Real Estate Investing

I was cruising my Google reader - trying to save up the LOL Cats for a quiet, boring day - when I saw a post by Monosyllabic Pedantry about the flooding in Georgia last week.

I’ve been kind of grumpy lately over some of life’s usual problems, work, money, etc. Then I saw the pictures from the flood and thought, “Life’s pretty good. At least my house isn’t under water”

It must be terrible to experience a flood, hurricane, fire, or other disaster that would take its toll not just on your personal belongings but also on the home itself.  An uncle of mine once lost his home to a tornado.  When he and his wife rebuilt it, less than six months later a fire went through it - his home was completely destroyed again.  Now they live in a basement home … they never built UP again.

When you’re ready to BUY a home, the insurance history is very important to know.  When your insurance agent agrees to provide coverage, the insurer will pull what’s called a CLUE Report - or the claim history of the home.  Miranda Marquit - who writes for the loan chapter of Banks.com - described more about the CLUE Report at Bizzia.com.

One of the things that surprises many people is that they have a separate insurance score. When it comes to getting property insurance, companies can look up your CLUE (Comprehensive Loss Underwriting Exchange) report and see what claims you have made on your insurance. This information is used to develop a score that insurers can use to help determine the cost for your coverage — or if you can even qualify for coverage.

I once heard an agent tell about a home his buyers had planned to purchase.  There was a faint smoke odor in the home, which they thought may have been from the fireplace.  When the CLUE Report was pulled, however, it was revealed that the home had burnt and instead of the support beams and framing being replaced (they were all singed and burnt, too), the sellers had just slapped new drywall over them.  Once the CLUE Report revealed the fire claim, the evidence of this malfeasance was found in the attic rafters.

My advice to buyers is once they are in a BINDING contract to purchase a home, contact an insurance agent immediately to purchase the home owner’s policy.  You won’t pay for it until closing and during the time it takes to close, the insurance company may discover a claim against the home that you’ll want to know about.

Photo by Wonderlane via Flickr Creative Commons.

With Hurricane Gustav watering down Louisiana and Texas, Hurricane Hannah gearing up to pour on the East coast, and Tropical Storm Ike threatening to join the party, this may be the perfect time if you live in the Southeast quadrant of the United States to invest in some flood insurance.  No one likes to pay for flood insurance, but according to the Federal Citizen Information Center the cost averages just $370 per year… how can you NOT afford it?  Floodsmart.com says there are flood insurance programs that start as low as $119 per year.

Jackie Colson-Miller of the Tampa Real Estate Sizzle site tells us that a car can be swept away by just 2 feet of water!  She offers other sobering statistics that encourage homeowners (and renters!) to invest in some flood insurance.  In addition to flooded streets due to pounding, torrential rain, storm surge is a huge problem for coastal areas,

For most of us in the Tampa area, we are used to the yearly purchases of batteries, water, canned goods, etc., to prepare for the possibility of a storm. For homeowners who live close to the bay, the greatest threat from a hurricane in Tampa, is what is know as, “Storm Surge”. Storm surge is a threat to any coastal areas, which are often less than 10 feet above sea level. The surge is water that is pushed ashore by the force of a storm. The combination of a tropical storm, or a hurricane, along with high tides, can bring a wall of water up to 20 feet high.

Of course, when Hurricane Gustav approached the coast of Louisiana, we hoped that Hurricane Katrina would’ve taught the valuable lesson of evacuation.  Thankfully, the levees (at this point) seemed to hold, so the devastating damage from the flood waters was limited.  However, other economic concerns are on the horizon as pointed out in a report by To the Center.com.

Economists agree that a major natural disaster may help lift economic activity because of insurance payments and federal aid, however, in the short term, the destruction can be a major hit to the economy.

The company EQECAT, which estimates losses for insurance companies, says Hurricane Gustav will cause between $6 billion and $10 billion in insured losses. This amount is only a fraction of what was caused by Katrina: a whopping $41 billion in insured losses. Even so, Gustav will make the record books as one of the top 10 most expensive storms in U.S. history.

The impact which Gustav has on the economy is important. Going into the storm, the U.S. economy suffers from a housing downturn, credit crisis, and skyrocketing unemployment rates.

I’ll be closely following the news as people get back to their homes to see the extent of the damage - and hoping that it will be minimal.

Photo from the Huffington Post.

One of my favorite buyers ever has a pooch who is in the Top 5 sweetest dogs I’ve ever been around. My own Libby and Cocoa (aka Bambi) are in first place, my brother’s dog Ginger was a gentle soul, and our old dog Friday was sweet.  Mrs. Wigglebottom is also pretty amazing - she is polite when she sniffs you and her little tail wags so hard that her bottom wiggles - hence Mrs. Wigglebottom.

However Mrs. Wigglebottom is a pit bull.  And according to the Site for Pitbull Awareness,

Did you know that in most states it is legal for insurance companies to charge homeowners higher premiums or refuse to renew a policy based solely on the owner’s breed of dog? Surprising as it may sound, more and more dog owners are being told they will be dropped by their insurance carrier if they refuse to give up their dog, even if they are long-time customers and their dog has never bitten or attacked anyone.

It’s not just pitbulls that insurance companies are targeting, according to Bankrate.com.  More dogs that are victims of canine profiling include Chow Chows, German Shepherds, and Siberia Huskies.  On one hand, the insurance companies are concerned with the reputations of these dogs being aggressive animals.  On the other hand, these dogs could defend a property from being burglarized or vandalized.

MSNBC further writes that toothless chihuahuas are not a concern of most insurers (hey, I’ve seen some pretty mean chihuahuas before!), but they advise, 

If your dog has ever bitten anyone, regardless of its breed, youre probably going to have trouble getting coverage as well — particularly if it was an unprovoked attack.  Each insurer has different policies, though, so you may be able to find affordable coverage if you shop around. You also can ask the insurer to exclude your dog, meaning that youll pay for any damage it does.

They go on to suggest that owners get rid of pets who’ve attacked without being provoked.  Somehow I can’t see my friend getting rid of Mrs. Wigglebottom since she’s about as sweet as they come.

Photo from here.