Real Estate Investing

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.

Here are three great real estate-related gift ideas that also happen to be tax write-offs. These are kind of different, and may not be for everyone, but they’re worth a look at least.

Make It Right donation: This campaign, spearheaded by Brad Pitt, aims to build eco-friendly homes in New Orleans’ Lower 9th Ward, the area hardest hit by Hurricane Katrina. You could “adopt” an entire house, or only a piece of a house, as a gift to someone who needs nothing and who values such initiatives. And it’s a donation, so it is a tax write-off!

Give Your House Away: OK, so when you give your house away to a charitable organization like House Angel or Real Estate With Causes, you might not actually get to see the recipient’s response. But you’ll feel better having done some good. You’ll also get a tax deduction equal to the home’s current market value, not what its value was when originally purchased.

Buy a house for your college student: This is the ultimate gift for a college student. You can sign them up as co-owner and help build their credit as well, an added bonus. There are, however, pros and cons to this scenario. Consider it carefully before deciding one way or the other. But of course, it is well known that real estate ownership has tremendous tax benefits.

For those who have missed the Larry King special, missed the plethora of other media coverage, or who have generally been living under a rock, Brad Pitt is in New Orleans. He is spearheading the ‘Make It Right’ campaign to build 150 affordable, eco-friendly homes in New Orleans’ Lower 9th Ward, the area hit hardest by Hurricane Katrina. The effort is similar to one Pitt launched in August in partnership with the Global Green environmental organization. He points out the long-term money-saving power of “green” construction.

Pitt is saying $150,000 will get a family into a new home. He is actively seeking donations - even the “adoption” of a piece of the home, like a solar panel, a low-flush toilet or even low-volatility wall paint that improves air quality. The project enables people to “adopt” anything from $5 faucet aerators that reduce water use to $1,500 tankless water heaters that reduce water heating costs. The availability of nearby resources like wind, water and sun should make outside energy sources a thing of the past, according to Pitt.

“The idea that we pay utility bills is absolutely unnecessary,” Pitt said. “…We can integrate ourselves into that ecosystem and not only power our houses but actually produce energy for other parts of the city.”