All Forum Posts by: Eric Belgau

Hi Rusty,

Welcome to Western Washington! It will be quite a change from Provo. You'll be moving from the place in the United States where it's hardest to find a cup of coffee to the place in the United States where it's hardest NOT to find a cup of coffee. Culture change!

My wife and I planned to build when we moved to Olympia. We had an artist's drawing of what we wanted, interviewed architects, and spent a year trying to make the numbers work. We found that it was basically impossible to build for less than market rates for a home, so we started looking at buying a place in the middle of last year.

Since then, the prices of existing homes have been increasing in this market and the rest of Western Washington, and by the time we got ready to make an offer on a house (October) our analysis had the numbers about even building vs. buying. (We bought because we got a crazy deal on a property with great karma.)

If I were to make the same decision now, absent the great deal, I would probably lean toward building, but it's important to do your homework and get yourself into a good support network. Early on, I went to an Olympia Master Builders networking event, and it gave me an introduction to a lot of great people in building and finance who showered me with excellent advice. There's a King-Snohomish chapter here: http://www.mba-ks.com/ If you come up for a visit, I'd highly recommend you plan the trip to take in one of their networking events. They can provide a ton of information over the phone and via e-mail as well.

Good luck!

@Geoff S.

That's a great idea for the land. I believe it's pretty well treed right now, but I wonder if timber value + a farm lease on part of it could at least pay the taxes and liability coverage to keep the property in the family.

The fire-sale price on the home was around $220k. I'm not sure of the value of the land.

I'm not sure what the equity position is right now, but I've asked her to try to find out. I believe that there is some. The 100 acres is owned outright.

I believe it's pretty rural. Will a property manager get involved in a short-term rental? A PM friend in LA said that it probably wouldn't be worth the investment of time if they just want it rented while it's on the market...and it might be harder to show occupied.

Thanks for the thoughts!

Hello BP brilliance factory!

A dear friend of mine lost her father recently, and he left his home and 100 acres of land, both in northern Maine, to my friend and her sister. Neither one of them lives in the area.

Before his death, her father was unable to work and strapped for cash. He put the home and the property on the market at fire sale prices. He passed before they sold.

Given that the values of the properties are considerably higher than the asking prices, my friend and her sister would like to try to sell them closer to market rates. This could take some time, since real estate in northern Maine isn't what you'd call high volume or fast-moving. Neither of them has the resources to pay the mortgage on the home and the taxes on the land while they wait.

Is there a vehicle out there - a financial product, an investment strategy, or whatever - that they could use to buy themselves some time? Any input would be greatly appreciated!

Can the propane company create a duplicate bill? I know that in Tumwater, WA, the water is the landlord's responsibility (only the owner of a property can set up the water service), but they send a duplicate bill to the address. That way, the tenant gets the bill and can pay it. If he doesn't, then of course it remains the responsibility of the landlord.

Also, the propane company I use will allow me as a homeowner to set up the account, but to put a third-party credit card on it for automatic billing. If your provider can do that, then you might just get your tenant to put his cc number there to take care of it automatically.

Nothing wrong with adding it to the rent though.

Here is a situation under which I would consider going without property insurance on a rental.

1. The value of the structure is low. Let's say I own an older SFR with a market value of $25,000.

2. My middle name is Handy, so I have the skills and equipment to fix anything that goes wrong with it.

3. I'm in a strong financial position, so if there is a loss, I can handle it.

4. I have a good tenant who's going to let me know if anything goes wrong, even if it's just that the bathtub needs caulk.

5. The cost of insurance is high. For example, maybe the property is pretty rural so it has a high protection class, or maybe it has a woodstove that wasn't professionally installed - but I did it, and I'm sure I know what I'm doing. (If it's high because it has aluminum wiring or fuses instead of circuit breakers, different story.)

Under those circumstances, I would think that it's reasonable to go without property insurance. I'm not really self-insuring (by pooling risk). I'm managing my risk in order to minimize the potential (and magnitude) of loss, and what risk there is I'm absorbing.

Unless your situation is something like that, I would suggest that the property insurance is a good idea. Also, the liability portion of a property policy is usually cheaper than standalone liability. As was well said above, you need the liability coverage: adequate underlying liability at each property, and an umbrella on top of that.

You should really discuss this with a broker, look at all your options, and understand what each of the policies does so you can make an informed decision. While you're there, drink enough free coffee to make it worth your time!

Welcome Lonnie!

I'm up in Olympia (you know, Seattle Lite), but our rental is down in SoCal. The acquisition prices are high, but it's a great area to own rentals in, I think, if they're either solid properties in lower-cost neighborhoods or starter units in nice areas for the endless flood of 22-year-olds coming in with rent paid (and leases cosigned) by their parents.

Good luck!

(Sadly, you're in the wrong state for a Super Bowl this year!)

I don't think it's a good idea to get involved in another person's mess unless:

A) You know what the mess is, and

B) You know how to fix it.

If both of those are true, then you can probably make money fixing the mess. If either of those is false, then you should probably walk.

It's not going to be an issue for most insurance agents because it probably won't get in the way of writing the business (unless it's placed with an insurance company that has strict risk inspectors).

But if you're going to make an unfinished space habitable, including adding a kitchen, and you're going to get permits for the upgrades, I imagine at least some of the work will need to be inspected. It seems doubtful that the guy inspecting your kitchen will miss the egress problem.

It would be awesome if you could create a safe place, occupy it, and free up the unit you're living in to bring in a paying tenant. It would be equally the opposite of awesome if you dumped cash into finishing the space and then you couldn't live in it because somebody noticed what was going on.

Maybe if you had a really good artist paint a picture of a window in the bedroom, nobody will notice!

It sounds like there are a couple of issues going on. First, you have a CO problem, as a result of which your tenants can't be in the unit. It seems like that existed before the utility employee came over and that they had to be out until it was resolved. You can probably make a claim against your property insurance for loss of rent if you want to be reimbursed for the money you're reimbursing to your tenants. (Feels like a lot of reimbursing going on.)

The second issue is the frozen pipes that were caused by leaving the door open. It sounds as if the utility employee left it open when he left and that you have that on tape. Why not just shoot a copy of that tape over to customer service at the utility company?

I think you'd be hard-pressed to argue that the tenants are responsible for standing out in the cold during an historic freeze.