How to Know if You Are Financially Secure

Financial IndependenceAt one time, I was just a working stiff.  I still am, for now.  Working a 8-5 job, sometimes on-call, weekends, and trying to climb the corporate ladder.  I was a member of a hot shot team that was selected for future management.  When you are climbing your way up, you have a tendency to make a lot of people happy, and some not so happy.

It’s fun when you are making a lot of money; but you know the money train cannot last.  At some point, a merger may knock you down, a layoff, a boss that you cannot satisfy, or some other reason that you may not even understand.

Welcome readers of OurNextLife!

Regardless, you need to make sure you are prepared.  An emergency fund comes first, then becoming debt free, then bringing in other forms of income.  I already had the first two, when I started investing in real estate.  Here is how I knew I finished the journey to be financially secure.

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How to Manage Out of State Rental Property

Out of state rental property

The Deck (at 50 degrees)

For those of you who follow my Blog, you know that my properties are very close to my own home.  All are within a few miles; the furthest is seven miles away.  It may not always be that way, and sometimes you will need to manage your properties from a distance.  Even if your properties are close, if you move, perhaps to a retirement location, you will need to know how to manage out of state rental property

I wrote a previous article on long distance property management about this a while back.  I also wrote about the disadvantages of having to manage out of state rental property.

The secret to managing any property is to have great tenants. Great tenants can think ahead, and can anticipate issues before they occur.  They take action to avoid having a problem.

Regardless of where you live in relation to your properties, you need to be able to manage them effectively.  Whether they are 7 miles away, or 700 miles away, you need to set yourself up so that you do not have to be on-site as often.

My recent trip to Florida will illustrate an example that can help.

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How Renters Insurance Can Offer Protection for Your Personal Stuff

stockvault-twisted-metal109024-PDMore and more people are renting properties these days instead of buying. The reason behind this is the increasing cost of real estate properties. If you are thinking of renting an apartment or a condo, you are on the right track.

When making a budget, include premium for renters insurance. In case you don’t know what renters insurance is, it’s a type of insurance that provides coverage for a renter’s belongings.

Landlord’s insurance is limited

No matter what your landlord tells you, his insurance is not going to cover your stuff. His insurance only covers damages, caused by fire and natural calamities. Your personal belongings are covered by renters insurance.

Do you need it?

You might be wondering whether you need renters insurance. I think you do. Nobody can guarantee that your personal stuff will remain undamaged till the end of the tenancy. Besides, renters insurance comes with a number of coverages, some of which can save you from draining your hard-earned money. Below are some of them:

Liability coverage

Living in a rented apartment means you have to restrict your activities. Your neighbors live right beside you, and if your child accidentally throws a ball breaking one of their glass windows, he’d come to you and ask you to pay for it. More serious incidents could occur. A guest might tip down the stairs and spend two weeks on the hospital bed. Since renters insurance covers such damages, you wouldn’t have to empty your savings account paying for them.

Coverage for personal properties

What if someone steals your stuff? You can’t hold your landlord guilty for this. Being alert might prevent you from becoming a victim of a theft or a burglary, but what about the acts of god? What if a hurricane hits the town, and leaves wreckage in its wake? There’s nobody to blame, you alone would have to suffer all the financial losses.

Renters insurance can save you from worrying about such a situation. If you have expensive items at your house, renters insurance is a must for you then. Some people prefer to keep expensive jewelry items at home, at the risk of those items being stolen. If you are one of them, the bare minimum that you could do is having all those jewelry items insured.

If you don’t have pricey stuff, lower the coverage limit but do insure all your stuff. The benefit of eliminating extended coverage is it decreases your deductibles. But don’t do it unless you have pricey items.

Alternative living cost

Thinking of natural disasters scares us because the possibilities are very real. A fire accident might take place at your home and burn it down, or a devastating hurricane might tear up the building where you are staying. Under any such circumstance, the building won’t be habitable.

You’d need an alternative place to stay. Renters insurance covers the cost of a hotel stay or an alternative stay. Apart from staying, the insurance also covers cost of food, clothing and even the laundry. If you suddenly fall sick, and need emergency care, that cost would also be covered by renters insurance.

A good investment

That’s right. If you think otherwise, here’s two pieces of information that you should consider. The minimum insurance limit required by insurance companies is $25000. The premium that you’d have to pay every month can be as little as $8 a month, which means you just have to stop eating out at your nearest Chinese food joint for a week, and that’s all.

All your belongings including television, music system, computer, kitchen utensils, bed cover, furniture, flower vase, etc cost probably less than $25000. Hence, it’s a good deal without the slightest amount of doubt. The resale price of all your stuff would be pretty less compared to the money that you’ve shelled out when you purchased them.

Automobile insurance waiver

There’s just one catch. You’d have to purchase the insurance policy from the same company, from which you’ve earlier bought the renters insurance. That’s not a problem for you, right. Contact your insurance provider today to find out whether they offer renters insurance (most companies offer it). If they do offer it, then look no further. Auto insurance premium costs are rising at a rapid pace, and getting a discount can help you save money.

Not just belongings

As you can see, renters insurance is not simply about it securing your personal stuff. There’s so much to it that you won’t ordinarily understand unless explained. If you live in a rented apartment, the least you could do for the protection of your stuff, and for yourself is invest in renters insurance.

This article is contributed by Tina Roth, a blogger and the founder of PROfinance, a leading personal finance blog online. She writes about money and personal management tips.

What do you think of renters insurance? Do you have personal belongings worth a lot of money? From which provider you want to buy the policy? 

 

 

Rental Cash Flow December 2015- January 2016

packs-163497_1280-PDThe rental cash flow for all of 2015 was the best ever in my history of a landlord.  I had several apartment turns, but minimal vacancy between the turns.  I am hoping that my last (half) year of working at my full time job goes well, and the cash flow continues for many years to come.

I am still working on procuring the next rental, and we have run into some title issues that are being addressed.  I have the property locked in, but it’s not final.  It should produce a solid 15%+ cash on cash return, with room to spare.  It should also add an additional ~$500 a month to my rental cash flow.

I was able to save a record amount in my 401K, IRA, HSA and after tax accounts.  All my tax deferred accounts were maxed out.  I saved enough for me to live on for a few years…

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How to Fix a Delta Shower Faucet Leak

Delta Shower ValveWhen you are a landlord, you can either hire out all the maintenance, or do some of them yourself.  I do much of it myself, and it saves a TON of money.  When you are in doubt about how to fix an item, odds are, there is someone out there, with a YouTube video, who has dedicated their life to helping you fox the issue.

This bit of maintenance to fix a shower faucet leak started simple enough.  It was a quick text by a tenant saying her bathtub faucet was leaking.  Then a phone call.  When you get a text and phone call, it becomes a bit more serious…

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November – December 2015 Rental Cash Flow

100-PD2015 has been a great year in terms of rental cash flow.  It is the first year I have actually tracked rent increases, vacancy and next year’s potential increases.  I have always tracked income and expenses, but as I get close to retirement, I think it is a great exercise to track these other things.

I also signed a purchase agreement for another building.  I was not looking for another rental, and this one sort of came up.  It is a bit outside my normal purchases, and will add a few extra dollars to the bottom line.  Hopefully, in due time, it will be one of the greatest purchases I have ever made…  I will give a short briefing in this report, and save the rest for a more detailed post in the future.

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Rental Property Asset Allocation

Saving-MoneyAre you holding the proper rental property asset allocation?

My investment account has finally recovered from 2007.  That’s right.  My investment account has finally surpassed my account balance record set way back in October 2007, over eight years ago.  (It actually passed the mark a few months ago, and I just got around to writing this post.)  It was only just about $50K higher in 2007 that it was back in 2000 or so.  My current 401K, which is nearly as high as my investment account is today, was at $0 in 2003 when I started at my current mega-corp, as I have always converted my previous employer 401Ks to an IRA, and a Roth wen i could afford to pay the tax hit.

If you do not have the proper investment allocation, you could be in for a large surprise in your quest for financial independence.  Being financially independent is not just about having a large amount of money.  It is about multiple income streams and redundant sources of passive income.  And living below your means.  Here are a few insights into what I have done to become financially independent.

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How to Handle Tenant Disputes: Part II

tennis-court-338537_1920In an earlier post, we talked about using the good cop/bad cop method to resolve tenant disputes.  But if you own and manage the property by yourself, that doesn’t really work.  If you fully commit to the split personality, you might be sent to a mental institution.  So if you’re flying solo, you have to take a different approach.

This post is compliments of Amy aka “YETInvesting”.

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How to Handle Tenant Disputes: Part I

tennis-court-338537_1920

This post is compliments of Amy aka “YETInvesting”.

If you’re a new rental property owner/manager, or if you’re just not comfortable handling tenant disputes or confrontations, then you might get panicky just thinking about having to confront tenants about issues that arise.

My boyfriend has this problem.  Apart from his current rental which began just a year ago, he has no prior landlord experience, and watching him learn how to handle issues has reminded me of how terrified I was when I first started.  When I had to handle my first tenant complaint over the phone, I remember my hands shaking because I was so nervous.  I’m an introverted person, so I hate talking to strangers anyway.  But this was going to be even worse: I wasn’t just introducing myself to someone I didn’t know, I was going to be fighting with them over money!  Yikes!  Maybe most people are braver than I am from the get-go, but I felt like I was going to throw up.  Good way to start a phone call, right?

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Getting Rid of a Bad Tenant

Graphiti-PDThis post is compliments of Amy aka “Yetisaurus”.

If you have thought about being a landlord, you have thought about the possibility of getting rid of a bad tenant.  The first two rules of being a landlord are (1) collect all of your rents, ON TIME, and (2) keep your rentals full.  But that’s not the end of the story: it is equally important to get (and keep) good tenants in your rentals.  If you have multiple rental units near each other, such as a duplex, fourplex, or even an apartment building, a bad tenant can spoil the whole bunch.

Tenant screening is critical.  It’s important to run income and credit checks on your prospective tenants, and to meet all of the people who will be living in your rental, and maybe even their pets (photos can be deceiving in terms of size and personality).  But what if someone makes it through your screening process, and turns out to be a bad apple anyway?

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