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Insurance is necessary to protect you from risk.  Risk is, according to Investopedia.com, “the possibility of losing some or all the original investment.”  In the case of insurance the investment maybe an automobile, home, building, and even life.  The investment is then given a value by the insurer or the item being insured.

For the investment value of a home, the insurer or insurance company utilizes information from the assessor’s calculation of the replacement cost of the home.  The replacement cost of the home is calculated by multiplying a pre-determined value to the assessed value.  This equated value or replacement cost value is the investment value of the home.   For example, the assessed value of Home A is $56,400.  The replacement cost value or investment value is $85,810.   The multiplier is 1.52.  Still yet, it may be another value for another home.  It is, of course, based on when the home was built and if any updates have been done since it was built, the material the home is built of, and the cost of materials and labor to replace the home.

Insurance Specialist understands that your home is more than an investment value, but your home is a valued asset that you would like to protect with the maximum protection for the lowest cost.  This is why Insurance Specialist offers quotes from all of the leading companies so that you can compare “apples to apples and oranges to oranges”.  You get all this valued information for free and under no obligation.

The added advantage of Insurance Specialist is that you can get or meet all your insurance needs in one place.  You can obtain a quote on life, health, home, auto, motorcycle, and even business without the pressure of making a decision without knowing all the facts and other quotes.

Give Insurance Specialist a try the next time you are in the market for insurance.

Related articles on insurance

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Determine If Being a Landlord Is Right For You

Once you determine that being a landlord is right for you by understanding the market, learning the climate of the rental community, learning the neighborhood or neighborhoods that the potential income property is in, and understanding your finances to include vacancy rate.  Then, the investor is ready to find an income property.

Know Your Finances

First, we will discuss understanding the investor’s finances.  The goal of the income property is to produce income.   In other words, the property must cash flow.  To determine if a property cash flows, the investor must know the property taxes, the mortgage amount, maintenance cost, insurance cost, the fair market rent, and the repairs needed to make the property livable.

The property taxes,  mortgage amount, insurance and fair market rent can make or break the income potential of a property.  How you ask? The latter items with the exception of fair market rent must be paid by the owner whether the rent is collect from the tenant or not that is why the vacancy rate must be part of the investor’s calculations in determining the income potential of a piece of property.

Let’s look at the math.

As an investor looking at the  math is just as important and in some cases more important than finding the property.

There are options that the investor must consider if he or she is financing the property.  One option that an investor may choose is a hard money lender.

In order to determine if this the right choice for the investor, I found a math calculator that will help with minimizing the risk of this type of loan.  Remember, the interest rate on this type of loan can be very high.  Let’s examine the hard money loan by click on the link. 

There is an advantage to this type of loan.  The advantage of this type of loan is that the investor can get immediate cash or access to the equity of the property.  This loan, however,  is often used if the investor needs to rehab the property after purchasing it. 

At the time of purchase of the property that needs rehabing the investor will need to determine what the after rehab value is for the property.  The reason this is important is that the hard money loan will yield 65% to 70% loan to value for the investor.  For example, let’s say the investor found a property for $35,000 and the after repair value is $90,000.  The loan amount will be $58,500, so the investor will have $23,500 for the rehab.  The available amount for the rehab needs to be determine before purchase, so that the investor can determine if the project will possibly yield the income or value that the investor is expecting after the rehab is complete.

Once the potential amount of funds for the rehab is determined the investor needs to get estimates on the rehab to determine if the amount available is enough to complete the project.

It is important to note that all of this research needs to be completed before purchase.  In an effort, to prevent the prospective property not being sold before the investor completes his or her research, the investor would need to have his or her contractors available at the time the potential property is considered for purchase. 

The contractors would give the investor a rough idea of the amount needed for the rehab.  Of course, most properties that the investor would consider will not have utilities on, so the investor needs to add an additional twenty percent to the final estimated rehab amount to cover possible unknowns.

Once the investor deems that the property is a good investment then the investor purchases the property.  However, to reduce the investor’s financial risk the investor must also determine how long the rehab will take and when the investor will realize an income if the property is an income property or buyer if it is consider a flip property.

The math consideration does not stop at determining the type of financing, the investor also needs to consider the holding cost.  The holding cost is interest, property taxes, insurance, and utilities. 

Another aspect of examining income property is making sure that that the investor is abreast of all the changes to the market, the neighborhood, and the laws. 

Changes in Laws that Affect Investors

Due to the shift of the real estate market it is more important than ever to keep abreast of changes to the financial world, the neighborhood, employment, etc.  There are several changes recently that have affected real estate investors, so it is important to be abreast of the industry.  Please read the articles below:

• Real Estate Investor, Beware
• Breaking News For Investors 
• Types of Real Estate Markets
• Investors Have Options
• Good New Investors
• Thinking of Becoming An Investor
• Great News Investors, You Can Finance 10 Properties Again

Real estate investing can be rewarding, but it is very important to exam the risk.

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• Record Keeping for Real Estate Investors An investor needs accurate records of his or her rental income and expenses to prepare the investor’s income tax return.                 The following items should be recorded to collect required income tax information for each individual property: ·         Rental Income/Capital Expenditures ·         Rental ·         Expense ·         Additional Information ·         Sale of Rental......
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