Real Estate Investment – A Guide On Buy To Let Property

The process of purchasing an investment property is very different to that of buying a home for example, for you and your family to live in. There are many other considerations that must be taken into account before making this big step.

The buy-to-let boom of recent times has seen many more competitive mortgage deals become available, adding fuel to an already blazing fire. Many borrowers have found that they have come unstuck whilst jumping on the bandwagon without properly researching the proposed venture.

Thorough research of the market is essential. Even if you decide to borrow a substantial segment of the purchase price of the house, it will usually cost you a considerable amount to set yourself up as a landlord.

The location and the type of property you are going to purchase are the two most important factors to consider – for example, demand might not match the number of rental properties in certain areas and one bedroom flats may be easier to rent out than two bedrooms.

It is always a good idea to approach a number of letting agents in the proposed area you wish to buy, in order to gain an insight into rental demand – this is also a good way of finding out how much rental income you can expect.

When you look to purchase your own home, a lender will look at your income in order to assess how much they would be prepared to lend. With a buy-to-let mortgage however, mortgage lenders calculate how much they are willing to lend in a different way.

Many lenders will expect rental income to cover at least 130 percent of your monthly mortgage repayments – so make sure that you calculate your sums correctly. Once you have made your calculations and found a suitable area you wish to buy in, you can start shopping around for mortgages.

Many lenders offer mortgage advances on buy to let purchases of up to 75 percent of the property value. On certain buy to let schemes however, it is possible to borrow as much as 85 percent of the value of the property.

There are many different buy-to-let mortgage deals that can be arranged – You can choose between fixed, discounted and variable rates.

Some lenders may insist that you use an agent to manage the property. If this is the case then you could expect to pay up to 15 percent of the gross rental income on management fees. By using the services of an agent you can expect them to source tenants on your behalf, check references and collect the rent.

As with other types of mortgages, it will be a condition of the lender that you have in place a buildings insurance policy at the very least. Contents cover is also highly recommended however it is not usually obligatory.

Buy To Let Action Plan

1. Stay clear of areas that are already saturated with buy-to-let properties – supply can often outweigh demand, which could make finding tenants a difficult task.

2. It pays to negotiate! It may seem as though competition is fierce for property although if you are prepared to be patient then you could land yourself a bargain at well below market value.

3. When decorating, it is a good idea to invest that little bit extra. Ask yourself, could you see yourself living there? If not then you may wish to review your decor.

4. Join a landlords association. For about 100.00 a year you will have access to help and assistance on matters such as tax issues and legislation.

Fundamentals of Renters Insurance

Many people who live in rental apartments or houses ignores the necessity of renters insurance. They don’t realize that their landlord’s insurance covers only the building where they live, but not their possessions. In such conditions, Rental insurance can cover your personal belongings from many perils such as, fire, theft, and floods. When compared with the regular home insurance the renters insurance is much inexpensive.

Fundamental of Renters Insurance

As landlords require home insurance to protect their home property, renters require renters insurance to protect their possessions. The following are some of fundamentals of renters insurance.

• Landlord’s insurance doesn’t cover renters’ belongings: The rental insurance can only cover your rental apartment or home. Many people believe that their landlords insurance can cover their possessions, which actually doesn’t do it. So to protect your rental home and belongings, it is essential to buy a renters insurance. It even claims for the injuries caused to the people who visit your home.

• Renters insurance is inexpensive: When compared with any other regular home insurance, it is less expensive. You have to make sure of obtaining good rates for your rental insurance. There are many online insurance website where you get various quotes from various insurance companies. This even enables you to speak with professionals online and get feedback to your queries.

• Possessions that can be claimed: Renters’ insurance costs only a couple of hundred dollars per annum. When you record a list of all your possessions, you can realize that it costs more to buy than replacing them. The renters insurance claims your possessions for the causes stated in the policy, which include such things as, electronic appliances, furniture, musical instruments, jewelries and tools.

• Insurance regarding the region: The policy doesn’t claim for the causes of earthquakes and floods. Therefore, if you live in prone regions where such affects are frequently occurred, you have to buy a separate insurance policy that covers your home.

• Ensure about valuable items to agent: You have to ensure the agent about any specific precious items having with you such as, jewelry, electronics and antiques. However they are claimed only for certain amount and unusually for certain expensive things like diamond rings, you have to take a separate policy. If your agent is unaware of such expensive things, it is not possible to recover the losses.

• Policy Pays for living expenses: If your apartment becomes unlivable due to any viable reason, which can be covered by the renters insurance can pay you for the additional living expenses. Usually, these claims are paid for living in some other place, till your home gets repaired, or pays for another similar apartment’s rent.

The above stated are the basic fundamentals for buying a renters insurance. This provides awareness for the people who live in the rental homes to protect their possessions from any disasters.

Moving Into Your First Apartment-Know All The Costs

When you move in to a new apartment, the landlord may charge you more than the first month’s rent. Before you sign the lease, make sure you understand exactly what you’re going to be charged, and get it in writing.

Security Deposit: This is mini-landlord insurance. The deposit is equivalent to about one to two month’s rent and can cover anything from a broken window to stained carpet. At the end of your lease, the landlord will conduct an inspection and see whether or not he or she needs to use any of the money on anything damaged beyond the normal “wear and tear” during your stay. State law may only use the security deposit for three purposes: unpaid rent, damages and for cleaning stains or any excessively dirty area. The landlord cannot use it to repaint the apartment to make it look more inviting for the next tenants. (That’s illegal).

Cleaning Fee: Since landlords cannot legally use your security deposit for basic cleaning purposes, some of them choose to include a cleaning fee in your lease.

Last Month of Rent: Some landlords ask for the last month’s rent in advance. This way, if you break your lease without first consulting your landlord, he or she has 30 days to find a new tenant before he or she needs another rent payment. If you’re a good tenant, and don’t break your lease, then you’ll save yourself the trouble of having to worry about getting together your last month of rent. (This can be really helpful when you have to deal with all the costs of moving out!) Unlike the security deposit, this charge is non-refundable.

Pet Deposit: This, too, is a form of mini-landlord insurance typically running somewhere around $300.00. The pet deposit is used to cover any wear and tear caused by your pets. Some landlords also ask for a ‘pet fee’ once a month ($20-$50) to cover the cost and inconvenience of the lovely pooper-scooping duties. Renter’s Insurance: You aren’t required to get insurance, but it is HIGHLY recommended. It’s incredibly easy for an unusual character to walk through the complex unnoticed. New people are in and out of apartments all the time, so you don’t have the same security that a homeowner does. With that in mind, you ought to invest in Renter’s Insurance as protection against theft, water damage and fire.

Parking: You might not always catch that prime parking space, and depending on where your apartment complex is, this could mean parking on the street. If you’re living in the arts district in Downtown Dallas, you might need to feed the parking meter monster or pay for a secured parking lot. Keep this in mind when you yearn for that artsy loft.

Some states put a limit on the deposits a landlord can ask for. For example, in California the deposits cannot add up to more than two-month’s rent. Check out the landlord/tenant laws to get the scoop on your state’s restrictions.

Regardless of how many of the deposits and fees the landlord asks you for, make sure these are all outlined in the lease. If they are not, make a list of all of the charges, when they were paid, then date it and have the landlord sign it with you. Keep one copy of this list and give one to your landlord to avoid any problems in the future.

Why you should have renters insurance

I confess. I used to be a serial non insurance having lump of humanity. I’m talking no health insurance, no renter’s insurance and I’m still convinced credit card insurance is nothing but a big ole scam. I only had auto insurance because I was still on my Dad’s policy not because California

requires it. There was a life insurance policy in there somewhere only because Dad got that one, too. When you’re barely scraping by, insurance is the last thing on your mind. After tithes, rent, food, gas and bills, I wasn’t trying to part with anymore money than I had to. Maybe once I’d gotten a higher and more stable income, but not right now.

And then a friend of mine started hosting financial seminars. They taught us how to build wealth the right way. Imagine how surprised I was to learn that part of building wealth was having insurance. As a layperson, it seemed counterintuitive to me. I mean, why pay out on something that you may or may not ever need? Then the speaker said something that still echoes in my head years later.

“Protect what you have.”

It was like a light bulb went off in my head. What was the point of working your butt and sacrificing so you could save the magic number 20% of your salary if it would only get wiped out at the first emergency? I was a believer. But the procrastinator in me still put things off. Until I was given this really cool Tablet PC and had it stolen along with my car keys and wallet from a resort in Palm Springs. Imagine how sick I was to learn that a simple renter’s insurance policy would have covered a percentage of the theft. Within a month, I had my policy.

Best decision of my life.

Just over a year later, my apartment building went up in flames. Even though the situation turned into one heck of a nightmare when my landlord refused to return my property that was damaged by neither fire nor water, my insurance policy went a long way toward getting me back on my feet. It even gave me the ammunition I needed to take on my landlord and win. All because I protected what I had.

The apartment complex consisted of 150 units, all of which became uninhabitable after the fire. Out of the hundreds of people who lived there, I was one of less than 10 people who were insured. Without insurance the other tenants were left to the mercy of the landlord who allowed the clean up company he hired to blatantly steal cash and jewelry and laptops and God only knows what else from people who were already devastated and homeless after the fire.

So what’s the moral of this story? No matter how evil or unnecessary you think insurance is, buy a policy anyway. Because if the unthinkable happens, the last thing you’ll want to deal with is how much it’ll cost you to get back on your feet. You don’t have to go for the biggest policy right off the bat. Take an honest look at what you have and insure what you can afford. You can always add more coverage later. Also, look at any discounts for which you might qualify simply by having both an auto and renter’s/homeowner’s policy with the same company.

It’s all about protecting what you have so you don’t have to start over from scratch.

Until next time! Remember that there’s no law against love, joy or peace.

Best Place to Compare Renters Insurance to Get the Best Rate

As a renter, you need renters insurance to protect your personal possessions from theft, vandalism, fire, and a host of other disasters. Here’s what renters insurance covers and the best place to compare renters insurance to get the best rate.

What Renters Insurance Covers

Think you don’t need renters insurance because you don’t own anything or because you’re covered by your landlord’s insurance? Think again! You landlord’s insurance only covers the physical building you live in. It does not protect …

* Your personal property

* You if someone is injured while visiting you

* You if you damage someone else’s property

You need renters insurance to provide this protection.

Can I Afford Renters Insurance?

Renters insurance is relatively inexpensive, usually only a couple hundred dollars a year. You can save even more by …

* Buying your renters insurance from the same company where you buy your auto insurance so you can get a multi-policy discount.

* Asking your insurer if you qualify for any discounts such as a non-smoker’s discount. Also check if your rental has safety features such as burglar alarms, smoke detectors, deadbolts, and window locks that qualify for discounts.

* Set your deductible as high as you can afford. The higher you set your deductible, the lower your premium will be.

Finding the Best Renters Insurance Rate

To find the best rate on renters insurance, begin by getting on the Internet and visiting an insurance comparison website. These websites allow you to get quotes from a number of companies at one time, so you can easily compare them.

All you do is fill out a simple questionnaire on the website. Then you’ll receive quotes for renters insurance from several A-rated insurance companies. It’s fast and easy – and it will save you money.

And if you have questions any time during this process, the best insurance comparison websites have an online chat feature, with insurance professionals on hand to answer your questions and help you get the best rate (see link below).

Visit http://www.LowerRateQuotes.com/renters-insurance.html or click on the following link to compare renters insurance rate quotes from top-rated companies and see how much you can save. You can get more tips and advice in their Articles section.

Buy to Let: 10 Tips for Success

Finding a buy-to-let mortgage is a lot easier than it used to be, as more lenders are entering the market. But the actual process of becoming a landlord/landlady isn’t quite so straightforward. Here are some tips to smooth the path.

1. Look carefully into the rental potential of the area before committing yourself to a buy-to-let mortgage. City centre areas often attract the highest rents. However, in some city centres, there may have been so much new build for the buy-to-let market that supply exceeds demand.
2. Remember too that if you buy in an area where property prices are booming, your profit on re-sale may be reduced. It’s a gamble – if you buy in a currently down-market area, it may be the next property hotspot, or the property may prove virtually unsaleable. Find out all you can about property trends.
3. If letting the property will involve a change of use – for instance, to multi-occupancy accommodation – make sure planning permission is available before committing yourself to a buy-to-let mortgage.
4. Don’t just go for the first lender you find for your buy-to-let mortgage – for instance, your existing lender. Without shopping around you can’t be sure you are getting the best deal. Shopping around can be time-consuming – finding an independent buy to let broker can simplify the process.
5. Make sure your application for a buy-to-let mortgage includes all the relevant details. Many applications come unstuck at the last minute because of undisclosed information. For example, if the developer is offering a discount and you base your application on the full price without mentioning the discount, you could be in trouble.
6. Regularly review your finance facilities. The buy-to-let mortgage deal you get may have been the best at the time, but your lender may “forget” to let you know about a new and better product they bring in three months later.
7. Consider looking for a property within easy travelling distance of where you live. Having to make regular trips of several hours to deal with problems, repairs, complaints etc. may quickly erode your enjoyment of your new venture! If it is at a distance, think about using a lettings agency. This will reduce your profits, but will enable you to relax and forget about day-to-day problems.
8. Remember that the purchase of the property is not your only expense. You will need buildings insurance and there will almost certainly be repairs, refurbishments and alterations that need doing. And don’t forget that your buy-to-let mortgage will need paying whether you have a tenant or not. You may need to think about a mortgage protection policy – consult a broker to find the right type.
9. Once you have your buy to let mortgage and your property in place, it’s tempting to grab the first tenant that comes along – the last thing you want is “down-time”. But this could be a costly mistake. Get references from an employer, and a previous landlord if applicable, and ask for a credit check. Insist on an up-front payment of a deposit (equivalent to at least a month’s rent) plus at least the first month’s rent in advance. Draw up a legally binding contract and go through all the fixtures and fittings together before the tenant moves in, so there is no argument about what condition they were in. If the tenant is unhappy about any of this, find another tenant.
10. Put utilities – gas, electricity etc. – in the tenant’s name. If they fail to pay their bills, you are less likely to be cut off, and the utility company can chase them and not you for the payment.

Getting a buy-to-let mortgage can be the start of an exciting and profitable adventure, or of a horrible nightmare. Following these tips can help you make sure it’s the former.

Homeowners insurance: Is your jewelry covered against loss?

$1000? $1500? $2500? What’s covered, What’s not, and how much is it covered for? Let’s put some of these “guesses” aside and lay out the coverages for Jewelry under a homeowner’s policy.

First, not all homeowner’s policies provide coverage for jewelry. There are several different standard “ISO” policy formats on which almost all residential property insurance policies are based. The most basic “fire” policies cover only limited specifically named perils (causes of loss) to the dwelling structure itself. As there is no coverage provided for any articles of personal property, accordingly, there would be no coverage for jewelry under these policies.

Second, those polices that DO provide coverage DO NOT all contain the same “limit” for jewelry, nor do they contain the same type of coverage.

POLICY $$ LIMITS

Keep in mind that each insurance company can “adjust” their policy from the standard forms, to change numbers and conditions. Some insurers write their own policies, loosely based on the ISO forms. The point is there is not one standard, by which all policies are exactly the same -as long as the policy conforms to state law, the insurance company can write it any way they want.

Under a standard HO-3 policy, the default language will often specify that the policy provides coverage for jewelry with limits of $1000 for any one item, with a maximum of $1500 for all jewelry in a single loss.

How does that work? – Let’s assume you have a deductible of $500 on your HO-3 policy.

Now, if someone burgles your home and takes a $1000 diamond ring, the insurance would pay $500 ($1000 value of stolen ring, less $500 deductible) for the stolen ring.

If some burgles your home and takes your $1500.00 ring, the insurance would pay $1000.00 for the stolen ring ($1000 limit for single piece of jewelry – the deductible is “waived” or applied to the loss in excess of the policy limit).

If someone burgles your home and takes a $3000.00 ring and a $250 pair of earrings, the insurance pays $1250.00 ($1000.00 single piece limit, $250 for the earrings, and the deductible is “waived” or applied to the loss ins excess of the policy limit)

If, however someone takes the jewelry box with $5000.00 worth of miscellaneous jewelry, then insurance pays the $1500.00 limit and the deductible is “waived.”

INCREASING THE LIMITS – With most insurers you can get an special blanket “increased jewelry loss” endorsement to the policy which increases the limits.

Tax deductions for landlords in the US

If you are a first time landlord you may be concerned about the amount of taxes you will owe the IRS this year. Fortunately though, several tax deductions may considerably cut the amount of taxes your owe. Knowing about these tax deductions first hand will be a must, in the meanwhile, hopefully you have held on to several receipts and have other important documentations handy!

1) Interest on your mortgage payments

Yes, even as a landlord the interest you pay on your mortgage (supposing you are paying a mortgage) and the property taxes will be tax deductible. Your bank or loan company should send you the appropriate form at the beginning at the year so you can present it to your tax preparer. If you lived in the home for a part of the year and then rented it for the rest, then you must divide up the taxes and mortgage payments accordingly.

2) Insurance premiums

As a landlord you probably have some sort of insurance to protect your rented property and its tenants. If so, your landlord insurance can as well be tax deductible.

3) Depreciation

The truth is that all properties wear out. It is calculated that every year for 27 1/2 years the property will undergo significant wear and tear. This is seen as a loss and allows landlords to get a tax break from their yearly rental monthy income . However, there is something on your property that will never depreciate regardless of the passage of time and that is land.

4) Repairs

If you repaired that broken window or that jammed door keep the receipts handy as they are tax deductible. Other various expenses are deductible as well such as landscape work, carpet cleaning, winterizing your home and pest control.

5) Travel Expenses

Do you travel back and forth to collect rent, do repairs or inspect the property? If so, the gas mileage and vehicle maintenance costs are also tax deductible. The tax deductions are valid also if you travel from out of State or even overseas.

6) Office Space

If a part of your home is used to operate your rental property this can be tax deducted just as if you own a business.

Tax deductions may sound complicating and particulary intimidating for most first time landlords. As a first time landlord, you may want to hire a professional in order to avoid being audited. The good thing is that should you decide to hire a certified public accountant experienced in real estate, this expense can be tax deductible too!

Cutting the Cost of Landlords Insurance

Apart from agency fees and mortgage costs, the principal overheads associated with a property portfolio relate to maintenance and landlords insurance. If this sounds like we are mixing together two separate topics, then you might like to consider that maintaining your property in a good state of repair is an important factor in keeping down the costs of landlords insurance.

It is not that landlords’ insurance premiums are directly related to property condition; however there is an indirect link that can make considerable difference to you. This is because the total cost of insurance is not just the premium, but also how a claim is settled. Failing to keep your property well looked after might not directly increase your landlord insurance premiums, but insurers may not wish to cover a poorly maintained property at all. And when it comes to paying a claim, the insurance company will look carefully at the state of the property to ensure that there is no degree of “betterment” in the settlement.

In other words, if premises already needed significant repairs before they suffered fire damage, the insurance company, when considering how much it will pay out for your fire claim, would take into account the money you would have had to spend on making them good in any event.

It is no good thinking that the building will be so badly damaged that the insurance company will never know – the majority of claims are not for total loss but for partial damage so there is likely to be plenty of evidence about. And even if the premises are totally destroyed, the underwriters may well look at the balance of your portfolio for an indication of how good the level of maintenance was.

If this sounds a bit too much like “big brother” for your taste, it is worth remembering that the money insurance companies pay out in claims comes from your landlords insurance premiums, so you do not want them paying out more than necessary to other people, or you will end up paying for their largesse.

Of course, it is important to ensure that you have the right landlord insurance in the first place. For residential buy-to-let properties, a standard home insurance policy will be unsuitable, partly because there is likely to be a condition that you are occupying the premises yourself, but also because some of the covers you will require are likely to be missing.

For example, only a special landlord’s insurance policy is likely to include insurance for loss of rent and to cover the cost of re-housing a tenant following damage (this is typically up to 30% of the buildings sum insured).

Similarly, most conventional home insurance policies will not cover extended periods of unoccupancy between lets, whereas a specialist landlord’s insurance policy will be more flexible, albeit subject to some sensible precautions being taken.

Specialist landlord’s insurance policies are also likely to be more accommodating when it comes to property construction; imposing additional charges only on exceptional properties such as those constructed substantially from timber or with a thatched roof. They will also include employers’ liability insurance, which is essential if you use direct labour for cleaning, repairs and so on.

Many of the landlords associations provide insurance schemes designed especially for buy to let investors and offering enhanced benefits and reduced costs for members. For many landlords, it is worthwhile joining one of these associations simply to take advantage of the competitively priced insurance deals.

Mortgages – Buy To Let A Wise Bet

Buy-to-let is often seen by private investors as an interesting alternative way to make their money grow. Certainly it offers the chance of double benefits for the owner. There is the income from letting the property and the hopeful increase in the value of the property.

Unlike the mortgage which you raise when you buy your home, which is based upon your earnings, a buy-to-let mortgage is normally based on the income which can be generated from the letting of the property. There are many specialists in buy-to-let mortgages and a good broker will be aware of the prerequisites and terms which apply to them and will guide you to the right lender for your own circumstances.

The right property in the correct location is all-important. If your main aim is for growth in the value of the property then obviously you need to look at where you think the next “value-spurt” is going to be. Something like the Commonwealth games in London will pull up an area with all the developments and if you can get in early on this type of area there should be strong potential for property value growth. If income is your main aim, then University towns and cities are good hunting-grounds and you’re assured of a regular, although changing, stream of tenants, over the years.

Lenders like to see where their repayments are coming from and should be happy if you could produce some projected figures showing a gross income of around 135% of the property’s mortgage costs. This should cover the costs if things don’t go quite as smoothly as planned.

Costs over and above the mortgage repayments will include the upkeep of the property, any renovation work, furnishings if these are included in the contract and the cost of testing (for safety regulations) appliances and maintaining them. If the property is leasehold there could be ground rent and then there are possible service charges. Add to this any letting agent’s fees, typically 10% of the monthly rent and another 5% if you go for a management service. Don’t forget buildings insurance.

As far as a letting agent is concerned, they will earn their fees by searching for and vetting suitable tenants and collecting the rental. This could be valuable if you’re not renting in your own area, but is something many small landlords manage for themselves. Remember to allow for the time when there is no income from the property, between lettings, for example. At one time students use to pay rental on a per term basis, but nowadays it’s become more usual to pay for an annual occupancy.

Whilst everything goes well for the vast majority of private landlords, things can go wrong and it’s possible to find the whole project is more time consuming than you first thought. House prices have doubled in the past ten years or so, who knows how long this will continue?

In the event of bumps in the market, a landlord would still have the income from letting to cushion the blow and the property would still be there as a long term investment.

For all the advice and information that you need, the best approach is to find an on-line mortgage broker. They have access to all the latest mortgages from a range of lenders. As soon as they have your information they’ll scour the market for the best possible deal, on the most favourable terms.