Why Rental Property Is A Powerful Asset Class

From a financial standpoint, rental property is at the top of the list of assets to own.  It can soon become the biggest headache if you don’t screen properly for the right tenants or buy in a location which consistently attracts poor tenants.  Good thing you scre eRb402HI en like the CIA and only buy in prime locations.

Rental property is the ultimate hedge against inflation as well as the ultimate asset to make money during inflation from a cash flow and real asset appreciation perspective.  With the US Dollar going into the crapper, your goal should be to borrow as much USD as your personal balance sheet allows and buy a real asset in an appreciating foreign currency!  If you can’t do that, you just have to do the next best thing and buy American.  The foreigners are coming!


Resolving My Insurance Company Home Premium Scam

Pacific Heights MansionIt’s been two weeks since I found out I was being scammed by my insurance company. I sent in my 8 month old house appraisal to Tricky Dick, who is trying to raise my home insurance premium by 45% since their inspection 7 months ago.  Their shady inspector made my house 50% larger than it really is, so they could raise my premiums by a similar magnitude.  It’s so easy to prove what my house’s square footage is, it’s not even funny.  It’s like saying Lebron James is 10 feet 5 inches instead of just 6 feet 8 inches tall.  Utterly ludicrous.

The recent appraisal I sent in contains perfectly drawn outlines of my house’s layout and square footage.  It matches up to within 50 square feet of what the SF County Assessor’s has on record.  I’ve had two other appraisals in the past 7 years, and both are also within 50 square feet of the real size.  Clearly, this case is as slam dunk as convicting Elliot Spitzer for messing around!  Not so!

If you’re curious, here’s the e-mail exchange I had with them with names, figures, and dollar amounts changed that mimic the same percentages.  All of this takes precious time.  In this post, you will learn what the tricky “Home Protector Insurance” product is.  You’ll also learn whether the rebuild cost premium you pay trumps the square footage size they have in their documents, and what you get to rebuild if your house blows up.


How To Decide Whether To Buy Or Rent A Home

Squaw, Lake Tahoe

The rain thrashed our office windows hard one February Friday in San Francisco.  The weatherman encouraged us to stay in and avoid the roads if we could.  Most people would be glum, but not my friends and I.  Rain during the winter in SF means lots and lots of snow in Lake Tahoe!  My buddies and I decided to take a 2.5 hour drive up to Sugar Bowl and hit the slopes that Saturday.  A total of 2 feet of fluffy powder fell overnight and we were in snowboarding heaven!

When we returned that evening, our legs were sore but our faces beamed with smiles as we reminisced our daring jumps off of several of the steepest slopes.  We had no fear because the landing zone was soft.  The very next day in SF, the sun was beaming down a warm 76 degrees and we decided to play some tennis at the local park.  It was that exact moment when I knew that San Francisco was the place I wanted to live for as long as possible.  Months later I bought my first place.


How Insurance Companies And Appraisers Scam Their Customers

House On Golf Course In HawaiiI’ve always trusted my insurance company, which I’ll call TRICKY DICK in this article, to do the right thing. After all, I’ve been a client of theirs for almost 20 years. They’ve benefited from my growth in assets and I now have auto insurance, homeowner’s insurance, valuable personal property insurance and an umbrella policy with them.  Furthermore, I’ve got a relatively large chunk of change in CDs deposited with them as well.

I had a unwelcomed change in my credit card the other day and had to call Tricky Dick to cancel my existing card on file and add a new one. Imagine my surprise when looking over my previous statement that they were billing me 45% more a month in premiums!  What the hell, I thought to myself.  Clearly there must be a mistake.  Oh how wrong I was.


Mortgage Interest Deduction Limit and Income Phaseout

According to the IRS, the maximum mortgage amount you can claim interest on is $1,000,000 on first or second homes if the loan was taken after Oct 13, 1987. You can also deduct interest on $100,000 for a second mortgage loan used for anything other the purchase of your first or second home. More specifically, home equity debt means “any loan whose purpose is not to acquire, to construct, or substantially to improve a qualified home“.  Interesting right?  In other words, you can take a $100,000 home equity line of credit to buy a Porsche 911, an incredible home theater system, and do a little landscaping and all the interest is deductible!  No wonder why everybody took out so many Home Equity Lines Of Credit (HELOC)!

You already know that the government is sexist because the maximum mortgage interest deduction limit stays at $1,000,000 even though both people could have $1,000,000 mortgages. It’s beyond me why the government thinks two people who want to marry with $1,000,000 mortgages each, don’t deserve to keep their deductions. But at any rate, just be aware that if you can afford such a mortgage, you might want to think of this crucial loss of deduction before you get married. With rates averaging 5%-6%,  you could literally lose out on tens of thousands in interest deductions!