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Posts Tagged ‘surviving a recession in real estate’


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Surviving a Recession in Real Estate (Part 3)

Saturday, March 6th, 2010


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The premium for home owner’s insurance is influenced by your credit and the replacement cost for the home.  Since your home owner’s insurance can be part of your mortgage payment it is important to know ways to decrease the premium to lower your  mortgage payment.   There are three ways to decrease you home owner’s insurance:

  • Since it may take some time to improve your credit, a reduction in replacement cost is one way to decrease your home owner’s insurance.  Some insurance company can decrease your replacement cost to 80% of the replacement cost.  For instance, if the replacement cost is $100,000 it can be decreased to 80,000 as long as it is enough to pay off the mortgage and help you start over if the home is total loss.  Incidentally, this is not recommended for a long term solution to the increase in mortgage or insurance premium.
  • Another way to decrease your premium is to increase your deductible.  Remember on homeowner’s insurance you do not pay the deductible before a claim is paid it is simply deduct from the claim.
  • Still yet another way is to decrease your liability coverage.

There is an often overlook way to combat an increase in premium that is to find out what your home owner’s insurance when it is three months before your one year anniversary of the purchase of your home.  Your insurance agent should have your renewal premium amount.   If it is more than one hundred over your previous year premium shop for new insurance by calling other companies and get quotes or ask for the above changes to your present premium.

Originally posted 2009-10-31 05:00:47. Republished by Blog Post Promoter


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Surviving a Recession in Real Estate (Part 4)

Wednesday, February 17th, 2010


Accounting is another expense that you can evaluate to reduce cost.  You may be able to reduce cost by meeting with your accountant on a quarterly basis and  if you do some of the bookkeeping yourself.   Below is forms that can help you do some of your bookkeeping and reduction in cost.

accounting-documents

Next, copy all receipts write on top of the receipts which properties the receipts are for.   The most effective way to keep up with your receipts is to upload them to your computer.  Doing this will create less work for you and the accountant, therefore reducing cost.

Originally posted 2009-11-01 05:00:44. Republished by Blog Post Promoter


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Surviving a Recession in Real Estate (Part 5)

Monday, November 2nd, 2009



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Reducing cost on maintenance is accomplish by planning major repairs.  If the property needs a roof, plan and budget for that repair.

Each month that you receive the rental payment the money should be divided by expense then the remaining would be considered profit.  For example, if the annual property taxes are $1200 then the monthly property taxes are $100 a month.   If the annual insurance premium is $850, then the monthly insurance premium is $70.83 month.  If there is a mortgage, the principal and interest payment maybe $250 a month.  The real estate investor needs to account for maintenance, as well.  Most real estate investors that I spoke with and including myself use $75.00 each month for maintenance.  The investor may want to consider setting aside some money for accounting and legal fees from the monthly rental amount, as well.  Fifty dollars for both should be sufficient.  This amount will give you more than enough to cover the additional income tax preparation fees when filing income taxes.

To recap, the monthly expenses are:

$50.00 accounting/legal

$75.00 maintenance

$250.00 principal and interest (mortgage)

$100.00 property taxes

$70.83 insurance

$545.83

This example has a three bedroom home that currently rents for $750.00 a month, after expenses, the investor has a profit of $204.17 a month or $2450.04 annually.   Pretty good, huh.

Well, this too may need to be evaluated for cost reduction so that your profit margin can be increased.  You may want to consider refinancing for a lower rate this one change alone may save you hundreds monthly,  and thousands in interest payments, annually.  You may want to consider an area where the rental values are higher when purchasing your investment property.

You may want to increase your insurance deductible, thereby reducing your annual insurance premium.  An important note here, unlike your auto or health insurance, the deductible for landlord insurance or home insurance is taking out of the claim payment.


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Surviving a Recession in Real Estate (Part 2)

Friday, October 30th, 2009


Another useful professional is a Realtor on your quest to appeal the property taxes.  The Realtor can give you more useful information on the recent changes in the neighborhood, market trends, market value, etc.

Still yet another useful piece of information is newspaper articles, magazine articles, and news reports of information pertaining to the impact that foreclosures and short sale properties have had on the local real estate market.

Armed with the above information and any evidence that you deem necessary to prove that the property is over assessed, you should be successful.


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