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Posts Tagged ‘Insurance’

Home Insurance

Monday, June 4th, 2012

Everybody dreams of owning their own house someday. And once you achieve your dream you cherish it and take good care of it. You just can’t help but feel proud of being able to live in a house of your dreams. But the dream does not end in there; you need to secure it by protecting it from any untoward incident, unexpected calamities, and disasters. One way of protecting your house is by having a good home insurance plan for it. A good home insurance plan does not cover only the structure of the house but it goes beyond that. It also covers the personal loss, medical expenses incurred, animal loss, and mental stress among others. In cases of fire, your home insurance plan covers burned down houses and all its personal properties and belongings.

Since the value of home properties are higher and it also involves higher risk. You need to insure your home at its replacement cost, how much it would cost you to rebuild your home if it were destroyed. Being able to choose the right home insurance for your home is very important. Remember insurance may cost a lot but having no insurance cost more. So how do you choose the right insurance company without deplete your finances. First thing to do is to know the value of your property. Have a local contractor give you estimates for rebuilding your property so that you will know the replacement cost of your house. Search for not only one insurance company but at least six. So that you will be able to compare their quotes and choose who among them offers the best deal for you.

Know the company’s background and reputation especially in situation regarding claims. They may be slow in giving claims. Check too the financial capabilities of the insurance company. Are they stable enough to be able to pay claims at a short notice, You don’t want to insure your home to a company who might not be stable enough to last for a very long time .

Know what you are getting in to. Take note of every detail that is in the insurance contract. You owe it to yourself to scrutinize every detail of what is covered and what is not. The exclusions section must also be read carefully. Information is the best protection you can give to your self. Always keep records, and photos concerning the house and events that transpired that may have affected in one way or another home. In cases of robbery get police report if needed.

Investment Properties for Commercial Real Estate

Wednesday, May 2nd, 2012

Customers have understandably wanted to pursue every avenue to sell their property. To do so, they often request that I list their property as an investment in addition to listing it under a particular commercial real estate category. While this may seem like a good idea, in my opinion, unless you really have a property that can be considered an investment property, it is not particularly helpful.

Recently, one client asked to have their office building listed as an investment property. Office properties can be an investment but in my opinion, this property did not qualify. It was about 50% vacant and all of the leases in place were short term leases.

Similarly, I have had clients ask to have land listed as investment property. Certainly, there are people who will buy and hold land for a potential windfall down the road but unless the land has a lease or some sort of on-going income potential, I do not think that it is appropriate to consider it an investment property.

For a true investor, neither of these cases would get you past first glance. For something to be an ideal Investment property, it should have the following –

Ongoing income streams – Usually this would be rent. In the past, some people have assumed an appreciation of the property over time in their decision process. In my opinion and in light of the tremendous devaluation of real estate over the last few years, that is a mistake. When making an investment decision, the best practice is to consider the actual income streams themselves in valuing the asset.

Long terms on the income streams – Ideally lease terms remaining should be 10 to 20 years. When buying an income property, a new owner does not want to pay for a property that may be vacant in 1 or 2 years.

Single tenant users – This is not to say that people will not consider multiple tenant properties however, as you increase the number of tenants, you also increase the number of potential headaches associated with the property.

Credit Tenants – Whether you have a single tenant or multiple tenants, the leases associated with the property are only as strong as the tenants.

Triple Net Leases – Ideally, an investor will simply want to collect rent and deposit a check. For them the best leases have the tenant responsible for the property taxes, insurance, utilities and maintenance of the building.

Full or nearly full occupancy – Some properties are advertised as income properties which have significant vacancy. These properties often advertise a cap rate for the property that assumes the vacant area will be leased at the asking lease rate and the asking price for the property. In my opinion, this is misleading. If a property is not fully leased, quoting a cap rate in this way makes no sense. An investor making an intelligent decision would be best served selecting a property which is fully occupied.

For Investors to compare apples to apples, they need an investment alternative that is basically as simple as any other investment option. With stocks, bonds, or interest bearing accounts, you simply invest the money and do not have to take on property maintenance, leasing and other chores and expenses. Of course, these criteria significantly reduce the number of properties which you might consider and I realize that not every property will have all of these features. But I will also tell you that properties like this do exist and can be found.

There are definitely properties which will sell that do not have all of these features and expectations of these features differ somewhat with the type of property (i.e. retail vs. office). However, if you are marketing the property as an Investment option, the successful seller will try to match these criteria as closely as possible.

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