All Forum Posts by: Edward Burns

First, identify the deductible you can live with and decide on the coverage (particularly liability) you need. I recommend replacement value insurance with either a $500 or $1000 deductible and $500K liability (one kid getting hurt on your property can eat that easily). Then contract an independent insurance agent and have him(her) get quotes from a few leading companies, including any AM Best A+ rated local company. Please note most insurance companies have had a rough last few years and rates have risen because of that.

I would kind of take a middle of the road approach if you can tolerate the stress that may be associated with leveraging through loans. Imagine the worst possible scenario associated with your current rentals. This may be damage to one of the homes rendering it unlivable for a year. Or it may be something else. Then make sure you have adequate reserves to cover all costs associated with this scenario (loan payments, repairs or deductible in case of insurable damage, losses due to covering temporary living cost for tenant if needed, etc) and maintain that amount in a semi-liquid account. A semi-liquid account might be something on the order of several 1 year cd's expiring at different times. Then go ahead and leverage additional properties as you can. PLAN FOR THE WORST AND HOPE FOR THE BEST.

Not sure if I understand what you are asking. If you are wondering if a certain amount of infiltration of outside air into a house is desired, yes. This is to offset usage of oxygen due to gas stoves, furnaces, hot water heaters etc. It is also desired to have ventilation to reduce (or increase) the humidity in the house. Low humidity can lead to cracking of wood etc, while high humidity can cause mold, mildew and damage due to rotting.

No. Paying off the primary residence if possible is never a bad idea. Especially, IMO when the option considered is long distance investment in real estate. By paying off the primary residence, you can now save the mortgage payment plus whatever amount you have been savings, so your investment nest-egg will be bigger than what is would be otherwise. In addition, the primary residence is still there and can be borrowed against if needed. In short, while I do not know the interest rate for your mortgage I am guessing in the 4-5% range, by paying off the mortgage you got a guarantee return of 4-5%. Not bad for a hands-off investment. Could you have done better? Maybe but not as safely.

If you are asking if FEMA can change flood zone boundaries or elevations, then yes, this happens all the time. Usually flood zone boundaries and or elevations are altered due to new construction in the area, which may be alterations to the stream upstream (i.e. building higher dikes, etc.), widening the stream below you are two such examples. In addition, building of new commercial property, etc. and raising levels of lots will also affect the flood elevations and zones. If are buying in or near a flood zone always pay to attention to changes going around you as they will affect your property.

I do not know where the duplex is located but Heat Pumps do not work well when outside temperatures are in the 30's or lower and with most of the country under an artic freeze I would not jump to conclusions based on his statement. You should have a back-up heating system where heat pumps are used in the northern part of the country.

I know quite a few are recommending to take out a loan against your current house. Based on the tone of your initial post, I strongly suggest that you do not. Yes, I know money is cheap right now, etc. but your peace of mind is worth more. I would save as much as possible over the course of the next 6 months or a year while reading and learning everything you can about REI, Then look at buying investment properties. You sound uncomfortable in risking your families home, so do NOT. Also take steps to insure that your home is separated and protected from any REI or other investments you may enter into. Talk to an attorney specializing in estate planning and real estate investments for the best way to this.

@Greg H.

Actually signing the offer and submitting the EMD is OK in my opinion. It is individuals that make an offer, win the bid and fail to submit the paperwork and EMD that I have a problem with. They unfairly tie up a property which they have either no knowledge of (having submitted the bid sight unseen) or do not really know what they are even doing. I lost a HUD earlier this year by $67.00 and the buyer failed to go thru with the paperwork. Since I was lost the bid and I was interested in another home that just came up that I submitted a bid onI had retracted my bid on the first since it was "already sold".

In my opinion the first was the better buy and I knew what the drainage problem was and had an estimate to fix it. It was already fixed in the inside, and the problem was all the gutters flowed to a common point near the foundation and plainly visible if someone looked as the soil was washed away near the gutter drain. A French drain and some rerouting of gutters would have fixed it for under $5K, giving me a $40K house for about $20-22K. Instead I bought and fixed up what is a $35K home for about $23K. So I lost $5K because someone failed to even submit a EMD and paperwork.

My preference would be for the kitchen in the rear. First, not keen on living room being in the rear and visitors needing to track thru the house to get to it. Second, the kitchen in the rear allows easy access to the deck for grilling, etc.

@Brett Braden

If you can not make any money on the deal as a flip, then chances are no one else can either. If there is no profit to be made by flipping, then there is less profit to made by wholesaling the place.