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Mortgages are complicated and confusing, and second mortgages are doubly complicated and confusing.

A second mortgage can be an extremely useful tool for your wealth, or it can become a financial trap.
Before you head into the world of second mortgages, there are a couple of different things you should think about.
Read on for an overview of second mortgages and advice to help you determine whether or not you should consider a second mortgage.

What Is a Second Mortgage?

A second mortgage can be a valuable borrowing vehicle in certain circumstances. Here’s how you can benefit from a second mortgage.

How a Second Mortgage Works

A second mortgage is basically a loan using your home equity as collateral. If you own your home, whether you have a mortgage attached to the property or not, you may be able to secure a second loan by liberating your equity that has built up over the years.
Generally speaking, real estate increases in value, so while a typical mortgage can stretch out for up to 30 years, the principal owed on the house steadily falls while the value of the house appreciates.
To find out how much you can possibly qualify to borrow on your home you need to find out how much equity is in your home. This is calculated by estimating the market value of the property and subtracting the payments made towards your first loan so far.
For example, if your home is currently worth $250,000 but you have a first mortgage of $160,000 outstanding on the property, you have managed to amass $90,000 in equity.
Lenders may be willing to allow you to borrow anywhere from 60% to 80% of your equity, which works out to roughly $54,000 to $72,000.
One unique kind of second mortgage is a cash-out refinance. This replaces your old mortgage with a new mortgage. With the new mortgage, it’s slightly larger than the original amount. The larger mortgage will give you a one-time cash payment.

What are Second Mortgages Used For?

As you can see a second mortgage can really represent a sizable chunk of cash, but what are they used for? Well, you can use a second mortgage for anything from funding a child’s education to making repairs on your home.
If you are going to take on additional debt, it should be for something worthwhile. A vacation, however deserved, might be better to save for slowly, than to take on the cost of a home equity loan.
Another option can be to avoid Private Mortgage Insurance.  

While Private Mortgage Insurance may not seem like a big deal, it can cost you thousands of dollars over the course of your loan.

It’s almost always worth avoiding PMI if you can,

Getting a Second Mortgage

Now that you understand how a second mortgage mortgage works, we can continue with the process. If you’ve decided that you want to take out a second mortgage on your house, we can help you with the route you should take.

Use a Good Lender

It is an unfortunate truth that there are unscrupulous people and businesses in the world. One of the best options for making sure you are getting a good rate with your mortgage company is to shop around different mortgage lenders.
This is why, we recommend using LendingTree for your second mortgage. LendingTree will shop several different lenders for home equity loan rates and allow you to screen who you apply with. 
They are also able to work with you whether you choose a separate home equity loan or decide to do a cash out refinance mortgage. You can learn more in our LendingTree review.

  • Our Rating
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  • Loans Available Home Equity, Refi, HELOC

Steps you Can Take to Get the Best Loan

If it’s been some years since you’ve taken out a mortgage, you might want to brush up on some of the lingo that you’ve going to see.

  1. Go to the bank: The obvious first place to start is with your bank or mortgage company that holds the FIRST mortgage. More than likely they will be happy to give you a second mortgage (assuming you have a decent credit score and history with the organization). It will almost make the payments on the second mortgage easier because you already write one check to the bank for your mortgage, so you won’t forget to write a second one (hopefully).
  2. Shop around: After you’ve talked with your current bank or mortgage company, you can continue to look around with other banks and lenders. More than likely you didn’t go with the first lender you quoted with the original mortgage, so why would you go with the first on your second mortgage? Once you’ve met with several different loan offers at various established, you can sit down and decide which one works best for you. There are a few things you should consider, aside from interest rates (although it’s the most important factor), before picking out a second mortgage.
  3. Look at the loan types: Are they fixed rate or adjustable? This is going to have a huge impact on the amount of interest that you pay over the course of your loan.
  4. Look at the fine print: Are there any balloon payments attached to the loan? Be sure to look at every aspect of the mortgage before you sign any paperwork. Otherwise, you could pay thousands of dollars that you didn’t expect to pay.

Pros and Cons of a Second Mortgage

Pros of a Second Mortgage

  • Deductible: The good news about a second mortgage is that mortgage interest of up to $100,000 of the principal for married couples and $50,000 for singles is deductible on your tax return as well. Although this is meant to be a combined mortgage interest on both your mortgage loans it is still a great deduction, especially if your first mortgage is closer to the end of its life and so has a relatively small portion of interest payments left.
  • Liquidation: Another (possible) pro of taking out a second mortgage is the ability to liquidate the equity in your home. If you are on the verge of bankruptcy and you need to get access to cash to pay off high-interest loans and back taxes, taking a home equity loan might not be a bad trade.

  • Low interest: The interest payable on a home equity loan is usually lower than other types of debt because it offers the lender the security of your house. Depending on your situation, this could be an excellent way to lower the amount of debt you have and save you money on monthly interests.

Cons of a Second Mortgage

Taking out a second mortgage is not without its drawbacks.

  • Your home is collateral: For instance, you need to remember that even though the loan does provide you with the cash you want it comes at the cost of putting your house up for grabs in the event you cannot make good on the loan. While we hope it never happens to anyone, it’s not uncommon for some financial tragedy to strike and for a person to lose their house because of a second mortgage.
  • Expense: A second mortgage is also not without its costs. You have to pay for an appraisal on your house, loan origination and other legal fees associated with an ordinary loan, so although there is a lower rate of interest, there are other costs to consider. If you don’t remember from when you first got a mortgage, the house appraisal and legal fees can add up to be quite a hefty bill. While this probably isn’t going to completely change your decision on a second mortgage, you should at least calculate it into the costs beforehand.

If you’re one that has a rough relationship managing debt, I would strongly have you reconsider taking out a second mortgage to pay off debt.
You first have to fix the root of the problem which is most likely – you. A second mortgage is not the answer for everyone so think about all the factors before making your final decision.
I hear a lot of stories of people who took out a second mortgage to pay off some debts. Sure, the lower interest rate can be very attractive. Why wouldn’t you want to pay lower rates?
Getting a second mortgage to pay off credit card debt or some other consumer debt is only a temporary band-aid.

Alternatives to a Second Mortgage

Figure

For those looking for extra capital to use for things such as home improvements or debt consolidation, a Home Equity Line of Credit (HELOC) is another option.
A HELOC allows you to borrow money against the equity you have accrued in your home. For example, if you bought your home for $300,000 but it is now worth $330,000, you could borrow $30,000 to use for things such as kitchen or bathroom improvements.
Borrowing funds is always a big decision and should only be taken with great consideration. But, a HELOC can be a great alternative to a second mortgage.
For those who are interested in learning more about a HELOC, Figure ncould be a good place to start. This new company is innovating the HELOC game with AI-based approval that streamlines the application and appraisal process.

Other Alternatives

Think of the second mortgage as an emergency lifeboat in this situation. Hopefully, you never need it, but you’ll be grateful for it if you do.
If you are staring at bankruptcy but don’t want to go with a second mortgage, but still looking for a good way to lower your interest amounts, you can always go with a personal loan.
If you prefer to go the way of a personal loan rather than a second mortgage here are some ideas on where to get a personal loan that is best for you, according to Good Financial Cents.
While this might seem like a smart strategy, one thing you never do is borrow against your home to pay off credit cards. I cringe every time I hear of someone pondering that.
That is a major no-no in my book. You are much better off getting a credit card with 0% APR on balance transfers to pay off the old cards. You save tons of money and honestly, it’s normally a lot easier.

Our Experience With a Second Mortgage

We recently took the plunge and built our dream home. Along the way, we learned a lot in the building process, especially when it comes to the mortgage loan process.
Our first home was bought while I was in Iraq, so I cashed in on my veteran status used the VA home loan. With our dream home, we were short the 20% down payment that we needed to avoid PMI (Private Mortgage Insurance).
While we could have used the VA loan again (for refinancing not for first time home purchases), it was actually cheaper to do the traditional loan process and take out a second mortgage.

Second Mortgages, Friend or Foe?

Because of all the risk associated with a second mortgage, they have gained an awful reputation among homeowners, but if done carefully, they can be an excellent tool.
Just like with every other part of your finances, a second mortgage isn’t something that should be done lightly.
Spend some time looking at your financial situation and weigh your options.

Source: goodfinancialcents.com

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Last Updated on February 25, 2022 by Mark Ferguson

Finding a great rental property can be tough. In many markets, prices are increasing and being able to make money on a single-family house or multifamily building is difficult. One option is to buy the cheapest homes you can in your area and make them a rental. You can also buy a townhouse or condo and turn into a rental property since they are typically less expensive than a single-family detached home.

I think a townhouse or condo can be great investments, but you must look at the numbers closely. There are many costs associated with condos like HOA fees. The appreciation also may not be as much on condos and there are some very scary issues that can cause a great condo or townhouse investment to become a nightmare.

Why are condos and townhouses so much cheaper than houses?

Before I get into the pros and cons of condo and townhouse investments, I want to be clear on what a townhouse or condo is. A condo is a unit within a large complex of apartments or other condos. There may be units beside you, above or below you. You rarely have any yard except a shared space with other units.

A townhouse might have a small yard and may have neighbors beside the unit, but not above or below. Townhouses are typically worth more than condos because they have less connected neighbors and some land.

Both condos and townhouses are worth less than a single-family home that is otherwise similar.

How does an HOA work on a townhouse or condo?

Almost every townhouse and condo will have an HOA. The HOA takes care of the shared land in the complex and most HOAs take care of the exterior maintenance and landscaping. Many HOAs also pay for the water on a condo or townhouse and they may provide common amenities like a swimming pool, clubhouse or tennis courts. Some single-family neighborhoods have detached homes that are in an HOA as well. The HOA fees are usually much higher on a condo or townhouse because the HOA takes care of many more things. Here is a list of many things an HOA takes care of on a single-family detached home, patio home, and a condo or townhouse.

——————-Condo/Townhouse                 Patio Home               Single-Family

Common Amen.            Yes                                   Yes                           Yes

Landscaping                  Yes                                   Yes                            No

Water                              Yes                                   No                             No

Exterior maintenance  Yes                                   No                             No

Exterior Insurance        Yes                                  No                             No

Clubhouse/pool             Yes                                  Maybe                      Maybe

Trash/snow removal     Yes                                 Maybe                      No

If you are wondering what a patio home is, that is usually a single-family detached home that has an HOA that maintains the lawn. The condo and townhouses have much more involved HOAs, which makes them much more expensive.

In my area in Northern Colorado, I see HOA fees for most single-family detached homes $400 or less a year (if they have an HOA). HOAs on condos or townhouses can are usually at least $100 a month and in some cases $400 a month. HOA fees can be even higher in larger cities with complexes that have security and many more amenities. Only one of my rental properties has an HOA and it is $300 a year.

Is it a bad thing to have an HOA on a rental property?

I have no problem with having an HOA on one of my rentals. The HOA takes care of the common amenities in the neighborhood and I have never had a problem with them. The only other job of this HOA is to make sure all the homes in the neighborhood are in compliance with the rules and regulations of the HOA. Many HOAs don’t allow work trucks to be parked outside, or excessive junk to be stored in the yard. For many people, this is a good thing and for others a bad thing. As a landlord, I think of it as another set of eyes on the property and I think it is a good thing to know if the tenants have junk everywhere or are not mowing the yard.

I don’t think having a small HOA with few responsibilities is a bad thing. A larger HOA will provide many benefits as well. Even though a larger HOA will be more expensive, it will lower many costs for a landlord. The HOA will pay for exterior insurance and maintenance, which will reduce the landlord’s expenses. The HOA will handle yard maintenance and snow removal, which can lower the landlord’s expenses as well. In my case, I invest in single-family homes and I have the tenants take care of the lawn and pay all utilities themselves so that does not save me much money.

HOA special assessments

The problem with a large HOA is they can create special assessments if they need more money for any major repairs or financial problems. I know of a couple of landlords who had their HOA fees increase greatly in a one-year span because the HOA had to repaint the exterior of the entire complex. The HOA fees went from just over $100 a month to $200 a month for every condo in the complex. Another HOA imposed a $30,000 special assessment on every single condo in a complex to pay for improvements. This particular landlord was planning on flipping the condo and all his profit disappeared with this assessment.

The HOA cannot impose a special assessment or raise the HOA fees without agreement from the HOA members, but in many cases, the members don’t show up to HOA meetings to oppose the changes. If you are buying a condo or a townhouse that has a fixed HOA fee, that does not mean it cannot be raised or a special assessment is levied upon the property.

Will the HOA allow rental properties?

Another problem that can come up with HOAs and rental properties is that some HOAs may not allow rental properties! My office recently had a home listed that was in an HOA and the HOA decided they would no longer allow rentals. The property was used as a rental property so the owners decided to sell it. Then the tenants decided to stop paying due to covid and it was a nightmare for the owners.

Be aware that HOAs can decide to ban rentals although it is rare.

Will condos or townhouses appreciate as much as detached homes?

Another factor to consider when buying a condo or a townhouse is the value of the property. Condos and townhouses are cheaper than detached homes because they are cheaper to build and demand is higher for single-family homes. You also own more land and have lower HOA fees with a single-family house. When you have an HOA fee that also reduces how much a borrower can qualify for when they get a loan. Usually, the condos and townhouses with the highest HOA fees will be worth less than similar condos or townhouses with lower HOA fees, because more buyers can afford them. A $100/month HOA fee could reduce the amount a buyer can qualify for by as much as $20,000.

I don’t invest for appreciation, I invest for cash flow when I buy rental properties. That does not mean I do not consider possible appreciation or depreciation on the properties I buy. There are some people who prefer a condo to a detached home, but most people want a detached house. In my area condos are the first to start losing value in a down market and the last to increase in value in an appreciating market. While condos and townhouses can appreciate and often do, single-family detached homes tend to appreciate more. It is the land that is causing the appreciation and detached homes have much more valuable land.

How can FHA rules affect condo prices?

FHA will loan on condos and townhouses, but they have very strict rules. FHA will not allow a buyer to use an FHA loan to purchase a condo in a complex if there are too many investors in that complex. If there are more than 50 percent investors in a particular complex FHA won’t lend to anyone in that complex. FHA is a very popular loan and it can greatly decrease values in a complex if the units cannot be sold using FHA. Here are some more requirements for FHA loans being used on condos. Even though conventional loans do not have to abide by FHA rules, some banks will also have guidelines similar to FHA to lend on a condo.

Is it smart to buy a condo or townhouse for a rental property?

As you can see there are many factors you must consider when investing in a condo or a townhouse. The number one factor should be cash flow and how much money you will make. You have to remember to factor in the HOA fees and the possibility that they may increase in the future. If you buy a condo in a complex that is older and will need work soon, you may see a huge increase in HOA fees or a special assessment. If many investors decide to buy units in a complex it could greatly lower the value of every unit due to FHA rules and don’t expect as much appreciation.

I think you can make money with condos, but given similar returns between a condo or townhouse and a single-family detached home, I will take the detached home every time.

My book, Build a Rental Property Empire, goes over my personal rental property strategy in depth. It covers how to find deals, finance rentals, manage them, and much more! It is available as a paperback and ebook on Amazon or as an audiobook on Audible.

Build a Rental Property Empire

Categories Rental Properties

Source: investfourmore.com

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Maybe you just graduated college, or you scored your first “grown-up” job, and now you’re looking for a car that suits your transportation needs. Whatever your situation is, there are a lot of factors to think about before purchasing your first car — the most important one being your budget. Be sure to consider these five things to help you decide whether you can fit the cost of a car into your new monthly budget.

1. Your income

The most important factor that affects your bottom line when it comes to purchasing your first car is your monthly income — especially if you’re buying a brand-new ride. Car payments can be pretty hefty, and if you’re not sure about what you can foot out of pocket each month, it can spell trouble down the line.

It’s a good idea to pay as large a down payment as you can comfortably afford so that you can score lower monthly payments. Experts recommend a down payment of at least 20 percent of the vehicle’s total cost.

Before you head to the dealership, think hard about how much you can realistically budget for your car payment each month, in addition to how much you can set aside for routine maintenance and repairs. Even if you’re buying an older, inexpensive car without a monthly payment, it’s still imperative to have some savings in case issues crop up.

2. Your credit score

If you’re new to this whole “being an adult” thing, you might not have much credit. But establishing a solid credit score is crucial to your car budget, since it directly affects your interest rates when financing your first vehicle. Scoring a good interest rate can save you hundreds — if not thousands — of dollars.

If you don’t have any credit, or you have a credit score that needs some improvement, be wary of dealership salespeople who may try to talk you into a longer financing term. You’ll end up paying significantly more interest over the course of the term, which can negatively impact your future finances.

3. Your financing options

If you’re not purchasing your first car outright, you’ll have to finance it in some way. It might seem strange to shop for loans before you go car shopping, but it’ll give you a better idea of what kind of interest rate and loan amount you can expect once the time comes to secure a financing option.

Compare rates from your bank or credit union to other lenders to see who offers the best option for you. If possible, it’s smart to get pre-approved for financing before you walk into the dealership — that way, you know the cards are stacked in your favor.

If you have little or no credit, you may find that it’s best to wait on your car purchase until you’ve improved your score so that you can get a better interest rate. You’ll be able to better afford your vehicle in the long-term.

4. Your research

While researching cars that you’d like to take a look at and test drive, it’s wise to focus on practicality versus the latest sports car. In other words, prioritize what you absolutely need out of a vehicle rather than what you want. This keeps your car payments lower and helps reduce other ownership costs, such as routine maintenance, repairs and fuel expenses.

Look for vehicles that have a solid track record of safety, reliability and inexpensive maintenance. Reference trustworthy sources, such as Edmunds.com, Kelley Blue Book, J.D. Power and Consumer Reports, to find honest reviews and helpful information.

Make sure you also compare prices across multiple dealerships for each vehicle you’ve got your eye on to ensure you get the most bang for your buck.

5. Insurance rates

Once you’ve narrowed down a list of vehicles to shop around for, call around or go online to compare car insurance quotes for each one. It’s key to incorporate your monthly insurance cost into your budget. Not only is liability insurance required in the vast majority of states, but most lenders also require that you carry comprehensive and collision coverages (a.k.a. “full coverage”) for the life of the loan.

To get the most accurate auto insurance quotes, there are a few pieces of information you should have handy:

  • Year, make and model of each vehicle you’re getting quotes for
  • Your social security number, which allows insurers to pull your credit-based insurance score
  • Your driving record and insurance history (if you have one)
  • Your coverage and deductible needs, plus any optional coverages you’d like to carry
  • Purpose of the purchase — whether you’ll be using the car for business, commuting or pleasure
  • Safety and security features on each vehicle, which can score you discounts
  • Vehicle identification numbers (VINs), if possible
  • Address where you’ll be garaging the car (usually your home address)

Though this may seem like a lot to consider when deciding how to include your new car purchase in your monthly budget, it’s best to think about these things ahead of time. You’ll be sound in your purchasing decision and sound with your finances — a win-win!

Haden Kirkpatrick is the director of marketing strategy and innovation at Esurance, where he is responsible for all initiatives related to product and service innovation. He manages the annual planning processes for the marketing and service business units. Haden is an innovator who is constantly thinking about how IoT, blockchain and machine learning will impact the insurance industry. He is also a mobile guru, aspiring yogi and mixed martial artist.

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Finding the best renters insurance policy is what most renters want but aren’t interested in spending a lot of time weighing all the different options.

Worse, a lot of renters don’t know much about it, or think it’s important.

But if you rent the home you live in, whether it’s a house, a condo, or an apartment, renters insurance is no less important than homeowner’s insurance is to a homeowner.

Renters often assume if they experience any losses due to disasters, such as fire and theft, they’ll be covered under the landlord’s insurance. That’s almost never true!

The landlord’s property insurance will cover destruction of the building, but not the contents that are within it. And since virtually all of the contents in a rental property belong to you, the renter, you will be completely out of luck if disaster strikes.

Best Renters Insurance Companies

It would be impossible to say which company offers the lowest premiums on renters insurance. That’s because the quotes you’ll get will be different, based on your personal needs and profile, other insurance policies you might bundle with the renter’s policy, your geographic location, and the type of property you live in.

There’s a wide variation in the premiums for renters insurance between companies competing in the same market. That means it pays to shop!

And while some companies seem to provide additional coverages, it’s hard to know if what they were giving were actual extras, or if they were simply giving more detailed quotes. It’s possible that similar types of coverage are available with all five companies.

What is Renters Insurance?

Renters insurance is a specific type of coverage that insures the possessions that are stored in your rental property. Exactly which possessions are covered depends upon the type of renters insurance you have. Whether you want to protect your prized jewels, new laptop, big screen TV, or a number of other items that are near and dear to your heart, a good renters insurance policy is probably well within your reach.

Renters insurance helps you with replacing stolen or damaged property, but also with protecting yourself from liability on your property and providing you with a backup plan in the event that your home itself is damaged. Let’s take a closer look at those below.

What Renters Insurance Covers

There are three standard provisions that will be found in nearly all renter’s insurance policies:

Personal Property

Similar to a homeowners policy, renters insurance covers the contents of the home you are renting. That includes furniture, electronic equipment, clothing, appliances, and personal effects. You will typically take a policy that will cover anywhere from $10,000 to $100,000 in personal property, though it can be higher.

To determine how much personal property coverage you need, you should take an inventory of everything you have. List the inventory, and then get retail prices on the cost to replace each. It’s tedious, but that’s the only way to really know how much coverage you’ll need.

It’s usually best to take photos, particularly of high-value items. That will make it easier if you need to make a claim with the insurance company.

Personal Liability

Personal liability coverage will protect you if an accident or injury happens to someone else who’s in your home. This can be someone slipping and falling in the home, being bitten by a family pet, or other types of injuries.

It could include visitors, repair people, or even the landlord if the cause of the injuries is determined to be your fault.

Personal liability coverage will protect you and your assets from lawsuits brought against you by injured parties who are holding you responsible.

Additional living expenses

This is coverage that pays in the event you lose the use of the rental premises. For example, if the property is destroyed or damaged by a fire, the insurance policy will pay for reasonable relocation expenses, such as reimbursement for a hotel stay, meals, and other expenses related to the temporary lodging situation.

Non-standard Renters Insurance Provisions

The following may be offered as part of a standard package with some insurance companies, but are additional provisions with others.

Off-premises coverage

This is coverage for possessions beyond the rental property itself. For example, it could include possessions stored in the common area of the basement of your apartment, that are subject to either damage, destruction, or theft. It can also extend to personal items stolen from your vehicle, if those items would normally be covered under your rental policy. This might be a laptop computer, as long as it’s specifically covered under your renter’s policy.

Some renter’s insurance may also include a provision to cover lost luggage, which might be lost by an airline.

Specific coverage items

You should never assume a renters insurance policy covers every possession you own. Some have specific exclusions, and others will exclude an item if it is not specifically listed.

Common specific coverages include home computers, jewelry and furs, business personal property, and firearms. If you have these items, be sure to check to make sure they’re included in your coverage. If not, you may have to get special coverage for each category individually.

Some policies do specifically include all four of these categories. State Farm is an example (see policy quote below). But never assume they’re automatically covered in your policy.

What Renters Insurance Doesn’t Cover

In the broadest sense, renters insurance doesn’t cover any hazard that is not specifically listed in the policy.

Got that? That’s the general rule, but there are certain specifics you should be aware of.

For example, just as is the case with homeowners insurance policies, renters insurance doesn’t usually cover losses due to floods and earthquakes. Those are considered a special category of hazard, specifically requiring either flood insurance or earthquake insurance.

While a renters policy may cover damages sustained as a result of a burst water pipe, you won’t be covered if your home is destroyed as a result of a river that floods your neighborhood.

If you live in an area that’s subject to natural disasters, you should look into getting a policy specifically for that hazard.

When is Renters Insurance Needed?

When required by a landlord – Large apartment complexes typically require you have renters insurance, but so do a lot of individual landlords. It’s likely they have this requirement to protect themselves from tenants filing suits to get compensation for possessions lost due to fire or some other hazard. The requirement is written into the lease.

When you want your possessions protected – Even if your landlord doesn’t require you to have renters insurance, you should have at least a small policy to protect your possessions. Though your stuff may not seem to be worth much, it could easily cost several thousand dollars to replace it, should most or all of it be destroyed or stolen.

College students – Whether you live in a dorm or off-campus, renters insurance is worth having. You probably have at least a laptop, clothing, and some entertainment equipment that would need to be replaced upon loss. You can usually get an inexpensive rider added to your parent’s policy to cover your dorm room.

Retirees who rent – Like college students, retirees may assume that what they have isn’t of much value, particularly if much of it is more than a few years old. But once again, the cost to replace your possessions could be many thousands of dollars. Renters insurance would provide you with the cash for the replacements.

Anyone who rents their home – You might assume if your rental is short-term you don’t need renters insurance. Or, if you’re renting a house, you may assume you’re covered under your landlord’s homeowner’s policy. Both assumptions are wrong.

Renters insurance is necessary anytime you’re in a rental situation.

How Much Renters Insurance Do You Need?

As I wrote earlier, you need to do an inventory of your possessions to determine how much coverage you’ll need to replace everything you have that could be lost. You might also have to get additional coverage for gray-area possessions, like business property, computer equipment, or jewelry and furs.

Liability coverage requirements are harder to estimate. $100,000 should probably be a minimum. But you should also adjust for factors such as how frequently you have visitors or people coming and going to and from your home, as well as any maintenance considerations. For example, if you live in an area where snow and ice are common, and you’re responsible for keeping walkways and stairwells clear, you may need more coverage.

As to the additional living expense portion, try to come up with a reasonable estimate of how much it will cost to live in a hotel for maybe 30 days, while repairs are being done to your rental property. If it’s a severe situation, you might need several months. But the cost of that coverage could be high.

Replacement cost versus actual cash value

This might be the most important single factor in choosing a renters insurance policy. It will determine how much you’ll receive on a claim, so you need to know which provision your insurance company is using.

Under a replacement cost provision, the insurance company will pay a sufficient amount to replace the lost items based on retail cost.

Under actual cash value, the insurance company will reimburse you for the depreciated value of the item. Let’s say you paid $1,000 for a flatscreen TV five years ago, and it’s destroyed in a fire. The insurance company may decide the value of the TV is just $200, based on its age. That’s the amount you will be reimbursed for.

Now actual cash value policies are less expensive than replacement cost policies. But as you can imagine, they’ll also pay you a lot less if you file a claim.

Unless you’re in the habit of buying your possessions at flea markets and garage sales at deep discounts, you’ll be much better off with a replacement cost policy. It may cost more for the premium, but it will do its job better when disaster hits.

How Much Does Renters Insurance Cost?

According to the Minnesota Department of Commerce renters insurance averages between $15 and $30 per month.

How much renters insurance costs depend on the usual factors that affect all insurance policies. These can include the amount of coverage you want, the deductible you’re willing to accept, your history of claims, and even how you plan to use the property.

But where renters insurance is concerned there are more specific considerations. For example, the number and type of pets you have can be a factor. Certain breeds known to be more aggressive will result in a higher premium. So will a wood-burning fireplace. The number of occupants might also figure in. Presumably, the higher the number, the more likely a claim will be paid out.

A higher premium might also be charged if you’re running a business out of the residence. In fact, certain types of businesses might require you get a commercial policy, rather than a standard rental policy.

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One of the biggest single factors is property location.

Urban locations typically cost more than rural ones, due to the closer proximity of buildings and the likelihood of fire. If the property is located in a high-crime area, it can also increase the premium. So can a location in an area that’s more prone to natural disasters, such as tornadoes and hurricanes.

The type of construction of the building is also important. For example, a building made of brick, rather than wood, would have a lower premium. The age of the building might also be a factor, since newer buildings generally have better fire protection features, like smoke alarms and sprinkler systems.

Here’s a table put out by the Insurance Information Institute that shows the average cost of both homeowner’s and renter’s insurance from 2006 to 2015. Notice how inexpensive renters insurance is compared with homeowners? It is a common misconception that insurance is too expensive for renters.

In fact, it is affordable and well worth the cost for the peace of mind and protection you receive. In 2019 and beyond, you can expect the same kind of minimal changes and affordability to remain intact, as the table below suggests.

How to Lower the Cost of Renter’s Insurance

Whatever the situation with your renter’s insurance premium, there are ways that you can keep the cost down.

Don’t buy more coverage than you need – Take an inventory of the contents of your home, and make a reasonable estimate of the replacement value of what you have. If it’s only realistically worth $25,000, then you don’t need a $50,000 policy.

Security and protective systems – Residences that have smoke alarms, fire extinguishers, indoor sprinkler systems, deadbolt locks, and security systems will usually have lower premiums.

Bundle renters insurance with other coverages – If you have auto, life, or health insurance, consider bundling your renter’s insurance with one of these policies. It can result in small savings on the premium.

Claim-free history – Like all other types of insurance, your claim history will be a major factor in determining the premium. When it comes to renters insurance, companies normally look back at least five years. If you had no claims filed in that time, you’ll get the best premium rate.

Policy exclusions and limitations – You can specifically exclude any types of property that you don’t actually own. For example, if you don’t have much in the way of high-cost jewelry, you won’t need coverage for jewelry and furs. Also, you can save a good bit of money by increasing your deductible from $500 to $1,000, or even higher you have the liquid savings to cover the difference.

The insurance company you choose may be the single biggest factor in determining your premium. Some companies just want the business more in your particular location, and will discount premiums to get it. You’ll see how this works in the next section.

What to Watch Out for With Renters Insurance

There are a few situations that might cause your premium to be higher, or even cause the insurance company to deny your application.

High-risk renters

This could be the result of the location of the rental property or even certain risks associated with you as a tenant.

Location can be a factor if you’re living in a high crime area, or in an area that has seen an above-average number of fires and other hazards. A location may be considered high risk if it’s located too far away from fire hydrants or fire stations. Your premiums will be higher if you’re located in such a neighborhood, or you may find that an insurance company is unwilling to extend coverage at all.

You could be considered a high-risk renter if you made one or more claims against your policy within the past five years (this is a standard question on renters insurance applications, so be ready). Some insurance companies may not offer a policy at all if you have one.

Still another possibility that would make you a high-risk renter is if you run a business out of your home. While a work-from-home situation won’t usually be a problem, having the type of business where you have people coming and going from the residence could be an obstacle.

One prominent example is if you’re running a childcare business out of your home. A situation like that would probably require a business insurance policy, in addition to renters insurance.

Sub-letting the residence

This is where you are the primary tenant in the property, but you might then rent the property out to another party on a temporary basis. While renter’s policies do provide for roommates and other regular occupants, they generally frown on transient arrangements. This will pretty much preclude using a rental premise for AirBnB customers!

Dangerous or exotic pets

Since certain types of pets are statistically more likely to cause injury to people, the insurance company may either charge you a higher premium for these pets, or even refuse to issue the policy entirely.

This is a common occurrence with certain dog breeds. For example, most insurance companies will have a problem if you have a pitbull, a German Shepherd, or other dogs deemed to be aggressive.

You might also run into a problem with certain exotic pets. A good example might be an iguana or a 10-foot python. Both are considered to be potentially dangerous, and don’t fall within the definition of ordinary pets. You probably won’t be able to get a renters insurance policy at all if you have this type of pet.

Unusual possessions

The same can be true of jewelry, furs, artwork, or antiques. If you have items that have significant value, either individually or collectively, you may need a separate policy that specializes in that particular type of possession.

Never assumed that a high dollar value item is covered under your policy. Just because you have $50,000 in coverage doesn’t mean that a $10,000 diamond ring is covered!

Should You Get Renters Insurance?

Unless you’re the kind of person who travels light in life – like really light – you absolutely need renters insurance. That means anything more than the clothes on your back, and an overnight bag with toiletries. It can be furniture, computer equipment, photography equipment, family heirlooms, appliances – you name it. If it’s worth anything at all to you, to the point that you would need to replace it if were lost, then you need renters insurance. .narrow-sky-1-multi-648border:none !important;display:block !important;float:none !important;line-height:0px;margin-bottom:15px !important;margin-left:auto !important;margin-right:auto !important;margin-top:15px !important;max-width:100% !important;min-height:250px;min-width:250px;padding:0;text-align:center !important;

Never assume your personal possessions will be covered under your landlord’s homeowners insurance, or under any other policies you may have. Renters insurance is a very specific type of coverage, and there’s no substitute for having your own policy.

Source: goodfinancialcents.com

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Last Updated on March 29, 2023 by Mark Ferguson

I strongly believe that real estate is one of the best ways to achieve wealth. Rental properties, in particular, are an awesome way to build net worth and create passive income.

I own a real estate brokerage, have been an agent for 17 years, and flip houses as well. My strategy is to make as much money as I can by selling houses as an agent or flipping houses and investing that money into rentals. Real estate has made me quite a bit more than a millionaire and anyone with a work ethic can do it. If you become a millionaire, it may not mean what it once did thanks to inflation and the cost of living. However, being a millionaire is still a big deal, and only 5 percent of American households have a net worth of one million dollars or more.

Why is real estate a great way to become a millionaire?

Real estate is one of the best ways to build wealth with or without a lot of money. I am not saying you don’t need any money or that it is easy, but it is possible. One of the main reasons real estate is a great vehicle for wealth is the ability to use leverage. Leverage is basically using loans or other people’s money. You can get loans relatively easy on real estate because it is a hard asset. The more money you have the easier it is to make money in real estate. While it is possible to get started with nothing or next to nothing, it is much easier if you have money to invest.

While you can borrow money to invest in other businesses, it is usually not as easy as it is to borrow against real estate. Banks love to lend on houses and commercial properties because they have an asset backing the loan. If banks lend on stocks or businesses and they go under the bank has nothing. If they loan against a house and the borrower can’t make payments the bank can take the house.

Because banks like to lend on real estate you can get some of the best loan terms available. Real estate also has amazing tax advantages that are not available with other investments. You can buy and sell a primary house, make $200,000 and pay zero taxes on that profit in certain scenarios. Not tax-deferred, no tax at all, ever. You can also force appreciation with real estate; you do not have wait for it to go up in value. I flipped 26 houses last year and all of them I bought for much less than they were actually worth. You can also make improvements to a property to increase the value. All of this can occur while you are making money on it every month after paying expenses including the mortgage.

It is also possible to take money out of your real estate investments by refinancing properties. You can use that money to buy more and more properties. This is what I have done in my career and one of my only regrets is that I did not start sooner!

Is a primary house an investment?

I want to start with the question of whether a primary residence is an investment. Many people talk about how it is dumb to buy a house and smart investors rent. I disagree. I think a primary residence can build a lot of wealth. I have increased my net worth buying and selling houses that I lived in over and over.

I bought my first house when I was 22 years old. I paid $190,000 for the house, which was full retail value for it. I lived there for 7 years and spent at least $10,000 on materials to remodel the home. That money does not count the time I personally spent updating bathrooms, painting, installing fixtures and fixing many other small things. I sold the house for $180,000 after doing all that work! It did not help that the market dropped, but I could have done much better if I would have been patient and waited for an awesome deal. Not every personal house is a great investment but I also did not have to pay rent, I was not forced to move when the landlord decided he wanted to sell, I could have pets, and I could change the houses however I saw fit. I did much better financially with my second house.

I bought my second house from the foreclosure sale for $215,000 in 2009, put less money into it for repairs, and sold it for $343,000 three years later. I bought the house with money I borrowed from my sister and father in law because I had to pay cash at the foreclosure sale. I was able to refinance all of that money out with a conventional bank a couple of months later. The awesome part about making so much money on that house was that it was tax-free. When you live in a house for 2 out of the last 5 years the money you make is usually tax-free! I sold the house to my friend so I had no real estate commissions to pay. We spent less than $10,000 on the house while we owned it and we did not even have to change the carpet.

I took the money I made from that house and used it for a down payment on a house I purchased for $560,000 in 2013. I have owned that house since and it is worth more than $850,000 now. I was lucky that our market has taken off, but I also focus on getting great deals on all the houses I buy. My loan on my personal house is less than $400,000, which means I have created $450,000 in net worth through my personal residences. that money is tax-free if I ever decide to sell the house I am in now. They limit your tax-free gain to $250,000 for an individual or $500,000 for a couple. I can also get a line of credit or refinance the house to pull money out tax-free and use it to invest.

I have not become a millionaire through these houses, but they have definitely helped to grow my net worth. When you buy a house as an owner occupant you can put very little money down. Because you are putting little money into the deal, the returns can huge if you got a great deal or values increase. If you do not have a lot of money to invest in rental properties, buying a personal residence is a great way to start. When you gain equity in the house or buy below market value, you can get a line of credit, pull any money you invested out plus some and use that money to invest. I bought my first rental property by refinancing the second primary house I had.

Why are rentals a great source of wealth?

The biggest increase to my net worth came from rental properties. I always buy properties below market value, which creates instant equity. When I buy a rental property for $120,000, it may be worth $160,000 or more after spending $15,000 to fix it up. When I buy that property and fix it up, I add $25,000 to my net worth. I have 20 rental properties now and all of them have added money to my net worth in multiple ways:

Buy below market value

You can buy below market value in many different ways. You do not have to be a professional investor to do it. There are deals on the MLS, on auctions, and even on Facebook! Buying below market value allows investors to use the BRRRR strategy which in turn can get you into rentals with very little money. Every house I buy adds $20,000 to $50,000 to my net worth because of the great deals I get.

Appreciation

I never count on appreciation but it is a nice bonus. I buy rentals that will make money today without prices increasing. However, my rentals have seen huge increases in prices. I started buying rentals in 2010 and spent about $1.3 million on 13 residential properties ( I also have commercial). Those rentals are worth over $3 million dollars today. Part of that is appreciation and part of it buying below market. The cool part is I spent very little money buying them after refinancing a few.

Cash flow

My rentals make me about $12,000 a month in passive income every month. I have property management who takes care of them for me and it takes very little work once I buy and renovate the property if needed. That money will keep coming in as long as I own the properties and will increase over time as rents go up with inflation. I love rentals because of the steady money they bring in.

Equity pay down

I have mortgages on all of my properties and my tenants are slowly paying them off for me. Every month my net worth increases because the mortgage balances on my properties decrease. This is on top of the cash flow I make every month.

All of these factors have increased my net worth directly or given me more cash, which allowed me to invest in more properties and add to my net worth. Rentals did not make me a millionaire overnight, but they have been an awesome investment and made me a millionaire a few years after I started buying them. Making a lot of income is great, but people can make hundreds of thousands of dollars a year with nothing to show for it if they spend it all.

How can you make money flipping houses?

One way I make a high income is by flipping houses. I flipped 93 houses in the last five years but started doing one or two a year with my father many years ago. Flipping houses is not as glamorous as they make it out to be on TV, but it can be a lot of fun as well as lucrative. I typically buy a house for $150,000 to $250,000, spend $20,000 to $50,000 fixing it up, spend another $20,000 to $30,000 on other costs, and sell for $250,000 to $350,000. We try to make $30,000 on each flip we do. Sometimes we do and sometimes we don’t.

I have used the money I make from flipping to buy more rentals and buy more and more flips every year. I would love to have more rentals but it is actually harder to find good rentals than good flips!

Below is a video of one of my flips.

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How much money can you make being a real estate agent?

I have also made very good money being a real estate agent. I use to be an REO and HUD broker which meant I sold foreclosures for banks. I had multiple years that I made well over $100,000 a year after expenses from being an agent. I now own my own real estate brokerage but focus on the flips more than selling houses.

Not only is being an agent a great way to earn income that you can invest, but it is a game changer for my flipping and rental property businesses. I am able to find more deals and pay less in commissions because I am an agent.

How long did it take me to accumulate one million dollars in net worth?

I bought my first rental property at the end of 2010 when I figure my net worth was about $180,000. I had been a real estate agent for 8 years, and flipping houses with my father for many years, but had not accumulated a huge amount of money. I invested money in the stock market, but most of my net worth was in my personal house.

I hit one million dollars in net worth in 2013. At the time I had seven rental properties, which had contributed greatly to my net worth. Not only did buying below market value, and appreciation increase my net worth, but I was saving as much money as I could to buy rentals. I put 20 or 25 percent down on each property and made repairs to most of them. Here is what a typical rental looked like:

  • Buy for $100,000
  • Put down $20,000
  • Spend $15,000 on repairs
  • When I was done the house was worth $150,000 to $160,000

After buying and fixing up the rental I had a house that was worth $160,000 with a loan that was $80,000. After a couple of years that house increased to $180,000 in value and my loan balance decreased to about $77,000. For each of my rentals, I gained $100,000 or more of net worth after a few years of ownership. On some of my houses, I built much more net worth because I got really great deals on the property. That does not count the cash flow I earned each month, which was about $500 per month, per property.

Some of my net worth was from my personal residence and other investments, but most of it was from rentals. It took me about four years to accumulate a net worth of one million dollars from just rentals. While it took cash to buy those properties, it forced me to save money as well. I know I would not have saved as much had I not been buying rentals.

What if you don’t make a lot of money?

My story may not be relative to many people. I have a successful real estate sales team, a successful fix and flipping business, and a blog that makes money as well. I have had extra money to invest in rentals to increase my net worth. Even if you don’t have a lot of cash to invest, you can buy real estate. You can buy houses with little money down as an owner occupant, and with many other strategies. You could turn owner-occupied houses into rentals or sell them, collect tax-free profits, and re-invest it into more properties.

You may not be able to buy as many rentals as I did as fast, but you can definitely start building wealth. How fast it takes you to reach one million dollars in net worth depends on many factors like:

  • How much cash you have to invest
  • How good of a deal you get
  • How many houses you buy
  • How fast your market appreciates or possibly depreciates
  • What strategies you use you to accelerate growth like refinancing, house hacking, or the BRRRR method.

Conclusion

It is possible to build a net worth of one million dollars in a couple of years with real estate. It also may take five years, ten years, or even fifteen years. Only five percent of households are millionaires so even if it takes a while you will be ahead of the pack. It may be tough to get your first property, but the more you buy the easier it gets and the more money you will make.

Build a Rental Property Empire

Categories Real Estate

Source: investfourmore.com

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Last Updated on March 29, 2023 by Mark Ferguson

I have been involved in many multiple offer situations as a buyer, seller and listing agent. I just made an offer on a short sale late last week where they received multiple offers and they have asked for highest and best. There are many different strategies you can use when trying to win a highest and best situation. It is tough to decide how to revise your offer and how much to raise your offer in a highest and best situation. The biggest problem in any multiple offer situation is you don’t know what other buyers will offer. All you can do is analyze the situation as best you can, and make the best offer you can based on your own numbers and needs.

What does highest and best mean?

Highest and best has become more popular in the last few years due to decreasing inventory and increased buyer demand. I am a HUD and REO listing broker as well as a real estate investor, and I am in highest and best situations all the time on my listings and as a buyer. Highest and best is when a seller receives more than one offer on a property, and they decide to give everyone a chance to submit there best offer. In the seller’s formal request, the seller gives each buyer a chance to raise their offer and a date and time all offers must be received by the seller. The seller will review all offers at the same time and pick the offer they like best.

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I used to list a lot of bank foreclosures, and banks use highest and best in almost every situation when they receive multiple offers. Banks can take a long time to respond to offers, and some banks have policies that they will not review offers until a home has been on the market for a certain amount of time. Because of these policies, banks end up with multiple offers on many of their properties. The banks started asking for highest and best to give every buyer a fair chance to revise their offers. In a highest and best situation, the bank notifies every buyer they have multiple offers, and to submit their highest and best by a certain date and time.

Many traditional sellers (not banks) using highest and best as well. In the past, most traditional sellers may let all buyers know they received other offers, but not officially ask for highest and best. Even if a seller does not formally ask for highest and best, I would treat any situation where a seller gets multiple offers as highest and best.

Do not be scared off by multiple offers

Many buyers do not like it when a seller asks for highest and best. I hear buyers say; “I don’t want to get in a bidding war” and they withdraw their offer. If you want to get the best deals you have to take part in highest and best bidding wars. The worst thing that can happen is you get beat out, so why not try? Why not leave your offer the same as your original offer and if you get it great, if not move on. For more detailed tips on getting your offer accepted here is a great article on how to make an offer that will be accepted.

Why do sellers ask for highest and best?

Highest and best situations can make buyers mad, but the sellers have a good reason to use it. The biggest reason is they want to formally give every buyer notice of multiple offers and give them a chance to raise their offer. Banks, in particular, have been sued a lot and they want to do everything by the book, with paperwork to prove it. Highest and best is usually the fairest way to handle multiple offers.

Banks and traditional sellers also use highest and best to try to get the most money they can for their house. They are the owner of the house and they have every right to try to maximize their profit or cut their losses.

Can you get information from the listing agent about other offers?

If you are dealing with multiple offers, you most likely have a real estate agent, and the seller has their own listing agent. You can’t exactly talk directly to the listing agent, but you need your agent to get as much information as possible. Here are some great questions to ask:

1.  How many offers are there?

2.  Are any of the offers cash?

3.  When is highest and best due?

4.  What is the highest offer you have now?

5.  Is there anything special the seller is looking for? Closing date, financing, rent back?

If you have any experience with highest and best, you know the listing agent will not answer most of these questions. It doesn’t hurt to ask and see if they will answer. As a listing agent myself I won’t answer any of them, except how many offers there are.

How much should you offer?

There is very little chance the listing agent will tell you how much the other offers are and even if they do, the other buyers could raise their offers. It helps to know how many offers there are, but It only takes one offer to beat you. Whenever I am in a highest and best situation I make the highest offer I can based off my buying criteria and profit potential.

I don’t try to guess what the other offers are in a highest and best situation. My theory is that I would rather pay a little more, and get a great deal than try to save money and get beat out. Having said that, don’t pay more than your numbers say you should. Most of this advice applies to investor offers if you are an owner occupant you have many factors to consider. You need to look at supply and demand, how much you love the house, and what neighborhood prices are. Emotion will come into play much more with an owner occupant offer than with an investor offer.

Remember that the list price is not the only thing you should base your offer on in a highest and best situation. Some buyers will think of the list price as the most they will offer, but this may be a huge mistake. I try to think of a multiple offer situation in this way: What is the most I would pay for the home if the house did not have a list price. If someone is willing to pay more, then I am confident I made my best offer and gave it my best shot. I won’t regret trying to save a few bucks by offering less than I was ultimately willing to pay.

How does your loan affect the chances of getting the house?

For myself, I have the option of offering with a loan or cash on most properties. On my long-term rentals, I like to use financing, but I may use a cash offer to give myself a better chance. On fix and flips, I will always offer cash, even though I have bank financing on them. The reason I do this is that I can pay cash if needed and my bank doesn’t require appraisals on most of my loans. If you can offer cash, it almost always looks better than a financed offer. Just make sure you can produce a proof of funds letter showing you have the cash. In some situations like with HUD, financing does not matter. HUD only cares about the net price to them.

How else can you get your offer accepted?

  • I always explain my financing if I submit a financed offer in a highest and best situation. My portfolio lender does not require an appraisal or repairs on most of my properties. I make sure I tell this to the seller so they know I will close quickly without having any appraisal issues.
  • Sometimes I will ask for the seller to pay closing costs in my offer to save cash. In highest and best I usually remove the closing costs, because it increases the net to the seller and makes my offer stronger.
  • I will remove my inspection contingency on some properties. Usually, I only remove my inspection contingency on newer homes that I have a very good idea about the repairs needed. If a home has had a few offers fall apart because of inspection issues this can be a great way to get the seller to accept your offer. Only remove your inspection contingency if you are experienced with repairs and evaluating a home.
  • An increase in earnest money can also get the sellers attention in a highest and best offer situation. If you raise the earnest money and remove the inspection contingency, this can really increase the chances of your offer being accepted.

What if the seller does not ask for highest and best?

Many times traditional sellers will receive multiple offers, but not ask for highest and best. In many states, the listing agent is required to tell all buyers when the seller receives other offers. When you are informed that there are multiple offers, don’t wait around to see if they will ask for highest and best. There is a chance they will never ask for highest and best, but you can still revise your offer.

If I am notified a seller has multiple offers, I immediately ask if they are asking for highest and best. If they don’t know or say no, I will revise my offer right away. If you revise your offer right away, they may accept your offer without asking for highest and best and giving other buyers a chance to raise their offers. Another tip is to always ask the listing agent to notify you if they receive other offers after you have submitted your offer. I hate it when I find out I lost out on a house, and I was never notified they had other offers!

Should you use an escalation clause?

An escalation clause is when a contract states the price will be this unless a higher offer is received, then the price will rise this much over the next highest offer. For example:

Contract price:     $100,000

Escalator clause: If the seller receives any offers higher than $100,000, this offer price shall increase to $1,000 more than any higher offer up to $110,000. Any other higher offers must be given to buyers agent to confirm the higher price.

Many buyers feel this is a great way to get the lowest price on a home in a highest and best situation. However, there are many problems with an escalator clause and it may actually cause the buyer to pay more than they would have otherwise.

  1.  The seller is not obligated to show any other offers to the buyer or their agent. Yes, it can be asked for in the offer, but the offer is not signed by the seller and they are not bound to it.
  2.  The buyer has stated in writing they are willing to pay $110,000. A smart seller will simply counter the buyer at $110,000 and does not have to show any other offers to the buyer or their agent, because they did not accept the original offer with those terms. I also do not know how legal it is to show a confidential offer from one buyer to another buyer without their permission.
  3.  Some offers may ask the seller to pay for closing costs and this will change the net price to the seller. Even though this offer is $100,000, another buyer could offer $105,000 with the seller paying $6,000 in closing costs. The second offer is actually lower than the $100,000 offer, but because of the escalator clause, the first offer would raise to $106,000.
  4.  Most banks simply will not accept an escalator clause. It may actually hurt your chances of getting the house and if your agent argues that they have to accept the escalator clause, it could make the banks and listing agent mad, hurting your chances even more.

Conclusion

It is tricky to know how much to offer in a highest and best situation, but stick to your numbers and do not let emotion get involved. It is better to lose out on a home than pay so much that it stops becoming a great deal. Another tip is to always ask the listing agent to notify you if they receive other offers after you have submitted your offer. I hate it when I find out I lost out on a house and I was never notified that they had other offers.

Build a Rental Property Empire

Categories Real Estate

Source: investfourmore.com

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You’re planning on living in the north. How do you get ready? What do you need to know? What has a life without winter in the south left you unprepared for? ApartmentGuide shares everything you need, to prepare for your new northern adventure!

Weather

When it comes to living in the north, the first thing that comes to mind is likely snow. Winters – and sometimes harsh winters or stretches of weather – are part of northern life. The snow begins to fall in autumn and is still on the ground during spring. However, living in the north means at least six months of very nice weather. Embrace the seasons and find what you like about winter, whether it’s snowmobiling, fashion opportunities or cuddling in front of a fire.

Most complexes hire snow removal companies to handle snow. This helps keep things less icy, but not ice-free. Be careful in the early morning going out to your car. All that melted snow (from either salt or sun) is ice now and it can be hard to see. Stay alert for black ice on the sidewalks and roads (a thin coating of clear ice which gets its name from being transparent, allowing a black road to be seen through it), a common cause of injuries and car accidents.

How to Winterize

It never hurts to prepare your home for the winter. Even if you do just a few small things, it will still save you money on your energy bill. Things like window insulation film, heavier drapes and draft guards are quick and inexpensive to install.

What to wear

Of course in the dead of winter, you want to make sure you have your gloves, hat, and a giant parka. But, there are other ways to keep comfortable too. Wearing several thinner layers under the parka will help seal out the cold air. This will also help you remain comfortable if the weather is windy. Be sure to invest in a good pair of weatherproofed snow boots too. This way your work shoes will stay looking great.

Your Car

If you drive a convertible, you may rethink that when winter hits. It will depend on the age and style of your roof, and the power of your heater. (You’d be the envy of everyone come summer, though).

One thing you’d probably never think of is getting winter tires. Winter tires use softer rubber and different tread patterns to give you a better grip on the road when it’s cold (under about 40 degrees Fahrenheit) or snowing. You’ll still need to drive with caution – they’re better, not magical – but it can make the difference between life and death.

For the driving itself, you need to learn some new habits. The most important is to slow down any time there’s ice or snow on the road. You’re much less likely to skid out of control when driving slowly. Even if you do lose control, don’t slam the brakes in a panic. Slowly go with the skid until you are no longer on the ice. Keep an ice scraper and some gloves in your glovebox, and a blanket in the trunk, in case of a breakdown. Make sure you have a phone charger in the car.

Many cities in the north use salt to de-ice the roads during the winter. The salt works great to get rid of the ice, but it can cause the undercarriage of your car to rust. That can mean some costly repairs. One solution to this problem is to take your car through the car wash when it’s not too cold. Make sure you choose the option that cleans underneath your car, too. Do not procrastinate on this. Expect car washes to close for the day if it’s too cold outside.

Many apartments in the north offer garage rentals. Renting a garage, at least during the winter, can be a huge time-saver. Defrosting and scraping snow or ice off your car can be a long, tiring process. Even if frost forms on the windows, you have no choice: you have to scrape. If the weather dips too far into the negative digits, your car may not even start. A garage can solve that problem for you during the winter.

Four seasons

You have four distinct seasons in the North. You’ll get to see the leaves change color in the fall, and the flowers bloom in the spring. It gets somewhat hot in the summer (although it’s pretty mild), and of course, it gets cold and snowy in the winter. Be sure to check out local parks during the autumn and spring. They’ll make you remember why you live up north. Anticipate much longer days in summer – yea! – and shorter days in winter.

Gorgeous gardens

Northern states, especially the Midwest, are known for their fertile soil. If you have a green thumb or love the farmers market, you’ll love the north. Since the spring and summer months don’t usually get unbearably hot, working in a garden is very pleasant. You can also just enjoy the beautiful gardens you’ll find all across your new city.

Ice hockey

Football, baseball, and basketball are still big in the north. But if you’ve been living in the South, you may get to experience ice hockey for the first time, as a spectator or participant. It’s an exciting, fast-moving sport and any northern fan will probably be happy to talk you through the basic rules. Watch parties are also a great place to meet people; your common areas or the neighborhood bar are both good bets.

Fireplaces and fire pits

There’s no better reason to live up north. The sheer relaxation of sitting in front of a fire is a primal pleasure, one that makes many people anticipate winter with gusto. Many apartment complexes have common areas with fire pits, a great place to meet your neighbors on a chilly evening (take a thermos of hot cocoa and cups with you to assure this!). If you have a fireplace in your apartment, ask the manager to show you the ins and outs of using it, then enjoy!

A new culture

Prepare to trade in your margarita habit for a different kind of libation (except perhaps in summer). You certainly won’t hear “y’all” bandied about, (unless the speaker is being sarcastic) and depending on where you are, you’ll have to train your ears to hear a new accent. Your neighbors will support different sports teams, and their favorite foods might include anything from cheese curds to lobster rolls, depending on where you move. Have fun exploring new events, new foods, and various cultural pockets of your new city.

Living in the North

Living in the north takes a little know how when it comes to the weather. However, northerners have systems in place to handle inclement weather. Make yourself a cup of cocoa, put a fire in the fireplace, and enjoy the perks of living up north.

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Last Updated on March 29, 2023 by Mark Ferguson

I am a huge believer in setting goals to help myself achieve more in life and in business. I love to make big real estate goals that are tough to achieve because I know they will help me accomplish more. Because I set really big goals, I do not always accomplish everything I set out too, but that is okay. I know I am still farther ahead not accomplishing big goals than I would be accomplishing small and easy goals. 2015 was a good year, but not as good as I hoped. I ran into many roadblocks (some of the same as 2014), but I also had many successes. Even though things did not go exactly as I planned, I had a great year, I have big plans for the future and I am going to challenge myself even more in 2016.

My goal articles for other years

Why do I like big real estate goals?

Before I get into exactly what happened and did not happen in 2015, I want to discuss goals. I overlooked goals when I was younger and it was a huge mistake. I thought goals were a waste of time and I never even tried to set any meaningful goals. When my career and life really started to turn around was when I accidentally set some goals as a real estate agent. I wrote out a very detailed plan on how many houses I would have to sell to make what I thought was decent money back in 2005. I gave that plan to my dad, who I was working with at the time to show him how unfair my commission split was. He didn’t change the split I was getting, but I did end up selling that many houses a couple of years later. When I wrote that plan, I thought it was an incredibly ridiculous number (100 houses a year). I know I would not have sold that many houses as a real estate agent if I had not written out that plan, even if it was by accident.

I started to make good money and I realized I wanted to make even more. So I started reading every book I could on goal setting, self-improvement and even “how to get rich”. I even took Jack Canfield coaching, which helped my career tremendously. Along the way, I learned a lot about myself, about habits I needed to have to be successful and how to continuously improve. Many people with life would get easier and are looking forward to a time when they can relax. I learned that challenges are fun, and solving problems is fun. Being bored with no challenges and an easy ride is not fun. I love Jim Rohn’s quote:

“Don’t wish life were easier, wish you were better.”

I started to realize I was in control of my life. If things weren’t going how I wanted them to go, I could change things by changing the way I did things. That may remind you of the saying:

“The definition of insanity is doing the same thing over and over again, but expecting different results.”

Honestly, this saying is one of my biggest pet peeves. First off, many people attribute this saying to Albert Einstein, but there is no record of him ever saying it. Second if this were true, 95 percent of the population would be insane. Sometimes doing the same thing over and over does change the results, if you do the same thing better and better every time you do it. While I think the saying sends a good message about trying new things if something is not working, it still bugs me that it is used so much and wrongly quoted to Eisenstein.

Making big goals is one reason I have accomplished so much. One of my biggest goals is to buy 100 rental properties by 2023. When I first starting buying rental properties I thought a good goal would be to buy 30 properties. I based this goal on my trend of buying 3 properties a year and thought I could continue that trend for ten years. After learning about goals and how to best use them, I knew I had to make my goal bigger. If I knew I could achieve my goal without changing much, I knew my goal was too small. I changed my goal to purchase 100 properties in the next ten years. That goal would challenge me to make more money, find new ways to buy properties or discover other ways to get more properties than I thought I could. While I am a little behind on my plan to reach 100 rentals, I am much farther ahead than my original goal to buy 30 houses.

What were my rental property, fix and flips, team and blog goals for 2015?

2015 rental property goals?

At the end of 2014, I wrote a goal article about what I had accomplished in 2014 and my goals for 2015. Below you will find the goals I set for 2015 and comments on how I did.

  • I want to get back on track buying as many rental properties as I can. I am going to flip fewer homes, which will give me more capital to buy rentals. I am also refining my direct marketing campaign, which should bring me more deals (I will have an upcoming article to discuss my direct marketing). I want to buy at least seven rentals in 2015 and that should put me closer to my goals of 100 rentals by 2023.

I only bought five rentals in 2015, which was less than my goal, but more than I bought in 2014. However, I am thinking about turning a couple of my flips into rentals, which would put me at my goal. I have one flip that I intended to sell quickly unless the tenants wanted to stay. The home was rented for $1,100 a month and I bought it for about $100,000. The tenants wanted to stay and we just upped their rent to $1,300 a month and they still want to stay. I have not done any work to the property and I think I may try to sell it as-is for $150,000 as with the tenants in place or I might keep it as a rental. My hesitation about keeping it as a rental is the location is a little different from most of my rentals.

I have another flip that I may turn into a rental as well because it is in a great location and could have a basement apartment. If I decide to make those properties rentals I would have met my 2015 goals. In fact, I may have surpassed them if you look at units because both of the new rentals would be 2 unit properties and one of the five other rentals I bought in 2015 was a 2 unit property as well. 

To learn how to use mindset and attitude to make yourself more successful, check out: How to Change Your Mindset to Achieve Huge Success: Why your attitude and daily habits have more to do with making more money and having more freedom than anything else. A 200-page book available as an eBook or paperback on Amazon.

2015 fix and flip goals?

  • For 2015 I am not going to be as ambitious on my flipping goals. My goal for 2015 is to flip 10 houses and wholesale 5 to 10 more. I have 8 flips right now so reaching ten should not be a problem, but I might sell a couple I have now as wholesale deals. If anyone is interested in some Northern Colorado deals, let me know! There are a number of reasons I don’t want to flip 15 houses in 2015.
    • It takes too much babysitting of contractors and I would need to add at least a couple more.
    • It takes a lot of capital to fund all those flips and the repairs. I think all the flipping made it harder to buy rentals.
    • I can still buy as many properties, but instead of flip them myself, I could wholesale the properties.

In 2015 I will flip 9 houses. This is less than the ten I wanted to flip and I should have flipped many more. The biggest problem was I could not get houses fixed fast enough. I even hired a project manager full-time to get things done faster and it has not changed anything. I love flipping houses and I have realized that I am addicted to buying houses. I did wholesale two properties in 2015, which was nice. On both deals, I made close to $20,000 without doing any work at all. I would still be open to wholesaling more properties if the opportunity arises, but those were unique properties. One was in a very small town that was perfect to wholesale because it was 45 minutes away from me and the other was a college rental that needed a ton of work. 

2015 real estate team goals?

  • For 2015 I want my team to sell 200 houses, which is a big pullback from my previous goal. REOs and HUDs are even harder to find in 2015 than in 2014, which will decrease our sales. However, the new team members and training we implement should increase the number of sales from the other agents. I also want to add a couple more agents and my goal is to have every agent on my team make $100,000 a year.

In 2015 we did add two new agents and almost added a couple more to our team. They have just gotten started, but are doing awesome so far. One of my agents that was hired in 2014 made well over $100,000 in his first year, which was awesome. We did not sell 200 houses, we sold 127. That is way below my goal, but our market keeps going crazy. Prices have increased and even though we sold fewer homes, the value of the homes was much higher. HUD homes and REO properties have decreased even more and the sales have shifted from me to my team, which is exactly what I wanted. 

2015 goals for InvestFourMore?

  • For InvestFourMore I want to increase traffic, increase my relationships with other investors and blogs and continue to improve my investing strategies by learning as much as possible. Here are some specific goals:
    • 300,000 views a month by the end of 2015
    • Implement a new real estate agent success system
    • Borrow private money through the blog in 2015
    • Improve or create a new forum for InvestFourMore

InvestFourMore has done awesome and I have the most fun working on it than I do anything else. I did not hit 300,000 views, but I am very close! I have a new source for private money, that was from the blog. I knew the investor before I started the blog, but he approached me about lending money after reading about my business on the site. I created the new forum and it has been a success as well. I also created a new Facebook Group, which has been very successful and you are all welcome to join. I did many more things with the blog, including starting a high-level mentor program (email me if interested: [email protected]). 

2015 personal goals for 2015?

  • I don’t have any big goals for 2015 as far as car buying. I would love to buy an Aston Martin V8 or Lamborghini Countach at some point, but I don’t plan on doing it in 2015. I have personal income goals and a few more that I will keep private. I can’t share everything!

The year was a good one personally and I did not buy any more cars. I did meet a lot of great people and I started a new blog about cars: Howdidyouaffordthatcar.com. I have not had time to do too much with the site yet, but I plan to work on it little by little. I didn’t reach many of my personal goals for income, but I achieved many others I did set. 

What are my new goals for 2016? 

As you can see, I did not achieve many of my goals for 2016. That may seem like a disappointment, but it is actually a good thing. If I had achieved everything, that would mean I  set my goals too low and did not challenge myself enough. I also know there is a lot of room for improvement! Below are my new goals and some things I plan to do to achieve them.

2016 rental property goals?

For 2016 I want to buy 10 more rentals! Yes, that is a huge number, but I think I can do it. Here are a couple of things I am going to change to reach that goal:

  • I am working on refinancing 8 of my rentals into long-term 30 year fixed rate loans. I am using some national portfolio lenders. I will pay a little higher rate, but have my loans locked in and get $300,000 in cashback. My properties will still cash flow and I will be able to buy many more rentals with that money that cash flow as well.
  • I am thinking about investing in other markets. I bought a turn-key property in Ohio in 2015, but for future rental property purchases, I want to buy below market value. In order to do that in another market, it will take a lot of work. My reason for switching markets is the huge appreciation we have seen here. It is getting harder and harder to find great cash flow.
  • I am looking for a new local portfolio lender. My portfolio lender is getting tougher and tougher to work with now that I have hit a certain dollar amount of loans with them. That is one reason I am considering refinancing 8 of my properties with another lender. I would also love to find a lender who does not have a seasoning period, which would allow me to refinance properties faster and get some of my investment back.

fix and flip goals for 2016?

For 2016 I want to flip 20 houses! Yes, this is another huge goal for the new year. This will double the amount of homes I flipped in 2015, but I think it is possible as well. It will be tougher if I decide to keep two of my current flips as rentals. Here is why I think I can make this happen:

  • I have ten flips going right now. I will get these ten flips sold in the first half of the year. I have two more flips under contract, which would leave me with 12 flips. I only have to buy 8 more, get them repaired and sold before 2016 is over.
  • I think I can buy and repair that many homes in the next year because I am changing my repair process again. I had a vision in place for 2015, which has not happened. However, I am going to make it happen in 2016 and that may take some big changes in the way repairs are handled.
  • I may look into more financing options with my flips. I already have a new private money lender who has made the process much easier. While he charges more than my portfolio lender does on my flips, I can close in a couple of days. I may look into adding more private money lenders as well.

real estate team goals for 2016?

For 2016 I want to hire another really good agent. I do not want to hire too many agents, because we don’t have space for many more! I also want to focus on getting leads for our team through our website FergusonGreeley.com. I think we have some great agents in place, we need to get them trained and performing as well as possible, before adding more. Again I want to sell 200 houses in 2016, this goal may seem too high, but one of these years I will get there! How will I meet these goals?

  • Focus on organic leads through our website, utilizing everything I have learned from InvestFourMore.
  • Use Facebook to generate leads and sales for our team (we already do this and have had great results).
  • Weekly training meetings and great support for our agents (we already do this as well).
  • Flipping more houses will generate more leads and opportunities for our agents.

blog goals for 2016?

For 2016 I want to keep increasing traffic and the number of people I help buy investment properties or make more money as an agent. Here are some goals:

  • 500,000 views a month by the end of 2016. As a site gets bigger and bigger the traffic increase slow down. I still want to grow the site, but I also want to focus on helping people more than getting the biggest audience possible.
  • Focus on a few core things. With a blog or website, you can get sucked into 1,000 different activities that take a ton of time. I started a podcast in 2015, which has been awesome and should be a core activity, I think my coaching products should be a core activity and writing articles.
  • I want to write a really awesome book. I have written five eBooks that can be downloaded as a PDF or read as a Kindle eBook. I think the books are good, but I want to write an awesome book. I have already started writing an extremely in-depth book on rental properties that will be available as an eBook and a physical book that can be ordered and delivered to your door. I want this book to be the best rental property book available. I am also working on a book that I am co-writing with J Scott.

personal goals for 2016?

I don’t disclose what I make or how much I want to make on the blog because I try to keep at least a few things private! I do have personal income goals, business goals, and many other personal goals. Here are some long-term goals I added to my bucket list. I don’t have dates yet for when I want to accomplish these, but I am working on that.

  • Buy an old plantation and fix it up. I love old houses and old mansions. At some point in my life, I would love to buy an old plantation house and fix it up.
  • Start a used car dealership. I have already looked into starting a car dealership so that I can buy more exotic cars. I love cars and my dream job would be to buy awesome cars all day long, selling them is tougher for me. I met some really cool people this last year, including some guys who started a car dealership.
  • I want to buy a 1980’s Aston Martin V-8 in 2016. Prices on these cars are going up and I want to buy one before they skyrocket as my Diablo has.

Conclusion

Over the last year, I have learned a lot, changed the ways I do business and had a lot of fun. I think I can improve things immensely in 2016. One reason I think I can improve things is because of my personal habits and routines. I learned many things over the years about success and once you reach some level of success it is easy to slack off. I did slack off on my daily routines, goal reviews and personal improvement over the last year. I have made a huge effort to get those habits back on track in the last three months. I am really excited to get things started in 2016 and see what happens!

Build a Rental Property Empire

Categories Money

Source: investfourmore.com

Apache is functioning normally

The thought of selling your home can be overwhelming. There is a lot to consider, like finding and working with a real estate agent, determining market value, deciding what you need to do to sell your home in a timely manner, and even settling on the right time of year.

As a result, many homeowners become overwhelmed with making repairs, painting, and sprucing up curb appeal to attract buyers. Although there is a lot a homeowner can do to attract buyers and increase their chances of a sale, there are some things out of their control, such as the season.

Many homeowners who are under pressure to sell their homes in a certain amount of time might not be able to control the season in which they need to put their homes on the market. In fact, statistics consistently show that spring is the ideal time of year to sell a home, but what if you have to sell your home during the winter?

Winter home selling isn’t impossible, but it can be more difficult. However, there are some small, inexpensive measures you can take to improve the look, feel, and comfort of your home so that it appeals to buyers, even during the colder winter months. In this article, we provide nine simple tips for selling your home during the winter that won’t break the bank.

1. Spruce Up the Front Door

Something as small as a festive wreath or a coat of paint on the front door can drastically improve the overall look of your home and make it feel more welcoming. In addition to adding a bit of flair, make sure your porch area is clean and well maintained. The first thing buyers see is the entry, so it’s setting the precedent for the entire house.

2. Avoid Over-the-Top Holiday Decor

Although sprucing up your front door is a great idea, avoid decorating your home and yard with over-the-top holiday decor. White holiday lights are nice, but overdoing it and littering your front lawn with tacky, plastic holiday decor and blow-up characters will turn potential buyers off. It’s okay to get into the holiday spirit, but when you are trying to sell your home, less is more.

3. Keep it Warm and Cozy

Before you host an open house or open your home to showings, make it warm and welcoming!
Make sure the heat is set at a warm, but not hot level, and light the fireplace if you have one. Not only will this help your home feel more comfortable in the winter, it will also help it feel, well, homey.

Learn about the Homie way: Selling your home.

4. Curb Appeal Matters

When the weather is cold and frightful, it’s more difficult to keep up with the exterior of your home. Although it’s normal to forget about landscaping until the spring, if you are trying to sell your home, there are a few things you can do to boost curb appeal. Keep the sidewalks and driveways free of snow, and make sure to salt any ice. You don’t want buyers slipping and sliding while they visit! Go the extra mile by clearing snow off of bushes and shrubs so buyers can get an idea of what the yard will look like when it’s in bloom.

5. Let in Natural Light

The winter is naturally a darker time of year than other seasons. Keeping curtains closed and shades drawn can leave a home feeling dark and empty, even if it isn’t. Let natural light in as often as possible to show potential home buyers how bright it can be.

If your home has smaller windows or is located in a shady area, be sure to pull open the blinds or shades. You can also adorn your rooms with light-colored curtains to help bring in more natural light. Avoid room-darkening curtains and blocking out your windows with clothing or blankets. It is also a good idea to throw away any broken blinds or shades.

6. A Fresh Coat of Paint

There are a lot of things you can’t control during the winter, like a blizzard on the day you had four scheduled tours. However, you can control how your home looks on the inside. A fresh coat of paint is a great way to show off how well you’ve taken care of your home, inside and out.

7. Outdoor Lighting

Lining your porch, walkways, driveway, or gardens with exterior lighting is a great way to light up your home—literally. You don’t even have to hire an electrician or purchase expensive light fixtures. You can purchase exterior lights that stick in the ground or sit atop the posts on your fence or porch, go the “green” route and purchase solar lights.

8. Repair It

Although we’ve primarily focused on easy and inexpensive ways to improve the curb appeal and interior look of your home, more in-depth repairs may be necessary.

If you are on a budget, take the time to prioritize repairs and upgrades. Start by making a list of issues that need to be addressed.

Are any windows broken? Are any shingles missing on your roof? Are there any holes in your walls or broken pieces of trim or tile? These issues can make your home undesirable compared to others in the area. No one wants to buy a home that needs major work in the winter.

9. Sell With Homie

Although the winter may not be an ideal time to try to sell your home, it is possible. Start with the tips above, and finish by selling your home with Homie! You can save tons of money to invest in a new home because you’ll pay a low fee to list, market, and sell your home with Homie.

Start now!

Want more blogs about selling?

Who’s Involved in Selling a Home?
What’s a Listing Agent?

Source: homie.com

Apache is functioning normally

A home warranty plan is an ideal investment for homeowners looking to protect their purchase and to ensure that every aspect of their home is kept running smoothly and efficiently.

A warranty differs from a homeowners insurance policy, though the two do have similarities.

The latter is usually designed to protect against any theft from the property, as well as damage which occurs as the result of natural causes such as flood, fire, or storms.

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A home warranty, on the other hand, attends to the mechanics and appliances which reside within that home, such as plumbing and heating systems, washer, dryers, and stoves.

Sears is one popular option for home warranties, and it may be worth your consideration. In this review, we’ll examine its coverage and cost and weigh the pros and cons of protecting your home with the company.

Home Warranties: Here’s How They Work

A warranty for your home works in a similar way to a traditional home insurance policy.

You pay a certain monthly amount, and in return be covered if an appliance or system requires a replacement or repair.

Most providers will offer a variety of plans which are designed to suit the lifestyle of the policyholder, and Sears is no different.

Who Needs a Home Warranty?

Although home warranties are not compulsory in the same way that home insurance policies can be for some mortgage providers, they are nevertheless a good idea for any homeowner.

Investing in property is a substantial financial commitment, and it is a good idea to protect this investment in the best way you can; by having secure, financial protection and cover.

You also get the peace of mind that things can be repaired and replaced if they go wrong, without costing you an excessive amount.

Sears Home Warranty

Sears Home Warranty is one of the best home warranty companies for a number of reasons. The Sears Home Warranty plan is an ideal way for busy homeowners to ensure every aspect of their home is taken care of in the event of an incident.

Plans

It offers a chance to purchase a single plan, which then serves to protect a range of systems and appliances within the home, no matter how old they are, the manufacturer, or where they were initially purchased.

There is a choice of three plans, allowing you to select the combination most suitable to your needs and lifestyle, and ensuring that you are not spending money on something you do not need.

Filing Claims

In addition, Sears takes the hassle out of finding a suitable repair service, by supplying one as part of the policy.

If you need to make a claim, simply call the customer service line, which is available 24 hours a day, seven days a week.

This means you can report your claim at a time that suits you, as soon as you need assistance, rather than being required to wait for days or weeks for a representative to become available.

Repair

Once this call has been received, the agent will arrange a suitable time for a pre-screened and qualified technician to visit your home and inspect the issue. Once the problem has been identified, Sears will endeavor to repair the malfunction or replace the item where this is not possible.

A service fee will be required when the technician arrives, and the amount you decide to pay at this point could impact your monthly payments; a higher amount will lower them while paying less could increase them.

What Plans Are Available?

Appliance Plan

As the name suggests, the purpose of the appliance plan is to provide cover for essential appliances within your home. It covers items including:

  • Built-in dishwasher
  • Washer and dryer

  • Refrigerator with icemaker
  • Range, cooktop, stove or oven
  • Built-in microwave

  • Trash compactor
  • Exhaust fan

Systems Plan

The systems plan is the area responsible for covering all the major systems which are present in your home. Key areas include:

  • Central heating
  • Water heater
  • Water softener

  • Plumbing and plumbing stoppages
  • Garbage disposal
  • Toilets and taps

  • Garage door opener
  • Ceiling fans
  • Electrical systems

All the above components come as standard, but policyholders also have the option to purchase add-ons according to their needs. These extras can cover areas such as:

  • Sump pump
  • Well pump

  • Stand-alone freezer
  • Septic tank and pumping (here, there is a pumping limit of $500 and a tank replacement limit of $1,000)
  • Pool and/or Spa with a heater (here there is a heater limit of $1,000)

Whole House Plan

A third option is the entire house plan. As the name suggests, this allows the whole home to be protected and covers 21 major appliances and systems for the ultimate peace of mind. Areas covered include:

  • Garage door opener
  • Central heating

  • Plumbing and plumbing stoppages
  • Water heater
  • Water softener

  • Garbage disposal
  • Faucets
  • Toilets

  • Ceiling fans
  • Electrical systems
  • Washer

  • Dryer
  • Built-in dishwasher
  • Oven, cooktop or range

  • Refrigerator – including ice maker
  • Range exhaust fan
  • Built-in trash compactor

  • Built-in microwave

There are also optional extras which can be added on according to your own needs and requirements:

  • Septic tank with pumping (limit of $500 for pumping, and $1,000 for tank replacement

  • Stand-alone freezer
  • Sump pump
  • Well pump

  • Pool and spa heater (this has a heater limit of $1,000)

Sears offers a diverse range of plans, allowing homeowners to make the best choice to suit their household.

Alternatives to Sears Home Warranty

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@media screen and (max-width: 768px)
body
padding: 0;
margin: 8px

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flex-direction: column;

#ap6993-w-placement-top10-v2 .mg-widget-filter-sorting-wrapper .zip-filter
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box-shadow: 0 0 4px 0 #9AAAB9;
margin-bottom: 18px;
flex-wrap: wrap;
align-items: stretch;
padding: 0

#ap6993-w-placement-top10-v2 .company-table .company-item .logo-container
flex: 1;
width: 50%;
min-height: 140px

#ap6993-w-placement-top10-v2 .company-table .company-item .cta
margin: 10px 0;
order: 2;
flex: 1;
min-width: auto;
width: 50%;
display: flex;
align-items: center;
justify-content: center

#ap6993-w-placement-top10-v2 .company-table .company-item .cta a.btn-primary
min-width: 120px;
font-size: 1.1em;
padding: 16px 10px

#ap6993-w-placement-top10-v2 .company-table .company-item .mobile-p1-highlight
padding: 0 8px;
order: 3;
width: 100%;
display: flex;
justify-content: center;
font-size: 1.2em;
font-weight: 600;
color: #333;
text-align: center

#ap6993-w-placement-top10-v2 .company-table .company-item .overview
order: 4;
display: block;
line-height: 1.4em;
font-size: 1.1em;
overflow: hidden;
transition: max-height .3s ease;
max-height: 0

#ap6993-w-placement-top10-v2 .company-table .company-item .overview .overview-inner
padding: 8px 15px 20px

#ap6993-w-placement-top10-v2 .company-table .company-item .overview p
line-height: 1.4em;
text-align: left;
margin: 0

#ap6993-w-placement-top10-v2 .company-table .company-item .overview .p1-highlight
display: none

#ap6993-w-placement-top10-v2 .company-table .company-item .overview ul
padding: 0;
margin: 0

#ap6993-w-placement-top10-v2 .company-table .company-item .overview ul li
text-align: left;
line-height: 1.4em

#ap6993-w-placement-top10-v2 .company-table .company-item .overview-toggle
padding: 6px;
width: 100%;
max-height: 24px;
order: 4;
cursor: pointer;
font-weight: 700;
line-height: 1em;
font-size: 1em;
color: #7C92A7;
background-color: #F0F5F9;
display: flex;
align-items: center;
justify-content: center;
align-self: end;
border-bottom-left-radius: 8px;
border-bottom-right-radius: 8px

#ap6993-w-placement-top10-v2 .company-table .company-item .overview-toggle::before
margin-right: 8px;
content: “See More”

#ap6993-w-placement-top10-v2 .company-table .company-item .overview-toggle::after
content: “”;
width: 12px;
height: 12px;
background-image: url(data:image/svg+xml;base64,PHN2ZyB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciIHZpZXdCb3g9IjAgMCAxMiAxMiI+PHBhdGggZmlsbD0iIzdDOTJBNyIgZD0iTTExLjcgOEw2IDIuMy4zIDhjLS40LjQtLjQgMSAwIDEuNC40LjQgMSAuNCAxLjQgMEw2IDUuMWw0LjMgNC4zYy4yLjIuNC4zLjcuM3MuNS0uMS43LS4zYy40LS40LjQtMSAwLTEuNHoiLz48L3N2Zz4=);
transform: rotate(180deg);
background-repeat: no-repeat;
background-position: center center;
background-size: contain

#ap6993-w-placement-top10-v2 .company-table .company-item.highlight .logo-container
margin: 45px 0 0 0

#ap6993-w-placement-top10-v2 .company-table .company-item:first-of-type .logo-n-cta .logo
margin-top: 20px

#ap6993-w-placement-top10-v2.expand-bullets-on-mobile .company-table .company-item .overview-toggle
display: none

#ap6993-w-placement-top10-v2.expand-bullets-on-mobile .company-table .company-item .overview
max-height: 150vw

#ap6993-w-placement-top10-v2 .company-table .company-item .ranking
border-top-left-radius: 8px;
left: -2px;
top: 0px;

#ap6993-w-placement-top10-v2 header h3
margin-bottom: 0.5rem;
margin-top: 0.5rem;

@media (min-width: 576px)
#ap6993-w-placement-top10-v2 .d-sm-inline
display: inline;

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Do You Need a Sears Home Warranty Plan?

The decision to take out a plan is a personal one, but it is worth weighing the pros and cons to ensure that your choice is confident and fully informed.

Pros

  • Comprehensive coverage: You will have a single plan to cover your whole home, so in the event of an incident, there is just one number to call.

  • Streamlined repairs: There is no need to try and find a repair service at short notice. The technician will be included with your plan, saving time and effort.
  • Affordability: The monthly repayments are very likely to be cheaper than having to find a replacement or repair for an appliance or system.
  • Budget-conscious: You will know exactly what you are paying and when, as well as being able to budget for any premiums, as you have all the figures in advance.

Cons

  • Required services: You are restricted to only using the repair services and technicians provided by your plan. This can be a disadvantage if you have a preferred and trusted option.
  • Requirements: All goods which are covered must be in full working order at the time the policy is taken out, which means it is no good for quick fixes.
  • Limited coverage: There are often caps on the amount which can be claimed, and this may leave you out of pocket if you have a particularly expensive system or appliance.

  • Exclusions: Make sure you know exactly what is covered. Exclusions and exceptions apply to every policy, and it is essential to be adequately informed.

In Conclusion

The Sears home warranty plan offers three diverse options, which can be adapted and changed according to your needs.

Unlike some of its competitors, there is no build your own plan, which is a little disappointing. However, various add-ons can be added to help make the plan more flexible.

A home warranty plan helps to give you more peace of mind and security and protects you from substantial, unexpected financial costs.

It can prove an affordable way to protect your home and property, and be better prepared for any future emergencies!


Source: goodfinancialcents.com