News: Real Estate, Risk, Economics. Jan. 27, 2016

Linking ≠ endorsement. News: Real Estate, Risk, Economics. Jan. 27, 2016

Table of Contents
(Click to sections below.)

1) Urban Gardening Ideas [and Insurance]

2) Seattle real estate developer Ted Schroth in jail for poisoning trees – Puget Sound Business Journal

3) Some perspective on how real estate dwarfs the rest of the asset universe – MarketWatch

4) Northern Colorado real estate market: Hot and hotter – Loveland Reporter-Herald

5) US East Coast Winter Storm | ALERT™ :: Event Summary

6) One year on, Syriza has sold its soul for power | Costas Lapavitsas | Opinion | The Guardian

7) China’s Migrants Go Home — And Stay There – Bloomberg View

8) Budget Deficit Losing Importance as Public Priority | Pew Research Center

9) Banks’ Influence on Congressional “Reforms” of the Fed

10) Opec pleads for Russian alliance to smash oil speculators – Telegraph

11) Macro and Other Market Musings: The Balance Sheet Recession That Never Happened: Australia

12) The State of Apartment Supply and Demand – YouTube

13) HUD sends La. $234M for flooding

14) Mississippi hit by snowstorm and two tornadoes | Times Free Press

15) President approves disaster declaration for Missouri – Maryville Daily Forum: State News

16) Massive snowstorm brings flooding to East Coast

17) Employee Wellness Programs Not So Voluntary Anymore – Bloomberg Business

18) Kingsport Times-News: Hawkins man accused of burning Baileyton residence a day before it was to be auctioned

19) Review of the RSA report on Universal Basic Income

20) Americans are trapped in a ‘cycle of financial insecurity’ – MarketWatch

21) Housing Economists See Job Gains Offsetting Stock-Market Pains – Real Time Economics – WSJ

22) How To Buy Real Estate With Leverage In A 401(k) Plan – Forbes

23) Scientists Warn Against Economic Disruption from Climate Change

24) Why one builder thinks cheaper homes work

25) ‘Too Big to Fail’ Banks Thriving a Few Years After Financial Crisis – The New York Times

26) APNewsBreak: $1 billion insured losses in California fires

27) Texas Led Nation in Catastrophic Losses in 2015

28) US blizzard to cause multi-billion dollar losses: report | Reuters

29) Hundreds of lots sit empty in N. Mpls. amid frenzy of demand – StarTribunecom

30) A Lesson for 2016: Upton’s Sinclair’s 1934 End Poverty in California (EPIC) Gubernatorial Campaign | naked capitalism

31) Wall Street Declares War on Bernie Sanders – New Economic PerspectivesNew Economic Perspectives

32) The Varoufakis Effect? by Yanis Varoufakis – Project Syndicate

33) Martin Wolf on China capital controls | FT World – YouTube

34) Head of China’s statistics bureau investigated for corruption | World news | The Guardian

35) China accuses George Soros of ‘declaring war’ on yuan | Business | The Guardian

  1.    Urban Gardening Ideas [and Insurance] News: Real Estate, Risk, Economics. Jan. 27, 2016

    Most landlords are happy that tenants actually want to improve the property, but it’s a good idea to get your container garden OK-ed before you start planting.

    What’s your policy? Do you have rules in place on the subject?

    As a landlord, the most important considerations for you are probably liability/safety and then cleanliness and infestations.

    You might require your tenants to carry renters liability insurance first and for your Gardening Policy/Rules to state that the tenant will be solely liable and be required to carry liability coverage covering the tenant’s gardening.

    You’d need to be informed of changes in such coverage. The insurance carrier and the insurance broker for the tenant don’t have to provide a notice unless required in the insurance policy. If the landlord is named as an “additional interest” in the policy, then notice is required.

    As a landlord, you may not want to be named as an “additional insured” on the tenant’s policy because you want to be able to allow your carrier to make a claim on your tenant’s policy in the event the tenant causes a loss. Also, simply being an “additional insured” will not require that you receive a notice of cancellation unless the policy itself requires it.

    This area is a moving target, and different jurisdictions (typically states) have different laws and regulations. Before you act, get the most recent and thorough info concerning your area.


  2.    Seattle real estate developer Ted Schroth in jail for poisoning trees – Puget Sound Business Journal News: Real Estate, Risk, Economics. Jan. 27, 2016

    Don’t try this at home (or anywhere else).

    Ted Schroth, a Seattle-area real estate developer, is in jail in Wenatchee for poisoning 123 trees on a property that another Seattle-area real estate developer owns, a Chelan County jail official confirmed Monday.

    Schroth, 47, had been scheduled to appear in court Tuesday, but last month he pleaded guilty to a reduced charge of second-degree malicious mischief. He was sentenced to 45 days in jail and ordered to pay $156,413 restitution to the owner of the Lake Chelan property where the trees were poisoned.


  3.    Some perspective on how real estate dwarfs the rest of the asset universe – MarketWatch News: Real Estate, Risk, Economics. Jan. 27, 2016

    The total value of all developed real estate on the planet reached a whopping $217 trillion in 2015, according to a new report released on Monday by U.K.-based real estate adviser Savills.


  4.    Northern Colorado real estate market: Hot and hotter – Loveland Reporter-Herald News: Real Estate, Risk, Economics. Jan. 27, 2016

    Because of the rising cost of scarce land inside Fort Collins and Loveland, plus labor, permits and water fees, “the price (builders) can deliver is not what the market wants.”


  5.    U.S. East Coast Winter Storm | ALERT™ :: Event Summary

    Reported Damage

    The storm is responsible for at least 15 deaths. The accumulation of heavy, wet, snow has caused roof buckling in several states; large or long-span roofs that are flat or have a low pitch are particularly vulnerable. Roof collapses were reported in the Philadelphia metropolitan area, York County and other areas of Pennsylvania, as well as in Maryland, Virginia, New Jersey, Kentucky, and elsewhere. Some of the buildings that were damaged by roof collapses include a grocery store in New Jersey, a bowling center in Virginia, and other buildings with large roofs that are flat or have a low pitch.

    The snow accumulation has also increased the risk of ice damming, as snow melts on the roofs of homes and refreezes. This has caused damage due to water leakage under roof shingles and over flashing, and has blocked gutters and drainage pipes. The weight of the dams can cause cracks and deformation in the wall/roof interface, allowing water to infiltrate ceilings and walls.

    Flood damage has been reported in several residential and commercial buildings in Ocean City and other areas of Cape May. Damage is also reported in many areas of Long Beach Island. In several coastal areas, from Delaware to New Jersey, coastal flooding exceeded the levels seen during Hurricane Sandy in 2012. Streets in Ocean City, New Jersey, were flooded with three feet of standing water.


  6.    One year on, Syriza has sold its soul for power | Costas Lapavitsas | Opinion | The Guardian

    This article is wrong.

    Tsipras had campaigned for a rejection but when the result came in he realised that in practice, it meant exiting the euro, for which his government had made no serious preparations. To be sure there were back-of-the-envelope “plans” for a parallel currency, or a parallel banking system, but such amateurish ideas were of no use at one minute to midnight.

    First of all, the parallel currency would not have required Greece to exit. Tsipras knew that. Secondly, it was far from amateurish. It would have worked. There was nothing amazing about it. It was basic accounting is all.


  7.    China’s Migrants Go Home — And Stay There – Bloomberg View News: Real Estate, Risk, Economics. Jan. 27, 2016

    … China is on the cusp of a long-term trend of reverse migration back to the countryside. This week, the National Bureau of Statistics reported that the migrant population dropped by 5.68 million in 2015 — its first decline in about three decades.

    This year, rural per-capita income is expected to exceed 10,000 yuan for the first time, surpassing urban income growth for the fifth straight year.

    It will be difficult to fill all those empty apartment buildings if this keeps up, but good.

    I hope they farm organically.


  8.    Budget Deficit Losing Importance as Public Priority | Pew Research Center News: Real Estate, Risk, Economics. Jan. 27, 2016

    As Barack Obama begins his final year in office, the goal of reducing the budget deficit, which the public once ranked among the most pressing objectives for his administration, has continued its recent decline in perceived importance.

    Overall, 56% say that reducing the budget deficit should be a top priority for the president and Congress in 2016, down from 64% who said this last year. The emphasis given to the budget deficit peaked in 2013, the first year of Obama’s second term, when 72% called it a top priority. At that time, the deficit ranked behind only improving the job situation and the economy on the public’s to-do list. Today, reducing the budget deficit ranks ninth in priority out of 18 policy areas tested in the survey.

    What we don’t learn from this poll is how much the public has learned about how money is created, the relative size of the deficit versus GDP, the impact of governmental borrowing while interest rates (bonds) are so historically low, and the positive impact of governmental spending (the multiplier) especially while the private sector still has so much deleveraging to go after the Great Recession crash.


  9.    Banks’ Influence on Congressional “Reforms” of the Fed

    Kocherlakota:

    Community banks operating in the interests of their shareholders should not – and don’t – fully internalize these taxpayer costs.


  10.    Opec pleads for Russian alliance to smash oil speculators – Telegraph

    Mr Norrish said the oil market faces powerful headwinds. US shale has emerged as a swing producer and will crank up output “quite quickly” once prices rebound.

    Global climate accords have changed the rules of the game and electric vehicles are breaking onto the scene.


  11.    Macro and Other Market Musings: The Balance Sheet Recession That Never Happened: Australia

    David Beckworth:

    … why did Australia’s balance sheet recession never happen? The answer is that the Reserve Bank of Australia (RBA), unlike the Fed, got out in front of the 2008 crisis. It cut rates early and signaled an expansionary future path for monetary policy. It also helped that the policy rate in Australia was at 7.25 percent when it began to cut interest rates. This meant the central bank could do a lot of interest rate cutting before hitting the zero lower bound (ZLB). So between being more aggressive than the Fed and having more room to work, the RBA staved off the Great Recession.

    This experience in Australia speaks to why the balance sheet recession view miss the deeper, more important problem behind depressions: the ZLB.

    Okay, but what they did was prop up a real-estate bubble. In addition, the reason the US had a recession was due to hugely insufficient fiscal stimulus.


  12.    The State of Apartment Supply and Demand – YouTube

    Alan Pollack, chairman of Providence Management Company, LLC, explains why apartment living is the popular choice for so many Millennials and Baby Boomers—and why there probably aren’t enough apartments to meet this demand.

    I think he’s right about supply and current and coming demand.

    Add your comment.


  13.    HUD sends La. $234M for flooding

    Heading in the right direction:

    NEW ORLEANS — In a nod to the threat Louisiana faces from flooding, the federal government is sending $233.8 million in grants to Louisiana to relocate a coastal American-Indian village, prevent damage from hurricanes and make a suburban slice of New Orleans better at handling stormwaters.


  14.    Mississippi hit by snowstorm and two tornadoes | Times Free Press News: Real Estate, Risk, Economics. Jan. 27, 2016

    Both tornadoes damaged homes in the area, uprooted trees and downed power lines.


  15.    President approves disaster declaration for Missouri – Maryville Daily Forum: State News

    The unusual winter flooding, prompted by three straight days of torrential rains, left 16 people dead and significantly damaged nearly 1,000 homes in eastern and southern Missouri.


  16.    Massive snowstorm brings flooding to East Coast News: Real Estate, Risk, Economics. Jan. 27, 2016

    A string of resort towns was temporarily isolated Saturday morning by floodwater that inundated homes and restaurants.


  17.    Employee Wellness Programs Not So Voluntary Anymore – Bloomberg Business News: Real Estate, Risk, Economics. Jan. 27, 2016

    “Employers will have to wait and see what happens,” said Steve Wojcik, vice president of public policy at the National Business Group on Health, a nonprofit that represents large employers.


  18.    Kingsport Times-News: Hawkins man accused of burning Baileyton residence a day before it was to be auctioned

    A Mount Carmel man has been charged with arson and insurance fraud, among other offenses, for allegedly setting his residence in Baileyton on fire a year ago, one day before the house was to be auctioned by the bank.

    I wonder what hard evidence there is, if any. The answer should come out in future coverage.


  19.    Review of the RSA report on Universal Basic Income

    … Citizen’s Income would offer the ‘power to create’, and then sets four tests for the idea to pass:

    • Does the system accord with a widespread set of moral precepts?
    • Is it broadly fiscally achievable within the parameters of existing taxation and expenditure?
    • Is it distributionally just when compared to the current system?
    • Will greater individual (and civic) freedom and creativity be realized? (p. 18)

    “Is it broadly fiscally achievable within the parameters of existing taxation and expenditure?”

    That’s irrelevant unless the question is asked in order to stimulate the formulation of a new fiscal system.


  20.    Americans are trapped in a ‘cycle of financial insecurity’ – MarketWatch News: Real Estate, Risk, Economics. Jan. 27, 2016

    Nearly seven years after the Great Recession, millions of Americans are stuck in a financial rut.

    Home ownership rates are at an historic low, renters are burdened by rising rents and — even though unemployment has fallen considerably in recent years — the percentage of underemployed Americans is twice those who are unemployed, according to the “2016 Assets & Opportunity Scorecard” released Monday by the Corporation for Enterprise Development, a nonprofit group in Washington, D.C. focused on expanding opportunity for low-income households.


  21.    Housing Economists See Job Gains Offsetting Stock-Market Pains – Real Time Economics – WSJ News: Real Estate, Risk, Economics. Jan. 27, 2016

    Economists are betting the U.S. housing market will take its cues from the labor market this year rather than unsettled financial markets.

    A global economic slowdown could also help ensure mortgage rates remain low despite the recent decision by the Federal Reserve to raise short-term interest rates—another boost to the housing market. Messrs. Crowe and Nothaft both said they expect rates for a 30-year fixed-rate mortgage to go no higher than 4.5% by the end of the year. Mr. Crowe said he expects them to reach 5.3% by 2017.

    They’ve been thinking that for years and years now. They must think the Fed will raise rates four times this year. I don’t see it (yet anyway).


  22.    How To Buy Real Estate With Leverage In A 401(k) Plan – Forbes

    Adam Bergman:

    When an IRA buys real estate that is leveraged with mortgage financing, it creates Unrelated Debt Financed Income (UDFI), a type of UBTI on which taxes must be paid. However, with a 401(k) plan, you can use leverage without being subject to the UDFI rules and UBTI tax. This exemption under IRC 514(d)(9) provides significant tax advantages for using a 401(k) plan versus an IRA to purchase real estate. In order to take advantage of the exemption under 514(c)(9), the loan must be a bona fide nonrecourse loan and the loan must be used to acquire real estate. A nonrecourse loan is [a] type of loan that is secured by collateral, which is usually property.

    There is one catch. Your 401(k) plan documents must allow for the purchase of real estate, which is not always the case, especially with 401(k) plans that cover many employees. However, if you are self-employed or have a business that has no full-time employees other than yourself or a spouse, a solo 401(k) plan could provide a solution. The solo 401(k) plan, also known as an Individual 401(k) plan, is an IRS approved type of qualified retirement plan. The solo 401(k) plan is not a new type of plan. It is a traditional 401(k) plan covering only one employee allowing it to bypass the complex ERISA regulations, which is the reason it is so popular for real estate and other alternative asset investments.


  23.    Scientists Warn Against Economic Disruption from Climate Change News: Real Estate, Risk, Economics. Jan. 27, 2016

    The WMO says that the fifteen of the 16 hottest years on record have all been this century, with 2015 being significantly warmer than the record-level temperatures seen in 2014. Underlining the long-term trend, 2011-15 is the warmest five-year period on record.

    The news comes as Asia is experiencing unusually cold weather and the United States a major blizzard, a sobering reminder that climate change is about extreme impacts from all kinds of weather as the weather systems we have taken for granted for so long shift into more chaotic patterns under the influence of the greenhouse effect.


  24.    Why one builder thinks cheaper homes work

    Express launched in early 2014, touting no-option, no-frills homes in exchange for prices between $120,000 and $150,000.

    It was a smart move, very consistent with my urging companies to build affordable housing even though the numbers aren’t supposed to work.


  25.    ‘Too Big to Fail’ Banks Thriving a Few Years After Financial Crisis – The New York Times News: Real Estate, Risk, Economics. Jan. 27, 2016

    William D. Cohan:

    … despite the endless complaining about how difficult Washington has made things for bankers, we have entered a new Golden Age of Wall Street, where competition is minimal, profits will continue to be high (as long as the economy continues its rebound) and regulation, while present as never before, can be “managed” as just another cost of doing business.

    Given that the 2008 financial crisis started because Wall Street banks packaged shoddy mortgages on a withering number of American homes and then sold them as securities around the globe, this is a particularly surprising and unexpected outcome.


  26.    APNewsBreak: $1 billion insured losses in California fires News: Real Estate, Risk, Economics. Jan. 27, 2016

    The $1 billion does not include uninsured losses nor does it include damage to public roads and utilities.

    For that, global insurance company Aon Benfield estimated last year that the two fires did nearly $2 billion in economic damage, including business interruption.


  27.    Texas Led Nation in Catastrophic Losses in 2015

    Tornadoes, hailstorms and fires took their toll on Texas last year with insured losses well over $3 billion ….

    The numbers don’t include flood losses, which were in the hundreds of millions of dollars ….

    Texas had 466,250 claims from catastrophic weather events ….


  28.    U.S. blizzard to cause multi-billion dollar losses: report | Reuters News: Real Estate, Risk, Economics. Jan. 27, 2016

    Massive blizzards that paralyzed much of the U.S. East Coast in the past few days are likely to cause “multi-billion” dollar economic losses ….

    … a similar storm system in January 1996 caused an estimated economic loss of $4.6 billion and insured loss of $920 million in current dollar terms.


  29.    Hundreds of lots sit empty in N. Mpls. amid frenzy of demand – StarTribune.com News: Real Estate, Risk, Economics. Jan. 27, 2016

    In Minneapolis, demand for housing has never been more intense. Agents are begging people to put homes up for sale. The teardown-and-rebuild phenomenon is spreading from the wealthy southwest corner east to the Mississippi River and toward downtown.

    But on the city’s North Side, there are hundreds of empty lots — some for as little as $1,700 — with few takers.

    It’s a situation, years in the making, that drags down the wealth and economic potential of homeowners in the area, distorts property value elsewhere in the city and is an obstacle to reversing population loss.

    … with prices on the rise and demand outpacing supply, the trend is moving into less-expensive neighborhoods. In the Nokomis area last year, the number of teardowns nearly doubled.


  30.    A Lesson for 2016: Upton’s Sinclair’s 1934 End Poverty in California (EPIC) Gubernatorial Campaign | naked capitalism

    Yves Smith:

    … before you pooh pooh Upton Sinclair’s ideas as pie-in-the-sky, remember that the worker-owned Mondragon cooperative has an admirable record of financial results and innovation, and is a major reason the Basque has suffered much less than the rest of Spain in its crisis.

    “We say to the voters: There are half a million persons in our state out of work. They cannot be permitted to starve. These persons can never again find work while the present system endures. They are being supported by public charities, and the burden of that is driving the state to bankruptcy and the taxpayers to ruin. There is no solution to this problem except to put these unemployed at productive labor, to make them self-sustaining, to let them produce what they are going to consume and so take them off the backs of the taxpayers.

    “That is the simple proposition. There can be no valid objection to it. But the whole power of vested privilege rises up against it. Why is this? The answer is because they are afraid of the precedent. They are afraid the plan will succeed, and show the unemployed how to produce for use instead of for profit. It will put into the minds of the unemployed the idea of getting access to land and machinery by the political method, by the use of their ballots. And once they get access to good land and modern machinery they will produce so much, they will make such comfort and plenty for themselves, that they will never again be content to support the parasites of Wall Street.”

    82 years ahead of his time? No, we’re just 82 years behind (at least).

    The most important element is democracy: full, rather-direct democracy where the people decide, not the elitists, not the plutocrats, not the oppressors, who want more for themselves and don’t care how little the rest has nor how hard the rest has to work or struggle or needlessly suffer because of the indefensibly brutal ideology of selfishness and greed.

    Add your comment.


  31.    Wall Street Declares War on Bernie Sanders – New Economic PerspectivesNew Economic Perspectives

    William K. Black:

    Why do the Wall Street billionaires hate Bernie? Paul Krugman, unintentionally, provided the key in his most recent attack on Bernie. Krugman claimed that the key to what he claimed was President Obama’s success was not “breaking” “Wall Street’s power” over our economy and democracy. To Krugman and Hillary’s horror, however, Democratic voters, like the median U.S. voter, understand that breaking the paramount power of the Wall Street billionaires over our economy and its political power that has caused us to descend into crony capitalism is essential to take back our Nation.


  32.    The Varoufakis Effect? by Yanis Varoufakis – Project Syndicate

    Yanis Varoufakis:

    So, what caused the huge drop in business confidence during my tenure? Was it my policy proposals — jointly authored with Jeff Sachs (with input from Norman Lamont, a former Tory Chancellor of the Exchequer in the United Kingdom, Harvard’s Larry Summers, and James K. Galbraith of the University of Texas) — that were responsible? Or was it the Troika’s explicit threat of bank closures (which were actually imposed when we dared to put our creditors’ ultimatum to the Greek people in a referendum last July)? In other words, was it the “Varoufakis effect” or the “Troika effect”?

    Thankfully, there are diligent analysts, like Mohamed El-Erian, to whom sensible investors can turn. And their verdict is clear: Greece’s downturn in 2015 was due to the “Troika effect.”

    Yes, political risk in Europe is clear and present. But it emanates from the Troika’s unwillingness to reform itself and to rethink its failed policies.

    The real Varoufakis Effect will come in the form of DiEM.


  33.    Martin Wolf on China capital controls | FT World – YouTube

    FT chief economics commentator Martin Wolf on whether China should tighten its capital controls to stem huge outflows of money, and the challenges posed by market turmoil and its slowing economy.

    Integration into the status quo global economy? I think the global system will undergo a radical reformation instead away from corporatocracy/plutocracy because those don’t seem sustainable and China will come to see it (likely already has but so far the leadership has been afraid to admit it openly).

    Add your comment.


  34.    Head of China’s statistics bureau investigated for corruption | World news | The Guardian

    There is only very scant info so far, much too little to do more than wildly speculate: scapegoating, etc.


  35.    China accuses George Soros of ‘declaring war’ on yuan | Business | The Guardian

    China’s official Xinhua news agency on Wednesday said that Soros had predicted economic troubles for China “several times in the past”.

    “Either the short-sellers haven’t done their homework or … they are intentionally trying to create panic to snap profits,” it said.

    We shall see. I disagree with George Soros about plenty of things I won’t go into here, but I think the extremely controversial Soros has been right all along about China’s prospects, as for the most part, he’s seen the same things I have about China.

National Flood Insurance and Dwelling Policies

Before you invest:

The National Flood Insurance Program – YouTube:

National Flood Insurance and Dwelling PoliciesSo, you build or raise your rental dwelling up on posts, stilts, piers, or what have you, so the first floor is above the Base Flood Elevation (BFE) and are therefore granted Flood Insurance only to find out the dwelling is still ineligible for a Dwelling Policy. State’s and insurance carriers vary regarding such construction.

5 Multi-Family Revenue-Growth Strategies

We retweeted this article January 16, 2013, but think it’s worth adding a quick link to it along with a bit of highlighting and commentary:

5 Multi-Family Revenue-Growth StrategiesEvery operator wants rent growth. Rent growth, rent growth, rent growth. Ok, ok, ok. I understand. Year over year rent growth is the most important driver of revenue growth. How do you get it?

1. Renewals. …
2. Resident screening. …
3. Expand “other income”. …
4. Resident referrals. …
5. Email. …

Please comment on the following questions:

Question: What are your most effective rental revenue growth strategies?
Question: Who is best suited in your firm to focus on rental revenue growth?

We recommend being very careful about #3 (Expand “other income”) and #5 (Email).

Concerning #3, be careful about converting anything that is built into the rent rate into a cost that is broken out where the renter can simply opt out or where the tenant may no longer consider it something that is a bonus just for living at your complex, even though the cost is still borne by the tenant.

As for #5 (Email), don’t email just to keep your name in front of the tenant. If you don’t have something valuable to say, it’s likely better not to “bother” the tenants. A multi-layered opt-out feature might be wise where the tenant can get all emails, certain types of emails, monthly summaries or even none.

Insurance/Risk Management Tip:

You should, however, clearly reserve the right to email in the event of any important issues including any emergencies and even if it means notifying the tenants more than once via different means: phone, notices on doors/cars, notice boards/areas, in person, etc. When it comes to real emergencies, it’s always better to over do it, so to speak, than to have failed.

Read the whole article (opens in a new tab so you may easily comment here): 5 Multifamily Rental Revenue Growth Strategies – Multifamily Blogs – Experts – Technology, Products :: MultifamilyBiz.com.

Landlord Gross Negligence Should Bar Coverage

Sometimes a great thing to learn is how not to be. Don’t be an ignorant, negligent, slum landlord. You certainly won’t be able to obtain good and proper insurance coverage. Any decent insurance carrier will reject you and your property. Any decent insurance broker won’t even submit an application to a carrier on your behalf. You could easily be wiped out financially and even end up in jail.

Landlord Gross Negligence Should Bar CoverageThis landlord got three months — with 15 years tacked on if he ever re-enters the rental business — in what prosecutors say may set a state precedent by holding a landlord criminally responsible, in this case for a fire caused by faulty, home-rigged wiring in his unit.

The outcome of that fire? Five people — an entire family — died, including children ages 7, 6 and 4.

via How landlords get away with it – MSN Real Estate.

Want to Buy Rental Property? Consider The Expenses

More sound advice:

Want to Buy Rental Property? Consider The ExpensesIf you are considering buying rental properties, you should already know how to analyze an investment by penciling out your real estate deal. Within that analysis, one of the critical tasks is accurately estimating how much your operating expenses — property taxes, HOA fees, lawn care, property management fees, insurance, maintenance expenses and all costs other than the mortgage — will be on the property.

Properly estimating your operating expenses will give you confidence that your analysis is on the mark. So to help you better estimate those amounts, lets talk about some percentages in a broad range and then specific items and costs.

Categories covered in the article:

Operating Expenses Percentage
Maintenance and Miscellaneous
Insurance

You can contact your insurance agent, run over the property specifics and get an exact estimate of the cost for the coverage you need. Don’t forget to consider earthquake, flood, umbrella liability, HO-6 interior condominium unit policies or any other special insurance you may want or need.

PropertyPak’s suggestion: If your property is 1-to-4 units, tenant occupied, and in Arizona, California, Nevada, Oregon, Utah, or Washington, check to see whether you should submit a Request for Quotation via PropertyPak’s online submission method: https://propertypak.com/. Also, check back with us to see if we’ve added additional states and property types, etc. Thank you.

Property taxes
HOA fees
Management
Other costs

Read the whole article: Want to Buy Rental Property? Consider The Expenses | AOL Real Estate.

PackageChoice: Real-estate owner/manager video/photographer coverage

Do you take photographs of real estate or make real-estate videos? Whether you’re a professional, landlord, or manager, how much is your video/photography equipment worth and are you covered concerning the various liability issues that may arise?

PackageChoice: Real-estate owner/manager video/photographer coveragePropertyPak has a sister division, “Package Choice™ from Hill & Usher, LLC,” that we highly recommend.

Also like PackageChoice on Facebook, Package Choice Photographers Insurance Program, and follow them on Twitter.

Please like and follow PropertyPak on Twitter and LinkedIn too. We’ll do our best to keep you in the know.

Landlord Risk Management: Screening Reports – Accuracy, the FCRA and You!

It may be counter-intuitive, but the only way to assure maximum possible accuracy is to involve humans in the process. The skills of a trained researcher are needed to conduct additional searches – warranted by aliases and additional addresses – and to do what it takes to confirm that records returned are accurately associated with the consumer in question.

A failure to search aliases and additional addresses (jurisdictions) will result in underreporting by approximately one third – a bad deal for landlords, employers, residents and the community. A failure to do the additional work necessary to positively match records to the individual is obviously harmful to those unlucky souls who share a name and date of birth with a convicted felon or dubious tenant.

via Screening Reports – Accuracy, the FCRA and You!.

There are liability issues here. Failure to exercise proper due-diligence and to follow applicable legal requirements could result in costly litigation. As a landlord, be sure you also have adequate insurance coverage. Start right now here on PropertyPak.

We also recommend that you require a Certificate of Insurance from your screening firm(s). If possible, always do that before hiring. As a landlord, do you also require that you be named as an Additional Insured on the screening firm’s policy or that the policy adequately defines your interest as an insured without naming you directly?

Make sure your contract with the screener spells out your required insurance details. Sometimes, you can’t get the exact arrangement you’d most like and for reasons that are beyond the control of the screening company, insurance agent/agency, or even carrier; but, it pays to get the best insurance arrangement available.

Is your insurance agent or agency looking out enough for what’s in your best interest?

1-4 Unit Insurance: What Rental Professionals Need To Know

[A PropertyPak™ Guest Post on Zillow]

1-4 Unit Insurance: What Rental Professionals Need To Know

Image by S. Diddy via Flickr

Homeowners Insurance is not designed for rentals and can even expressly exclude rental properties. Even if your policy covers liability for rentals, the rental property should have property coverage or the landlord will be exposed to risk of loss due to physical property damage or even complete destruction by what otherwise might be covered perils depending upon the particulars of the applicable policy. There are many types of insurance coverage available, which can be confusing when you’re shopping for the right plan.

Dwelling Property

The basic coverage the landlord needs is a Dwelling Property policy. For 2-4 units, the landlord could be living in a unit full time.

Typically, the following are covered: dwelling structure, construction materials and supplies, building and outdoor equipment, other structures, and certain personal property.

Other things covered under the Basic form usually include debris removal, reasonable repairs, fire department service charges, and loss of rents due to property damage.

Know the Policy and Use a Fully Qualified Insurance Broker

All first-named insureds and those responsible for managing the property should read the policy. As part of a property manager’s service, a manager should know what’s covered and work to transfer risks at optimal cost-benefit and to minimize risks of loss at every opportunity. The self-managing landlord needs to do those things directly.

Forming a solid working relationship with a trusted professional insurance broker experienced in Specialty Dwelling Property forms and all other insurance types will go a long way in helping you decide on the best policy and take care of any insurance-related issues that may arise.

Dwelling Property Policy Forms

Named Peril

There are three types of Dwelling Property forms. The first two types (Basic, mentioned above, and Broad) are “Named Peril.” Under this type, the insurance company will pay for losses due to perils expressly named in the policy. With the Basic and Broad types, the landlord is not covered against unnamed perils; therefore, if the property to be covered is in known or potential hazard zones for unnamed perils, such as among others, earthquakes and/or floods, check the policy for available endorsements or where unavailable, move to the Special form to seek additional policies to cover specific risks excluded even under the Special Dwelling Property form.

The Named Perils in the Basic form are Fire Or Lightning and Internal Explosion. Also generally included as options in the Basic Form are smoke, explosion, vehicle, windstorm, or hail. The Broad form names more perils than does the Basic form.

Options, Exclusions, and Broader Coverage

These forms offer a number of options. Certain things are expressly excluded. The Broad form goes on to cover additional living expenses while the property is being repaired or replaced and covers a number of other things absent in the Basic form. Here’s a quick guide to basic types of coverage as well as policy forms (including options and exclusions information, etc.) you’ll run into during your search.

Special Form

Lastly, we have the Special form. The Special form is not a Named Peril form. Generally, if the peril is not expressly named, the peril is covered under this category. The Special form extends the greatest coverage and is recommended.

It cannot be overstated that the policy forms are quite specific about the particulars of where and when and under what other circumstances things are covered, excluded, and to what degree. All policies are subject to change in the rapidly moving insurance and real estate industries.

Other Potentially Necessary Landlord and/or Management Insurance Types

However, don’t just stop there in considering insurance coverages for your business. Other often must-have insurance includes: Accounts Receivables, Automobile Liability and Physical Damage, Business Income and Expense, and much more. For more help with these forms and to find out what’s best for your business, it’s best to talk with an experienced insurance professional. For more details and descriptions about the types of coverage, check out PropertyPak’s post about landlord insurance.

About PropertyPak™

PropertyPak™ is Hill & Usher’s Specialty Landlord Insurance division, which as of the date of this guest post, covers Single-Family through Quadruplex properties with online “Request for Quotation” forms available for Arizona, California, Nevada, Oregon, Utah, and Washington. Online forms for other territories and property types are schedule for release in the near future. For insurance and real estate news and research, be sure regularly to visit the PropertyPak™ family of websites.

Hill & Usher, LLC (aka Hill & Usher Insurance and Surety), since 1995, is a nationwide (licensed in 50 states and DC), full-service, commercial-and-personal lines brokerage headquartered in Phoenix, Arizona. Toll free • 800·956·4220.


We extend our thanks to Zillow and especially Jennifer Chan, one of Zillow’s capable managers, for working so closely with us in bringing you this critically important insurance information.

Landlord Insurance, 1-4 Unit Rentals, What You Should Know: Named Peril & Special Dwelling Policies

First, all features described can vary by state and jurisdiction, carrier, property type, owner, and other particulars. They are subject to change without notice. The following is a very general summary only. Refer to the actual policies for complete details, conditions, and limitations.

That said, the landlord needs tenant-occupied Dwelling Property coverage. For duplexes through 4 units, the landlord could be living in one of the units. There are also instances where vacation/seasonal single-family dwellings may be occupied for part of the year by the owner/landlord. Again, refer to the actual Dwelling Property policy.

Typically, the following are covered: dwelling structure, certain construction materials and supplies, certain building and outdoor equipment, other structures on the residential lot, and certain of the landlord’s personal property on the premises. The policy forms typically expressly exclude a number of types of personal property, motor vehicles being just one example.

Other things covered under the Basic form usually include debris removal, reasonable repairs, fire department service charges, and loss of rents due to property damage.

There are three main types of Dwelling Property forms. The first two types (Basic and Broad) are "Named Peril." Under the Named Peril type, the insurance company will pay for losses due to perils expressly named in the policy. The landlord is not covered against unnamed perils. In very general terms (the policy narrows down the exact perils), the following are typically the Named Perils in the Basic, as opposed to the Broad, form:

  • Fire Or Lightning
  • Internal Explosion

The following are generally optional under the Basic form:

  • Aircraft [interestingly enough, including "self-propelled missiles and spacecraft"]
  • Explosion
  • Riot Or Civil Commotion
  • Smoke
  • Vandalism Or Malicious Mischief
  • Vehicles
  • Volcanic Eruption
  • Windstorm Or Hail

Certain things are expressly excluded even though the policy is of the Named Perils type. They are typically as follows:

  • Earth Movement (not to be confused with volcanic eruption)
  • Governmental Action
  • Intentional Loss
  • Lawns, plants, shrubs or trees outside of buildings
  • Neglect
  • Nuclear Hazard
  • Ordinance Or Law
  • Power Failure
  • War
  • Water Damage

The Broad form typically covers additional living expenses while the property is being repaired or replaced and covers a number of other things absent in the basic form above, generally such as: trees, shrubs, plants or lawns; collapse; and glass or safety glazing material.

These are by no means exhaustive lists or explanations. It cannot be overstated that the policy forms are quite specific about the particulars of where and when and under what circumstances things are covered or excluded and to what degree.

In addition to what the Basic form covers, the Broad form commonly includes the following:

  • Accidental Discharge Or Overflow Of Water Or Steam
  • Damage By Burglars
  • Falling Objects
  • Freezing
  • Sudden And Accidental Damage From Artificially Generated Electrical Current
  • Sudden And Accidental Tearing Apart, Cracking, Burning Or Bulging
  • Weight Of Ice, Snow Or Sleet

Exclusions are usually the same as for the Basic form.

Lastly, we have the Special form. The Special form is not a Named Peril form. Generally, if the peril is not expressly named, the peril is covered. The Special form extends the greatest coverage and is recommended.

On top of the considerations above are choices of deductibles and limits.

However, the landlord and manager/firm truly should not stop there in considering insurance coverages for the business. Other often must-have insurance includes:

  • Accounts Receivables
  • Automobile Liability and Physical Damage
  • Business Income and Expense
  • Computers and Computer Fraud
  • Crime
  • Earth Movement
  • Employee Benefits
  • Employee Dishonesty
  • General Liability
  • Hired and Non-ownership Auto
  • Landlord/Manager Personal Property (beyond that for tenant use)
  • Money and Securities
  • Umbrella
  • Valuable Papers and Records
  • Water Damage (beyond that covered by the Dwelling policies described above)
  • Workers Compensation

Also consider:

  • Crisis-Event Management
  • D&O (Directors and Officers Liability Insurance): This could be important to you if you are other than a sole proprietorship.
  • E&O (Errors and Omissions, Professional Liability Insurance): If you manage other than your own properties and/or landlords use you as a professional consultant, we strongly recommend E&O coverage.
  • Environmental Liability: Do you deal with or store environmentally hazardous materials?

Now take action: More and additional specific coverage information offered by PropertyPak™

What PropertyPak™ doesn’t have available on this site, Hill & Usher usually does. (PropertyPak™ is a division of Hill & Usher.) Refer to the menu-bars at the top of this page to click through to other Hill & Usher offerings.