Real Estate Investing

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.

Everyone knows you should have an independent home inspector and/or property appraiser check out a home before you buy. Everyone knows you should shop around for the best value on property and home loans. But there are some things that are not quite stressed as often, yet are equally important to the home search.

Property taxes — What will you be paying annually? Is it outrageous in comparison to surrounding areas? Why is it so high, and is it worth it? You may have heard of cities with low or no property taxes. This may sound like a dream come true, but closely examine what you might be trading for that. For instance, one fairly good-sized town in my area has no property taxes, but also has no fire service. By relying on the distant county fire service to arrive in a timely fashion, homeowners and their properties are at much greater risk.

Homeowner’s association dues — Again, are these outrageously high or are they reasonable? What do the homeowner’s association dues cover and is it worth the price? This is something to consider whether buying rental property, bare acreage or a home.

Surrounding income level and building restrictions — What will your neighborhood look like in 20 years? A good predictor of that is the income and education levels of the surrounding area. There are plenty of online resources to help you determine these facts. Furthermore, ask about building restrictions in the area. Are mobile homes allowed, or are houses restricted to a minimum square footage? These can all change the landscape, and the likelihood of rental property creeping in.

Zoning issues — Nobody wants a zoning mess on their hands. It’s just a disaster, so research this very carefully. Don’t take the seller’s word on it, but do your own independent research. You’ll be glad you did!

The fire departments of Detroit and other cities have been investigating more arsons lately. Coincidence? Perhaps, or perhaps not. But the Detroit Fire Department has noted that they issued twice as many arrest warrants on arson charges in 2007 than they did in 2005. Also, since 2004, the median home price in Detroit has dropped more than 17 percent to $145,173 and foreclosures increased more than 65 percent, according to MSN Money.

“Things were going great,” Detroit Fire Capt. Steve Varnas recalled of the local economy just a few years ago. “There were fewer desperate people in 2004 and 2005.”

Motives, according to lawyer David Brisco, include anger and bitterness over losing the home and also basic financial desperation. Many arson cases involve people who were very wealthy, but perhaps are no longer able to fund that lifestyle. Brisco investigates suspicious insurance claims for companies in five states.

“These are not necessarily lower-middle-class people,” Brisco tells MSN Money. “This is all over the place…”

The Economics of Financial Arson, a data compilation by two Baylor University professors from a 30-city study from 1991-1995, shed some light on the topic:

“Economic incentives do appear to matter for arson. We conclude that arson activity increases significantly when houses are insured for larger amounts and when homeowners encounter financial distress (as reflected in a rise in the local unemployment rate).”

Despite some debate as to whether there is a link between arson and impending foreclosure, MSN Money cites some recent examples of cases with suspicious timing.

• A Woodland Park, Colo. homeowner allegedly burned his home just before foreclosure eviction occurred.
• A Houston man allegedly faked a racial hate crime as a cover for arson on his home.
• A Russellville, Ind. woman allegedly offered her neighbor $5,000 to help torch her home and cover it up as a means of cashing in on an insurance policy.

So for people considering arson, just don’t. You should certainly make sure you have adequate insurance coverage, but don’t be in a rush to cash it in. You have other options to avoid foreclosure.