reduce the taxes they would have to pay if they received all the cash in one year.) Real estate brokers won't always tell you about this angle, so you may have to do the footwork yourself, following up the ads that list owner or principal, not broker. But it could pay off!

About the Author
For a wide range of personal finance articles, loans, credit cards, and debt reduction resources, visit

Ten Steps to Avoid Mold Problems and Lawsuits in the Rental of Residential and Commercial Real Estate by Phillip Fry

Real estate residential and commercial landlords, tenants, and rental agents in the USA, Canada, and worldwide should take ten steps to avoid mold problems and lawsuits in the rental of real estate properties, according to Phillip Fry, Certified Mold Inspector and author of the books Mold Legal Guide and Mold Health Guide.

Living or working in rental units that contain elevated levels of airborne mold spores and/or substantial mold growth infestation can cause very severe (and sometimes permanent) health problems to the tenants.

Landlords have ethical and legal obligations to tenants to provide an environmentally safe, habitable living space (residential rentals) or workplace (office and commercial rentals). Those obligations go unmet when a rental unit is mold-infested.

Landlords may have potential and substantial legal liability to tenants for such compensatory damages as: expenses for medical mold diagnostic and treatment procedures, loss of earnings, mold damage to tenants' clothing and personal property, higher rent differential if the tenants need to move to a mold-safe place, moving expenses, any tenant-paid expenses (such as mold inspection, testing, and remediation of the rental unit and tenant possessions), and punitive damages (jury-awarded).

A Hayward, California, jury in 2004 awarded $4 million dollars in damages because of mold infestation and other substandard living conditions on behalf of 124 past and present tenants of an apartment building whose owner failed to do proper mold remediation and maintenance of the mold-infested apartments. Take these ten steps for the mutual well-being of both the landlord and the tenants---

1. A property owner or manager should not even offer the property for rent until after a thorough mold inspection and mold testing of the entire rental building or of individual rental units (prior to rental) determines that the property is mold-safe for tenants to live or work in.

2. Hire a Certified Mold Inspector (USA and Canada) for an annual property mold inspection and mold testing, or at least use a do-it-yourself mold inspection checklist and mold test kits for a thorough mold examination and evaluation of the rental building.

3. If there has been a plumbing line break or leak, roof or siding leaks, flooding, storm damage, or other water intrusion problems, the building should be thoroughly and promptly mold inspected, tested, and remediated as part of the water damage repairs and restoration.

4. If mold inspection and testing uncovers visible or hidden mold problems, the property owner or manager should immediately do safe and effective mold removal and remediation. Hire a Certified Mold Remediator (USA and Canada), or follow the recommended steps for safe and effective do-it-yourself mold remediation. Re-inspect and re-test ("clearance testing") the building after remediation.

5. The building owner or manager should avoid hiding or camouflaging mold problems by deceptions such as painting over mold growth; concealing mold growth behind stored items, furniture, furnishings, and decorations; and masking the distinctive smell of mold growth with air fresheners and deodorizers. The smell of mold is from the digestive gases of the mold eating the building materials.

6. A prospective tenant should inspect and mold test the proposed rental unit (prior to the signing of a rental lease) with a Certified Mold Inspector, or by using a do-it-yourself mold inspection checklist, his sense of smell, a good flashlight, and mold test kits to determine the mold status of the rental unit.

7. In doing such inspection and testing, the mold inspector (or the tenant himself) should do an all-around physical examination of the building for both visible and hidden signs of water damage and mold growth. In addition, the inspector or the tenant should mold test the air and visible mold growths in all rooms, the basement, crawl space, attic, garage, plus the outward airflow from each heating/cooling duct register.

8. Mold testing requires mold laboratory analysis and mold species identification of the collected mold and air samples. In building locations with previous floods or leaks, the examination should also include fiber optics inspection to look inside water-penetrated ceilings, walls, and floors for hidden mold infestations.

9. The landlord or rental manager should disclose in writing to all prospective tenants any previous or present building water and mold problems, and what the owner or manager has done, if anything, to correct such problems. Attach these water damage and mold disclosures to the rental lease agreement so that the tenant acknowledges receipt thereof.

10. In consideration of, and based upon, the landlord's accurate and complete mold disclosure, and the tenant's full and unrestricted opportunity to inspect and test the rental unit thoroughly and carefully prior to signing the lease, the lease agreement may include a clause that releases the landlord, rental manager, and the rental real estate agent/broker from all mold liability to the tenant.

For more mold inspection, mold testing, and mold remediation information, please visit:

About the Author
Phillip Fry is a Certified Mold Inspector, Certified Mold Remediator, and author of the books Mold Legal Guide and Mold Health Guide

Filing a Case Against Canine Bite Injuries by Paul Hood

Man's best friend can be man's worst enemy. Statistics show dog attacks have accounted for more than 300 dog-bite related deaths in the United States from the period of 1979 through 1996. Most of these victims were children. And someone seeks medical attention every forty seconds because of this bites.

There are 800,000 approximate bites encountered every year in the US that needs medical treatment and again most of the victims are children. Almost $165 million is spent treating dog bites and 70% of dog bites occur on the owner's property.

In most cases like this, the dog's owner is required to pay for the damages caused by his pet's attack. However, there may be times when the dog's "keeper" may be held liable at the time of the attack. The landlord too may have culpability for an attack of his tenant's dog in limited circumstances.

The medical expenses that will be incurred due to dog bites is very high particularly with regards to scarring injuries. Scars can be a serious, life-long result of a dog bite. Children, because of their size, are particularly susceptible to bites around the head and face. Scarring injuries not only cause physical problems, but can also cause long term emotional trauma, requiring a significant amount of psychological counseling.

The liabilities that are to be shouldered by owner (or in some cases, the keeper or landlord) due to the animal's bite will include all past and future medical expenses. All past lost wages as well as future loss of earning capacity. Also, past and future pain and mental suffering of the victim will have to be compensated by the animal's owner. Property damages and damages for all scarring are also included.

Dog bites are a common form of injury which can have serious outcomes that include permanent disfigurement and psychological trauma. It may even result to death. Precautions need to be undertaken since even the gentlest of dogs are known to bite without warning.

A dog bite victim may incur many different kinds of damages and losses, from medical bills and emotional damage, to loss of the opportunity to earn income in the future because of disfigurement. A victim may be entitled to recover these losses from another person and that person's insurance company, provided that the victim presents the necessary proof, first to the insurance company and then possibly in a court of law.

About the Author
For additional legal information and inquiries about the article log on to

A Landlord's gripping story... by Mark Walters

You are the landlord of a small apartment building that you are offering for sale. You find a buyer and a sale is arranged.

The tenants learn of the sale and ask if they will be forced to move. How do you answer?

You explain that it depends upon the lease agreement. If the tenant signed a lease they have the right to remain in the unit at least until the end of the lease... longer if the new owner agrees.

In many cases the tenant signed a lease and remained after the lease term ended. At that point their occupancy became a month to month tenancy.

A month to month tenancy can be terminated merely with the landlord giving notice to the tenant. The length of the notice may be governed by state law, but a 30-day notice is customary.

In another situation the tenants learned that the apartment owner was in default on his monthly mortgage payments and the lender had begun a foreclosure action.

All the tenants had time remaining on their apartment leases and they had no intention of moving.

Bad news for the tenants... real property foreclosure law states that junior liens and leases are extinguished by a foreclosure.

This means tenant leases do not have to be honored by whomever buys the property at the foreclosure auction.

The tenants will receive due process by receiving a notice to vacate and if they don't move they will face an eviction lawsuit.

About the Author
Mark Walters is a real estate investor and author. His published works can be found at

"Joint & Several" In Leases by Mark Walters

When you see the phrase "joint and several" in a legal document or contract it means that that the parties on one side of the agreement are responsible individually and collectively for the terms of the agreement.

Example: In the case of two tenants signing a lease agreement, "joint" means they are jointly responsible for the rent.

"Several" means that their joint relationship is severed and they are individually responsible for the total amount of the rent.

If one does not pay his/her share of the rent the other is responsible for the entire amount.

Here's an example of a landlord who had a "joint and several" lease with the added provision that tenants must pay rent with a check, money order or cashier's check in the full amount every month.

Landlord allowed the two roommates to pay half the rent each month with two separate checks. Bad policy.

It not only creates accounting problems... but if one tenant pays on time and the other is late how do you handle the late penalty? And...

If you accept payment from one tenant and the other tenant fails to pay have you risked having accepted a partial rent payment and then not be able to evict?

Here's the good news. If you have in your lease a "non-waiver" provision it indicates that even if you allowed lease violations in the past you can at any time demand that tenants comply with the terms of the lease.

If the tenants continue to pay with two separate checks you can return the checks and give "notice for failure to pay rent".

If they then fail to provide you with a single check for the full amount of the rent you can file a forcible detainer action (eviction).

What if tenant #1 pleads that tenant #2 has moved from the property and tenant #1 should only be required to pay their own half of the rent?

Show them "joint and several" in your lease agreement and explain that tenant #1 is now responsible for the entire amount of rent.

Explain that tenant #1 must pay the full amount and then can seek recovery of one half from tenant #2 in small claims court.

If you rent property to more than one tenant be sure your lease has "joint and several" and "non-waiver" clauses.

Carefully explain each to every new tenant.

About the Author
Mark Walters is a real estate investor and author. His published works can be found at

The Case Of The Spooky Tenant by Mark Walters

You, Mr. Landlord are pleased to find qualified tenants for your rental house. The man and woman sign a one-year lease on Tuesday.

On Thursday the male tenant contacts you and says they have changed their minds because his girlfriend thinks she sees "dead people" in the bathroom.

He expects you to cancel the lease!

What do you do, hire an exorcist?

No, you smile and softly explain... "Listen Bub, that was a legal contract you signed. It binds both of us to everything printed on those sheets of paper.... the laws says so, that's who!

And that's true... both parties must agree to break a legal contract... it can't be done unilaterally (usually). In this case the contract is the well prepared, solid gold lease.

Is your reluctant tenant on the hook for an entire year's worth of monthly lease payments?

It brings a tear to the eye of we hard boiled landlords... but he probably is not obligated to pay rent for the entire year.

Courts have ruled that the landlord has to make a good-faith effort to find a new tenant for the unit as soon as possible.

As soon as one is found the original crybaby is released from the contract.

The cost of renting to the new tenant can be deducted from the security deposit you collected from Mr. Crybaby. That includes advertising and a copy of The Grinch Who Stole Christmas you give him as a go-away gift.

About the Author
Mark Walters is a real estate investor and author. His published works can be found at

Landlord Tips And Hints by Mark Walters

Every real estate investor dealing in rental homes has done his own clean-up and fix-up, at least in the early years. Landlords also become very skilled at managing tenants after being burned a few times.

You learn the tricks of the trade and how to get the best results for the least cost. Maybe a few of these tips will be new to you.

You can give kitchen cabinets new life with a liberal application of Liquid Gold.

Everyone has at least one chip or scratch in the porcelain on their refrigerator, bathtub, stove (except high heat surfaces), sink, washer or dryer. The solution? Touch up that nick with a tough porcelain glaze called "Porcelain Chip Repair". Just dab it on with the built in brush and it hardens in 24 hours. If your hardware store does not carry it you can find it with a Google search.

You can quickly clean black scuff marks from vinyl floor covering with a squirt of WD 40 lubricant and a rub with a clean cloth.

Put a shiny new strainer in the sink drain. Then install new handles and drawer pulls and you often have a minor kitchen miracle.

Get rid of globs of sticky adhesive residue with "Goo Gone"… from Home Depot.

When tenants move out they seldom do a really good cleaning job on the oven... or the dishwasher.

I'm sure you have discovered one of the many effective oven cleaners, but how about that gunk caked onto the inside of the dishwasher?

Try a product called "Dishwasher Magic"... found in many markets and some hardware stores.

The label reads "Removes Lime Scale, Rust & Buildup. Disinfectant".

You just remove the cap... place the blue, plastic bottle upside down inside the silverware basket and turn the machine on. You might have to use two bottles if your first look into the washer causes you to run screaming from the house.

When vinyl flooring is ready to be replaced use commercial grade floor tile instead. It lasts almost forever and it is cheap to replace a damaged tile now and then…rather than a whole floor.

Have you ever received an unsigned rent check? Here's a method that often allows you to deposit that check.

Write or type the word "over" on the line where the signature would normally appear. On the back of the check type "lack of signature guaranteed". Add your company's name, and your name and title. Then you sign it on the back.

This guarantees your bank that you will take back the check as a charge against your account if it isn't honored. Many banks will then process the check and remit the funds. This saves you the trouble of returning the check to your renter for a signature.

Spot those bad checks with these tips. 90% of bad checks are numbered 101 to 150, indicating a new account.

Legitimate checks have at least one perforated edge. Most forgeries are cutouts of copy machine created fakes.

Checks dated more than six months ago are usually not cashable, no matter how much money the issuer has in his/her account.

If the amounts written on a check in words is different fromthe amount written in numbers, the bank will pay the sum shown in words.

If you receive a check with the date missing, it's legal to fill in a date reasonably close to the date you receive it. To predate or postdate the check by several weeks is a criminal act... don't do it.

Remember, landlording is not for sissies. I hope these tips will save you a few dollars and a barrel full of aggravation.

About the Author
Mark Walters is a real estate investor and author. His published works can be found at

Sunday, September 18, 2005

Laminate Flooring Business - What You Need To After Deciding To Start by E. Timothy Uy

Before reading this article, please note that it was written for people wanting to start their own laminate flooring business in the U.S. Therefore, parts of the information in this article are useful only for those particular people.

After setting up your laminate flooring business plan and locating suppliers, several actions are required to kick off the business. First, you need to come up with a name, which you must then register with the Secretary of State, unless you are doing business under your own name. This is required so that people can identify who is the owner of a particular laminate flooring business. For information on how to register the name of your business visit the Secretary of State website for the relevant forms. In California, the website is Look for the same information for the state you want to start up your business in.

Next, you need to get is a tax I.D. or a Federal Employer Identification Number (EIN). These are one and the same thing. The EIN is required by the IRS for identifying employers. It is a must if you have employees. Even if you do not intend to have employeeds, it's helpful to obtain it. An EIN often needed for purchasing supplies and merchandise at wholesale prices. Read the IRS publication "Starting a Business & Keeping Records" ( -page 3).

After you get an EIN you should consider obtaining a license for your laminate flooring business. Again, contact the Secretary of State website for more information.

If you have employees, you must contact the U.S. Department of Occupational Safety and Health Administration (OSHA). It's a federal agency that oversees workplace safety. All employers are required to provide a healthy and safe workplace. Health and safety inspections are made by the OHSA without prior notice so make sure your workplace is always set up according to their rules. For more information visit the OHSA's website at

Finally, after you start your laminate business, make sure to purchase a general business insurance policy. This includes liability and other standard coverage. Get an insurance for the place of business, no matter if you own it or not. Landlord's insurance might be unreliable. If you have at least one employee, you must have worker's compensation insurance. Check with your state's insurance department to see if there are any other additional types of insurance required.

This article provides only a small overview on what you need to know before you start your own laminate flooring business.For more detailed information contact the appropriate authorities in your state.

About the Author
Laminate flooring enthusiasts unite! Installation, maintenance, selection, e.g., Harmonics, Pergo, Shaw, Mannington - you name it, we are talking about it. Join us at

Warranties Offered to Help Pet-Owners Lease Properties by dan the roommate man

A pet-loving Internet entrepreneur has launched a new Web site that he hopes will help pet owners have an easier time renting apartments by providing them a warranty against property damage. The site is

Founder Keith Snow said he and his wife developed the company because they had a hard finding rental units that would welcome both them and their dogs.

"My wife and I have dogs," he said. "We had a lot of problems with landlords who did not accept us because of fear of pet damage." He believes apartment owners will be more willing to accept tenants with pets if they know they will be reimbursed for pet damage. Having a warranty insures that a property owner will be paid for pet damages without tenant litigation.

Snow says the new site will open in the Atlanta market this month and attempt to grow nationwide.

The company actually appears to be less of a company than it is a real estate service provider. A corporate statement said it would sell pet deposit warranties to apartment owners and managers, as well as to pet owners who lease housing.

"These warranties will protect a landlord from potential pet damage for up to $5,000 per unit," said Snow. "They can function in addition to or as a replacement for a standard pet deposit, which generally only covers minor damage."

Also, the company says pet owners can use a temporary warranty, which is free, to try to convince unwilling landlords to accept their pets - along with themselves - as tenants.

The pet deposit warranties will cover soiled, chewed and destroyed carpets, linoleum, woodwork, drapes and doors for units that house cats and dogs that are one year old or older.

The cost for one pet is $200 per year plus a one time partially refundable deposit of $275.

Properties that already require pet deposits can benefit from as well. These apartments can be further protected with pet warranties, without charging tenants twice. The properties can simply pay for the pet warranties with already collected funds.

Snow says that according to Humane Society figures, there are 6.5 million animals living in shelters because their owners were not allowed to keep them in rented properties. He hopes that will "change pet acceptance in apartment communities." plans to work with animal shelters nationwide to help provide viable accommodations for pets in lieu of homelessness. The company also plans to begin fund-raising for pet protection with various humane societies.

About the Author
Since 1989 dan the roommate man has helped 1000's of people find roommates. Need help? Contact him at 800-487-8050 or

Renting With Pets by dan the roommate man

It's disappointing when the only thing holding someone back from that perfect apartment is a "no pets allowed" clause. Rather than going through the extra effort of finding a rental unit which fits their personal criteria and accepts their pet, some people think they have no other choice than to leave Fido or Fifi behind. The Humane Society of the United States (HSUS) has created a web site dedicated to easing the difficulties of finding a great apartment that will welcome both you and your pet.

According to the Humane Society, 'moving', and 'the landlord won't allow' are the top reasons given by pet owners when relinquishing their dogs or cats to animal shelters. Brooke County Animal Shelter puts anywhere from twenty to thirty animals to sleep per day. "It's not something we enjoy. We try to save as many animals for as long as we can, but we can only do so much," says one employee.

Making an extra effort to find a place which will accept you along with your pet may be time consuming, however, HSUS points out the benefits of pet ownership:

# Pets provide companionship. There are few things more satisfying than the attention and affection of a good friend. Wagging tails, contented purrs, and adoring looks are all ways companion animals communicate with people and demonstrate their devotion. Many people talk to their pets and consider them members of the family.

# Pets give us someone to care for. When you add up the small daily acts of caring for a pet - feeding, grooming, exercising - the sum total is a pet owner with a feeling of being needed. Having that sense of purpose and responsibility is a valuable learning tool for children and can help fight loneliness, boredom, and depression, especially in the elderly or socially isolated.

# Pets help people be more sociable. People out walking their dogs have a greater tendency to socialize with passersby; their pets give them security and provide a ready-made topic for conversation. Even among families and friends, pets provide a focus of conversation and activity.

# Pets stimulate exercise. Pets promote vitality through active exercise - such as brisk walking and outdoor games - or therapy for disabled hands through regular grooming of pets.

# Pets comfort with touch. The gentle stroking of a pet can reduce stress and lower blood pressure and, when combined with quiet talk, create a feeling of relaxation, intimacy, and closeness.

Hoping to reduce the number of animals unnecessarily put to sleep, the Humane Society attempts to bridge the gap between reluctant landlords and pet lovers by addressing the needs and concerns of both parties. Visit the HSUS web site at:

Also See: # Moving Your Pet # Pet Policies: Pleading Your Case Successfully # Are Your Pets Soiling Your Chances of Selling Your Home?

About the Author
Since 1989 dan the roommate man has helped 1000's of people find roommates. Need help? Contact him at 800-487-8050 or