Primary Factors For Investment

Rental properties have four primary factors that contribute to a return on investment. Based on market conditions and investor strategies, the individual motivating factor can change for property owners.
There was a time when the benefit of tax savings to offset income from other sources was considered important to some investors. However, in today's environment, they are more likely valued as incidental benefits.
Some investors expect appreciation to deliver the satisfactory results which can be reasonable over time if a reliable appreciation rate is used. Savvy investors today are using conservative estimates for long-term holding periods.
Leverage occurs when borrowed funds are used to control a larger asset. Positive leverage can actually increase the yield on an investment.
The fourth component that contributes to a property's yield is the cash flow. When the rents are greater than the expenses of operating the property and servicing the debt, there is a positive cash flow. A property with a good cash flow doesn't have to go up in value to justify the investment.
The combination of lower prices, incredibly low mortgage rates and rising rents are attracting investors to rental properties that include single-family homes in predominantly owner-occupied neighborhoods.
Even if you were to ignore the benefits of tax savings, potential appreciation and leverage, the attractive cash flows make rental property a very smart investment alternative. If you're curious, contact me for more information.

Helpful Hints for Winter Driving

Winter can be a fun time with the holidays, no school, hot chocolate, and snowball fights, but it can also be a dangerous time on the road.

Deer claims are especially high around October to December due to the fact that it is the deer migration and mating season, around 1.23 million vehicle-deer collisions occurred in the U.S. between July 1, 2011 and June 30, 2012 (Iowa Agent Newsletter).

 But it’s not only deer that we need to watch out for; it’s snow, ice, and cold weather.

The Washington State Department of Transportation website has several tips on how to keep you safe this winter:

• Drive for conditions -- slower speeds, slower acceleration
• Use your headlights
• Don't use cruise control
• Remember that four-wheel and all-wheel vehicles don't stop or steer better on ice; be careful!
• Leave extra room between your vehicle and the vehicle in front of you. Remember, the larger the vehicle, the longer the stopping distance
• Slow down when approaching intersections, off ramps, bridges or shady spots
• If you find yourself behind a snowplow, stay behind it until it's safe to pass. Remember a snowplow driver has a limited field of vision. Stay back (15 car lengths) until you're sure it's safe to pass or until the plow pulls off the road
• On multi-lane roadways, snow plows often need to clear the center, throwing snow, ice and slush into nearby lanes. If approaching an oncoming snow plow, slow down and give the plow a little extra room
• Check your tires and tire pressure during cold weather (tire shops and mechanics are busiest just before and during winter storms)
• Get a vehicle winter maintenance check-up. Check your battery, belts, hoses, radiator, lights, brakes, heater/defroster and wipers
• Keep your fuel tank full; don't let it fall below half a tank on winter trips

During the winter it pays to have a survival kit in your car in case the unthinkable happens. One of our insurance companies, State Auto, has a list of what to keep in your car during the winter months:

1.      Full tank of gas

2.      First aid kit

3.      Cell phone charger

4.      Flashlight

5.      Water/snacks

6.      Ice scraper/snowbrush

7.      Boots/gloves/warm clothes

8.      Music/games

9.      Jumper cables

10.  Flares

11.  Tire chains

Service Provider

While the Internet is a great resource to locate information about food, travel and a number of other things, it isn't necessarily the best place to find a local service provider.
Sure, you can run the search, get quick results and may even see some fairly impressive websites. The problem is that sometimes, those sites are run by companies that sell the leads to providers who may not be as experienced as you're expecting.
Instead of taking a chance on a total stranger, a personal recommendation could yield you more satisfactory results. Most real estate transactions require some work to be done to the house either in preparation prior to the sale or to meet requirements from the buyer or inspector after the sale is made.
Looking for a service provider on the Internet is easy. Contact me for a recommendation is easier still and you can trust that they'll be reputable and reasonable. I want to be your personal source of real estate information.

Flood Insurance on Your Home

A number of things can cause water damage to a home and it's important to know whether they're covered by your insurance policy. Some water damage may be covered and other may not be. Generally, you need an incident to invoke coverage rather than something gradual due to lack of maintenance.
However, some incidents are specifically exempt from homeowner policies such as floods. A flood can be described as rising water due to overflow of inland or tidal waters or unusual and rapid accumulation or runoff of surface water from any source.
Homes in designated high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance.
Even if you don't live in a dedicated flood zone, you could be affected by flood damage. Review your policy about water damage and call your insurance agent to get a better understanding. Ask if you need to purchase additional coverage or separate flood insurance along with other questions.
Flood insurance can be purchased for the building and the contents. The average flood insurance policy costs about $600 per year. For more information, see the National Flood Insurance Program.

The Value of Your Home

Knowing the current value of your home is important when you're considering a move, refinancing or getting a home equity loan. Prices are determined by recent sales and the supply and demand of current inventory.
The process of selecting comparable properties involves matching similar features like bedrooms, baths, square footage and updates. In addition to price, there are other factors that affect the value and ultimately, the sale of a home.
Location plays a significant role because by the unique combination of improvements and land. Beneficial considerations would be convenience to schools, shopping, transportation and proximity to freeways. Undesirable concerns could include being in the vicinity of busy streets, high-tension lines, commercial property and other things.
To receive a computerized estimate on the value of your home that includes prices of comparable homes that have sold recently and homes currently for sale, click here.
Value is not totally objective and does require a certain amount of subjective considerations. If you have questions after you receive your report by email, contact us and we'll be happy to talk to you about your concerns.

Owning a Home

Most people agree that homeownership rules! When asked, people say they want a home they can call their own, to raise their family, share with their friends and to feel safe and secure. It also accounts for the majority of most people's net worth.
These rules can help protect your investment and make homeownership more enjoyable.

1. Don't overpay for your home
2. Maintain your home's condition
3. Minimize your assessed value to lower property taxes
4. Make extra principal contributions to save interest and build equity
5. Validate the insured value of improvements and contents
6. Stay current on surrounding property values
7. Make mortgage interest payments deductible
8. Invest in capital improvements that increase market value
9. Don't over-improve the neighborhood
10. Keep records of capital improvements and other maintenance

We want to be your personal source of real estate information and we're committed to helping from purchase to sale and all the years in between.

Home Worth

What your home is worth depends on why you ask the question. It could be one value based on a purchase or sale and an entirely different value for insurance purposes.
Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing and unpressured by extraordinary events. This value is generally indicated by the comparable market analysis done by real estate professionals.
Insured value is determined for the proper insurance coverage. Replacement cost could actually exceed the cost of new construction when additional expenses are incurred for demolition and the added complexities of matching existing construction.
Homeowners are generally more familiar with their home's market value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agents periodically. Under-insuring could invoke a co-insurance clause that may limit the settlement and increase your out of pocket expenses.

DEALING WITH YOUR INSURANCE ADJUSTER

Insurance companies (carriers) may hire their own in-house insurance adjusters or use independent insurance adjusters.

 The job of the “insurance adjuster” is to ensure that the policy-holder and insurance company are properly treated in the course of a situation that triggers the insurance.

 If you are not satisfied with the offer of the carrier’s adjuster, talk to that adjuster and/or your insurance agent and express your concerns.

 After working with the adjuster and your insurance agent, if you are still not satisfied, you may contact a “public adjuster”.  The public adjuster will charge a fee as a percentage of the total claim settlement (usually between 12 per cent and 18 per cent). 

 You may also contact the National Association of Public Insurance Adjusters at >www.napia.com<.  The phone number for the NAPIA is 703/433-9217.

 Contact Mike, Andrea, or Mandee at the Triplett Companies for further information regarding “insurance adjuster” problems you may incur. Our phone number is 515/232-5240

Rent vs. Own- Are You Ready?

The question plaguing every tenant who wants a home of their own is whether they should continue to rent or is it the right time to buy?
The combination of good prices and low mortgage rates make it considerably cheaper to own than rent in most markets. Assuming a person is qualified with a down payment and won't be moving for several years, there may not be a better time to buy a home.
In the example below, the total house payment is $1,281.01 compared to $1,500 to rent the same home. Before you consider any of the financial benefits attached to home ownership, it's cheaper to own than to rent.
The net cost of housing falls to $764 or just more than half the house payment when you consider the principal reduction due to normal amortization, a modest appreciation and the tax savings along with a reasonable maintenance expense that a tenant would not have to pay.
One of the biggest benefits is the growing equity. As the value goes up, the unpaid balance goes down. A favorable leverage causes their low down payment to grow to $40,609 in a short seven years based on a modest 1% appreciation.

There's an expression often heard in real estate circles: "Whether you rent or buy, you pay for the house you occupy." You're either buying it for yourself or you're helping the landlord buy it.
Check out a Rent vs. Own to see how your numbers will compare to this example or call us to do it for you.

Projections On Your Mortgage

FHA loans require mortgage insurance premium to cover a possible loss to the lender if the property has to be foreclosed and sold. The premium is substantial and eliminating the MIP would reduce the payment considerably.
The MIP must remain in effect for five years but after that, when the balance is 78% of the original purchase price, FHA will release the requirement and your monthly payment will go down. Since amortization is affected by interest rates, the normal time to reach this 78% point could be from 9 to 12 years at today's interest rates.
In the example below, the MIP would be released in 9 years 6 months with normal payments. An extra $100 a month would allow the borrower to reach the release point in 7 years 1 month. To reach the release point in the minimum five years, the borrower would have to make an extra $268.04 per month principal contribution.
Releasing the MIP in this example would save the borrower $177.67 per month. The borrower would also save interest, build equity and shorten the term of their mortgage. Once the MIP is released, the borrower could continue the same payment schedule to further accelerate the debt reduction.
To make some projections on your mortgage, click here.