Life insurance for the elderly cheap rental cars
We originally started out with the 3 best ways to get cheap car insurance however our customers wanted to know even more ways. So we have compiled a list of 25 ways to get cheap car insurance below.
1. Comparison Shop
Finding the most affordable car insurance isn’t as hard as it once was. With so many different car insurance agents located all around the country, and some available exclusively online, your options are now more plentiful than ever before. The hard part is sorting them out in order to make sure you are getting the most affordable rates while still maintaining the exact amount of coverage you need.
The first thing you should do when looking for cheap car insurance is comparison shop. Consult your area’s local phone book, call or visit agencies near you, and remember to take notes regarding prices.
Next you’ll want to do some online research to find out your online car insurance options. Again, take notes and compare these to the notes you have concerning local agents.
Finally, ask your friends and family members what insurer they use, and ask for any recommendations or warnings they may have about other agencies. You’re sure to receive an unbiased opinion every time.
2. Age-Based Discounts
Many younger drivers may not realize this, but your age is an important factor in setting the exact price of your auto insurance premium. You’ll typically see premiums lowered once you hit the age of 25, with discounts that can sometimes be as high as 20%, though other factors such as marital status and driving record are also taken into consideration.
The lowest premiums associated with cheap car insurance rates are typically given to drivers between the ages of 25 and 55. This age group is considered to be amongst the safest drivers on the road; certainly safer than teenagers and elderly drivers.
3. Move to a Lower-Crime Area.
The location of your home as well as your daily commute to the workplace is also taken into consideration by insurance agents when determining your car insurance premiums. This is a factor for a number of good reasons.
Individuals who live and park their car in wealthy neighborhoods are statistically less likely to have their car stolen, broken into, or damaged while it is parked overnight. Secondly, those who have shorter commutes to and from work are statistically less likely to be involved in an accident as they spend less time on the road than drivers with longer commutes.
4. Consider Getting a Different Vehicle if Savings Warrant it
Did you know that insurance on a honda can be more expensive than insurance on a Jaguar?
The exact make and specific model of your vehicle is also used to determine how much you pay for cheap car insurance. This information is important to your insurance agent for a number of reasons.
RELATED: Technology a Big Problem for Vehicle Reliability
The newer the car, the higher the repair/replacement cost.
On the other hand, some vehicles are simply more reliable than others. A used vehicle that’s been on the road for 20 years is not nearly as reliable as a brand new car. Though it may be more affordable to buy the older, used car, you may wind up paying higher insurance rates because of it.
Owners of sports cars and luxury vehicles can also expect higher premiums than most other drivers.
5. Increasing Your Deductible Can Save You $100’s a Year
A deductible is the amount of money you are actually required to pay out in the event of an accident before your insurer will pay out on your claim. The amount of your deductible is also one of the biggest factors in determining your auto insurance premiums. In fact, the larger this deductible is, the less you’ll have to pay for coverage on a month-to-month basis.
Most drivers don’t realize this, but most agents will actually allow you to raise the deductible amount in order to lower your monthly rates. If you’re looking for cheap car insurance then this is a good deal for you; especially if you have a clean driving record as you may not ever have to actually pay this deductible.
6. Consolidate Your Policies With One Company
If you currently have multiple insurance policies through several different companies then you may be able to consolidate them so you just have to deal with one insurance agent. For example, many individuals have separate policies on their house, their car, and maybe even a boat or recreational vehicle.
Combining all of these separate policies into one, or at least choosing one company to handle all of your policies, can eliminate a number of hassles. It can also lower the amount of money you pay each month for insurance all around.
7. Check For Multiple Vehicle Discounts
Many individuals own multiple cars, and most of these owners keep insurance on all of their vehicles year round. Others may own seasonal cars, show cars, or other vehicles that are only brought out on rare occasions.
If you own multiple vehicles for whatever reason, you can consolidate them all onto one insurance policy when looking for cheap car insurance. The benefits of this include less paper mail being sent to your house as well as a reduction in your insurance premiums each month.
Multiple drivers can also be added to an insurance policy, allowing you to further reduce your auto insurance premiums.
8. Stay Loyal
Loyalty means a lot in any business, and the car insurance business is no different. In fact, many auto insurance companies are now offering reduced premiums as a way of rewarding some of their most loyal customers.
When looking for cheap car insurance, agent loyalty can be your best friend. Once you find an insurance company that offers the amount of coverage you need for the right price, develop a relationship with them.
Loyalty also relates to making your payments on time. Paying your premiums on or before the due date every single month will help you avoid late fees and additional fines or charges.
9. Get Liability Only if Your Car is Older
Most drivers automatically opt for full coverage on their vehicles when in reality, not every one of us needs full coverage. If you’re looking for cheap car insurance, try to find a policy that covers only the areas you need and nothing more.
If you already have full coverage insurance, it’s never too late to ask your agent for a decrease in coverage. Towing fees and rental car fees that are covered by a policy may sound good, but if you have a second car then you might not ever need to use a rental car. Furthermore, some individuals may hold memberships elsewhere that grant them access to reduced towing or automobile service charges.
10. Get Storage Insurance if Your Not Driving a Vehicle Year Round
If your vehicle is used as a seasonal vehicle or a show vehicle you may not require full insurance year round. For vehicles that are put in storage for any amount of time, storage insurance is your best option for cheap car insurance.
CHECK OUT: Are You an Aggressive Driver?
Note that this type of insurance is not legal for driving on, though it will pay out in the event your vehicle is damaged during storage. Depending on the exact make and model of the car in question, and depending on the type of damage that has been done, repairing the vehicle without insurance may end up costing you thousands of dollars in out-of-pocket expenses.
11. Improve and Fix your Credit Score
Your credit score affects many different things in your life, not the least of which is your auto insurance rates. If you’re looking for cheap car insurance, one of the best things you can do is clean up your credit score; it may be costing you thousands of dollars annually on your car insurance payments.
Keep your credit score clean by paying bills on time, paying back loans on time, and avoiding maxing out your credit cards. Bounced checks and bank overdrafts can also hurt your credit score, not to mention your pocketbook as well.
12. Clean Your Driving Record
Maintaining a clean driving record is the key to getting dirt cheap car insurance from your agent. Your first accident alone may result in as much as a 40% increase on your monthly premium, so driving carefully while on the roadways really can help keep your auto insurance as affordable as possible.
Most auto insurance companies offer a discount for safe drivers, though the exact definition and criteria of “safe” driving and a “clean” driving record will likely vary from agent to agent and company to company. Remember that agents aren’t likely to bring this discount up on their own, so don’t be afraid to ask them about it as long as you feel you have the clean driving record to back it up.
13. Vehicle Safety Issues
The safety of your vehicle will also be taken into consideration by your agent when you are trying to get cheap car insurance. The technology and features seen in newer vehicles make them far safer than older vehicles, so you can get a start on lowering your premiums either by having updated safety features professionally installed into an outdated vehicle, or simply by purchasing a more recent car.
Things to look for when taking vehicle safety into mind include automatic seatbelts, as this feature almost guarantees that both the driver and passenger will be wearing their belts at all time, and both driver-side and passenger-side airbags.
Airbags in the rear seats of the vehicle can also help to improve the safety rating of your car, thereby lowering your monthly car insurance rates in the process.
14. Get a Security Device
Exactly where you park your car at night is a big factor when calculating your auto insurance premiums, but having advanced vehicle security may also be factored in. If your vehicle is already equipped with a modern, functioning alarm system, mention it to your agent; you may be able to get a reduced premium because of it.
If your vehicle doesn’t already have an alarm and you want cheap car insurance, it may be worthwhile to pick up a brand new system and have it installed. Today’s vehicle alarm systems are not nearly as expensive as they used to be, they are quick and easy to install for anyone with common automotive knowledge, and they can save you a lot of money not only on your car insurance, but in case someone tries to break-in to your vehicle as well.
15. Park Off-Street, or Even in a Garage
While vandalism is more obvious in certain parts of the country, there is no doubt that the trend is on the rise throughout the entire country. Unfortunately, one of the top targets for today’s thieves and vandals include cars that are parked out in the open and left unlocked and unattended. They are the easiest targets to hit, and many drivers have trouble finding cheap car insurance because of it.
If your car is parked in a private garage on your property, however, you are likely to see a sharp decrease in your auto insurance coverage. This is not to say that a garage is a foolproof method of protecting your vehicle or your property, but it can help deter thieves.
Insurance agents know this, and they’re willing to charge you a little bit less if you are able to park in a garage at night. Even a simple carport may help lower your insurance rates; it never hurts to ask.
16. Verify Accuracy on Your Policy
It never hurts to browse through your insurance policy to make sure everything is correct. Make sure you are being given the right amount of coverage and paying the right price for your premiums. You’ll also want to make sure that your personal information is all accurate, as an error here could end up costing you money every month.
If you want cheap car insurance, it is crucial that you take your time and double-check all of your information. If you find any kind of errors, make sure to report these to your insurance agent as soon as possible, preferably immediately. Some of the most common errors include birth date and marital status errors, but these two mistakes are also amongst the most costly. Be certain that this information is accurate in order to receive the absolute best car insurance rates from your insurer.
17. Retirement Discounts
Depending on the exact area in which you reside, retirement typically comes at 55 or 65 years of age. Certain insurance agents offer discounts to retired drivers, and this is done for a variety of reasons.
Firstly, retired drivers usually spend less time on the road than most other drivers. Without a daily commute to and from work, retirees typically put far less mileage on their vehicles than drivers who have to drive to work and home each day.
If you want cheap car insurance and you are 55 years of age or older, don’t be afraid to tell your insurance agent. A retiree discount can make a huge impact on the amount of money you pay each month, but many don’t even realize this. Again, this is a benefit that isn’t typically offered outright by your agent, so you’ll need to ask about it in order to gain the discount.
18. Affiliate Discounts
Nearly every car insurance company offers different discounts based on your personal group affiliation. Like with most other discounts, this one is not usually advertised by your insurance agent. Never be afraid to mention the groups you are a part of and ask your agent if there any discounts available for you.
The most common group affiliations cited to receive discounts on their auto insurance include your work, college or university, military organizations, and many more. No matter how small or unknown the group or organization may seem to you, don’t hesitate to ask about a discount; it could be your ticket to cheap car insurance through the insurer that you already use.
19. Take An Advance Driving Course
Driving classes are offered by a variety of organizations, both public and private. If there are any types of driving classes available through your insurance agent, you may want to consider attending and completing them in order to find cheap car insurance through an existing insurer. If you are unaware of any classes being offered in your area ask your agent; they’ll be glad to help.
Be aware that if you take a class and fail, however, you may end up with an increased insurance rate instead.
20. Get Good Grades & Ask For Student Discounts
Getting good grades is important in school, but it can also help lower your auto insurance premium as well. In fact, if you are looking for cheap car insurance one of the best things you can do is succeed in school.
It doesn’t matter whether you are a teenage driver still in high school and driving under a parent’s policy or a student in college with your own vehicle and insurance, there are usually many discounts available to you for receiving good grades.
21. Drive Less: Walk, Bike, Carpool, Take Public Transportation
The amount of time you spend on the road, as well as the actual mileage you put on your vehicle can also be factored in when determining your cheap car insurance premium as well. If you don’t drive very often and don’t put many miles on your vehicle, then you’re likely to be eligible for a rate reduction.
Like with many of the other methods that can be used to decrease your premium, however, you’re going to have to ask for this discount specifically.
Auto insurance discounts for low mileage are more actually more common than you might think. Insurance companies realize that there’s not as much risk involved with drivers who aren’t on the roads very often, and they’re usually willing to adjust your rates accordingly.
22. Make Larger Payments on Your Premium
You have more control over the specific payment arrangements that are made with your agent than you may think. In fact, you can actually choose to pay off your entire premium, either on a 6 month or yearly basis, and save quite a bit of money in the end.
Of course paying in full isn’t always a viable option in every scenario, and some have no choice but to make monthly payments. Some even struggle to make that.
Many people don’t realize this, but if you are making monthly payments to your insurance company then you’re not getting the cheap car insurance that you should be. Don’t be afraid to ask your agent about paying in full. You’re likely to see a smile on their face as well as receive a good discount on your car insurance.
23. Verify VIN Accuracy
Many drivers don’t know this, but if the VIN (vehicle identification number) of your car is off even by one digit, then you’re probably not receiving the correct auto insurance quotes. The VIN is used to identify your vehicle, and is unique to each specific vehicle. It is also used by law enforcement to positively identify your vehicle in a wreck or if it is stolen. If your VIN is entered incorrectly you might be getting overcharged through absolutely no fault of your own and without even knowing it.
RELATED: What to Do After a Parking Lot Accident?
Being aware of your vehicle’s exact VIN and double-checking its accuracy on your specific policy is something that few drivers do, yet something simple that nearly everybody can benefit from. VINs vary greatly, though all cars manufactured after 1980 feature VIN consisting of 17 characters.
24. Review your Policy for Unnecessary Add-Ons.
Since automobile insurance companies are far more numerous than they were just 10 years ago, some companies have started offering benefits and plans that are aimed at helping the driver. However, many of these packages are added to your normal insurance policy automatically and with your knowledge, and some of them aren’t even worth the amount of extra money you’ll have to pay on your insurance premiums.
Some plans offer to replace your car with a new one of equal value if your car is wrecked in an accident, but this is actually referring to the value of your car at the time of the wreck and not at the time of the original purchase. Factor in depreciation, and you’re looking at recouping only a fraction of what you paid for your car.
25. Go Green!
With global warming and other environmental concerns more publicized than ever before, “green” vehicles are now being pushed as replacements for our modern vehicles that are already on the road. In order to add an increased incentive for purchasing one of these environmentally-friendly vehicles, many car insurance companies are offering lower auto insurance premiums to owners of “green” or environmentally-friendly vehicles.
While the cost of a new vehicle might not be worth the lower premium, if you are in the market for a new car then you may as well buy an energy efficient model. Not only will it help save the environment, but it will also help you find cheap car insurance rates that you might not have had access to otherwise.
Doesn’t now seem like a good time to sell?
There are two reasons why I’ve been thinking about selling my main rental property. Real estate is on fire here in San Francisco and it’s always better to sell higher than sell lower. We’ve clearly passed through the worst of the property market and sales prices are up anywhere from 15-25% in the last 12 months alone. Meanwhile, the median asking rent is commensurately up 21% YoY to $3,398. Spending $41,000 a year after tax on rent seems hard to sustain, even if you are making over $150,000 gross a year and working for Google.
The second reason for wanting to sell has to do with hassle. The older I get, the less I want to deal with conflict. I’m currently writing this post during a moment of frustration so my thoughts may be biased. However, it is my hope by writing things out we can come to a rational decision for those who are also thinking about selling their rentals.
At about 2pm the other day I get a blast e-mail from our HOA management company saying,
“I have seen a number of complaints regarding tenant occupied units which needs to be addressed by the Unit Owners. In particular are the following issues:
1. Parking without authorization in someone else’s parking stall.
2. Parking beyond the confines of the parking stall’s floor marking.
3. Not breaking down and bundling their cardboard boxes in the garbage area.
The lack of compliance by tenants places the Unit Owner in serious jeopardy as the Board will be meeting next month to discuss in conjunction with other business matters, solutions and punitive assessments. You are required to have your tenants sign off acknowledging receipt of these documents.”
I’m accustomed to receiving such e-mails because it’s always the same three issues over and over again when a new tenant moves into the complex. No matter how much the landlord stresses these three issues to our tenants, an owner will inevitably complain to the HOA or the property management company about new tenants. The older the owner, the more they will complain, especially if the tenant is younger.
Owners feel they own more of the place than their condo dictates. The longer the inhabitant, the more rights they think they have. Furthermore, there is a bias against younger people because they are viewed as more inconsiderate, entitled, rude, and lazy. The funny thing is an older generation’s bias against a younger generation has held true even during the times of Socrates.
“The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers.” – Socrates, 470 BCE.
A PHONE CALL SOME TIME PAST MIDNIGHT
The next morning I woke up to a voice mail complaint from my tenant’s downstairs neighbor saying that my tenants were still letting people into the complex at 11:49pm. Because the neighbor lives near the entrance of the complex’s main door, she can hear the buzzing and slamming sounds every time someone enters and leaves. The building rules states there is a quiet period after 10pm, which is loosely defined as being respectful to your neighbors and not throwing large parties with music. Entering and exiting the building after 10pm is fine. This isn’t jail.
The unexpected voice mail I received rudely stated that tenants are not welcome and neither are landlords. It almost sounded like a hate crime insult. She plans to complain to the HOA board and try to institute fines against me. I’m a pretty calm fella who hates getting disturbed at night as well so I sent her a cordial e-mail saying,
“Hi Jane (neighbor) – I apologize for the disturbance and will be having a word with my tenants today and get back to you. I also understand that b/c your unit is next to the main entryway that the buzz and door closing sound can be a problem. Regards, Sam”
I then proceeded to send an e-mail to my tenants to hear their side of the story and get as much info as possible to defend myself from allegations,
Hi Shirley and Stephanie (tenants),
I received a pretty nasty voice mail around midnight from Jane complaining about the noise from your apartment last night. She’s basically going to complain during our next HOA meeting and try to institute fines against me.
I’ve got to now defend myself so I need to know the details of what was going on the evening of October XX, 2013. I’ve noticed their complaints always make things seem bigger than they are, so I hope you can provide some details as to:
* The number of people at the party
* When were the people coming in
* How long did the party last
* Did Jane call/visit you guys to ask to turn it down
* How loud do you think you guys were e.g. blaring music, jumping around, etc.
* Did you violate the house rules?
Because Jane lives right next to the main entryway, she can hear the buzz and doors slam shut the most. I can understand that if she was trying to sleep at midnight how this would be very inconvenient for her. Please let me know your side of the story. And if the party was out of hand I encourage you to visit her and apologize.
MANAGING RELATIONSHIPS IS DIFFICULT
“Can’t everybody just get along?” said Rodney King. This current scenario brings me back to the time of managerial duties at work where egos needed to be massaged and expectations needed to be managed. Sometimes you get lucky and hire the superstar employee who is humble, collaborative, and hardworking. Then there are other times when you make a mistake and hire a prima dona who believes he deserves to make at least $125,000 his first full year out of college like one of my old subordinates. It’s the same thing with finding a great tenant.
To keep the peace I was apologetic to my tenant’s downstairs neighbor even if my tenants didn’t throw a rager. Whatever the true story is, my tenants disturbed the neighbor and that is the bottom line. I have to deal with the neighbor for as long as I own my place while my tenants can simply leave once their lease is done. Maybe I’ll even buy the neighbor a bottle of wine.
So how passive is being a landlord with no property management company really? I include my rental income as a key part of my passive income portfolio. Property management is usually very quiet as my turnover average is once every 2.5 years. Meanwhile, I only get a work order request or complaint once every nine months on average so it doesn’t take much time at all. Most of the complaints are in the first six months and then there are no more complaints for the remaining two years because my tenants start “getting it.”
Thank goodness everything turned out OK in the end as my tenants did apologize in person the next day. My hope is that this is the last complaint about my tenants for a long while.
TIME TO SELL MY RENTAL AND SIMPLIFY LIFE?
When I was working, I’d get more stressed when dealing with my tenants. Now I can easily go visit during the day and help out where needed. I still love rental property despite the work it entails because it’s tangible with a income stream, but as I grow my online business, rental property is losing its favorite nation status. Let me highlight the pros and cons to help readers and myself come to a better decision.
PROS OF OWNING A RENTAL PROPERTY
* Relatively passive income stream. So long as a tenant doesn’t do much damage to the property, gets along with the neighbors, and pays on time, rental income is relatively passive.
* Someone pays your mortgage. A tenant is paying your mortgage and helping build equity in your property. This is usually a net positive over the long run.
* Rents increase over time. Thanks to inflation and general population growth, rents consistently increase over time. The most recent rental income increase for San Francisco is 21% year over year as previously stated.
* Mortgage rate is fixed over time. Not only is the mortgage rate fixed over time, the percent of payment going towards principal also increases over time. Meanwhile, you are paying down your mortgage with inflating dollars making the real cost of mortgage even cheaper.
* Tax shelter while you build equity. All expenses related to operating a rental can be deducted from the rental income stream. If you happen to be in a high income tax bracket, the expense deductions are even more valuable. I wanted to receive 0 net rental income while I was working because I was in the 36% (39.6% equivalent today) tax bracket. Now that I’m no longer working, I’m more inclined to pay down my mortgage and raise the rent because the income will now be taxed at 28% or less.
* A real asset to utilize. Unlike a stock or a bond, you can derive utility in your rental by moving in. My general rule of thumb is to always buy a rental that I’d be willing to live in for two years. I’ve always envisioned having a paid off pied de terre in San Francisco if and when I relocate to Honolulu. I so wish I bought a place in NYC back in 2000 when I had the chance. Even if I lose everything, I’ll at least have my rental to come home to.
* An asset I can pass down to my children. My grandparents left my parents property when they died and such property will likely continue to be passed down. If I have children, I hope to give them a head start by providing a subsidized or free place to stay when they first graduate. I’ve seen so many young adults really progress faster in their career if they don’t have to worry as much about housing costs. Moving to San Francisco or NYC are no brainers for college graduates who want to participate in robust economies.
* Wealth accumulation. Property appreciates with inflation over time. If you can hold long enough, even a 3% increase is a 15% cash on cash increase of your 20% downpayment. I put down $120,000 back in 2003 for my $580,000 condo. Zillow.com currently has it valued at $910,000. Let’s take a 10% discount to $910,000 and we get $819,000. If I sell for $819,000, I’ll receive gross proceeds of ~$485,000 after subtracting my mortgage and 6% selling fees. I’ll end up paying at most a 15% long-term capital gains tax on a profit of roughly $239,000, for net proceeds of roughly $450,000. Of course I could live in the place for two out of the next five years to avoid the $34,500 in taxes altogether, but let’s stay conservative. My $120,000 downpayment turned into $450,000 over 10 years (includes paying down mortgage, excludes depreciation recapture which I will write about in the future). That’s a 375% cash on cash return after all fees and taxes annualizing at around 18% a year. The return based on a $580,000 purchase price and $819,000 selling price is only 3.7% a year. But as my numbers just demonstrated, the real cash on cash return is much better.
CONS OF OWNING A RENTAL PROPERTY
* Stress. If you are a busy person who works a stressful job, the last thing you want is a scenario that I’ve provided in this post. Fixing a toilet is easy because the job is outsourced to a plumber and just costs money. Ditto goes for installing a new dish washer. Maintaining harmonious relationships is much harder when there is conflict. Conflict is what’s most stressful.
* Liability. Whenever people are involved there is liability. Liability is the main reason why I rejected two Google tenants because they both wanted to have their parents stay with them for six months to a year in my two bedroom. One could slip and fall or get in a fight with another owner. That’s not something I want to deal with hence the reason for my large landlord insurance policies. Make sure your tenants take out renter’s insurance as well. Read: How To Prevent Tenants From Abusing The Lease With Multiple Long Term Guests.
* Crowding out. The crowding out effect in economics refers to when government initiatives crowds out more productive private sector initiatives, thereby stunting optimal growth. Having a rental property may take time away from you doing something more productive or fun. A rental property also ties up your money, preventing you from making potentially more lucrative investments. I’m pretty sure I could not match a 18% IRR for 10 years with the same amount of stress investing elsewhere. However, putting everything in Google stock would have done just as well.
* Property taxes. Property taxes is the #1 thing I hate about owning property, especially if you feel you are not even coming close to getting your money’s worth. Property taxes makes you realize how inefficient and greedy the government is. When the markets were imploding in 2008-2010, property taxes kept on going up for property owners not savvy enough to fight the tax assessors office. I fought every year for five years in a row and won my appeals. The government counts on its citizens to lay down and eat bitter pills. Stand up people. At least property taxes are deductible. Read: How To Lower Your Property Tax Bill.
* Lower cash flow. Real estate really starts to generate positive cash flow once a long enough period goes by thanks to inflation and a fixed mortgage cost. A $810,000 property in SF will generate approximately $45,000 a year gross revenue, or $33,000 a year after property tax and HOA, equivalent to a 5.6% gross and 4.0% net rental yield, respectively. The $450,000 proceeds from the sale will only generate approximately $13,500 a year if it’s dumped into a 3% dividend yielding portfolio. Read: How To Correctly Value And Analyze Rental Property Like A Pro.
* Can’t get back in. There’s never been a point over the past 15 years where I thought real estate was cheap. There were certainly some good values here and there, but cheap never entered the lexicon unless I were to buy in the middle of nowhere. If you time your sale wrong in hopes of getting back in, the market may very well price you out. Ask any long term tenant under rent control whether they wished they bought the day they first signed the lease and they’d emphatically say yes. We’re seeing this happen in more expensive cities such as San Francisco, Manhattan, Singapore, Hong Kong, London, and Paris. Just when you thought prices couldn’t go any higher, they do. I remember when $1,000/sqft was unheard of in Manhattan. Now $1,000/sqft is the price of a nice apartment in Brooklyn!
EXPECTATIONS FOR THE FUTURE
From a financial standpoint we must make best guesses as to how much property prices and rental prices will appreciate. San Francisco is estimated to show another 4-5% increase in 2017. But the 7 year bull market is finally taking a breather. The only hope we have is AirBnB, Uber, DropBox and perhaps Pinterest going public.
We should also question how important rental property income is for our retirement. Currently I save 100% of my passive income and live off my active online income. However, my online income could one day disappear and my rental income makes up a good 35% of my passive income. Losing this income stream would crimp my style. The other big question is what to do with the proceeds after a sale.
By the summer of 2016 I’d like to have the full flexibility of relocating to Hawaii if I so choose. Having multiple properties in California is an impediment to freedom even if I do hire a property manager. I have no desire to pay California taxes. At the same time, owning real assets is a huge part of financial security. I’m leaning towards holding on to my main rental until my current tenant moves out (soonest would be June 2014) and selling after it is vacant. One or two more years of ownership should see at least a 2% per annum appreciation with tens of thousands more paid down in principal.
I’ll use the proceeds from my rental property to purchase another piece of property in Hawaii for myself or for my parents to live via a 1031 Exchange in order to not pay taxes. This way I’ll still maintain my real estate net worth allocation percentage. It’s my hope that by the time I move, online income will consistently surpass the minimum Hawaiian household income level of $67,000 a year. It’s not too expensive to live in paradise with no rent or mortgage!
Updated 2017: My how things don’t quite turn out the way you expect! I bought a panoramic ocean view home in Golden Gate Heights, San Francisco in early 2014. I never thought I could afford an ocean view home until I actually looked. I’ve finished building my dream deck off the master bedroom to watch the sunset.
The house I used to live in for nine years was rented out, generating me a very healthy passive income stream over over $100,000 in gross rent. And the rental property in Pacific Heights I was considering selling has new tenants paying $200 more a month. I plan to hold real estate for as long as I possibly can. Screw paying taxes, commissions, and fees!
Look into real estate crowdsourcing opportunities: If you don’t have the downpayment to buy a property or don’t want to tie up your liquidity in physical real estate, take a look at RealtyShares, one of the largest real estate crowdsourcing companies today. Real estate is a key component of a diversified portfolio. Real estate crowdsourcing also allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. For example, cap rates around around 4% – 5% in San Francisco, but over 10% in the Midwest if you’re looking for strictly investing income returns. Sign up and take a look at all the residential and commercial investment opportunities around the country Realtyshares has to offer. It’s free to look and discover.
Shop around for a mortgage: Mortgage rates have collapsed after Brexit, and US assets are aggressively being bought by foreigners due to our stability. Check the latest mortgage rates online through LendingTree. They’ve got one of the largest networks of lenders that compete for your business. Your goal should be to get as many written offers as possible and then use the offers as leverage to get the lowest interest rate possible. This is exactly what I did to lock in a 2.375% 5/1 ARM for my latest refinance. For those looking to purchase property, the same thing is in order. If you’ve found a good deal, can afford the payments, and plan to own the property for 10+ years, I’d get neutral inflation and take advantage of the low rates.
Updated for 2017 and beyond.
*Average annual savings based on national savings figures reported by new MetLife Auto & Home® policyholders who called our call center and switched their auto policies to MetLife Auto & Home from 1/16, to 12/16. Source: MetLife Auto & Home internal research (2017).
Like most group benefit programs, benefit programs offered by MetLife and its affiliates contain certain exclusions, exceptions, waiting periods, reductions, limitations and terms for keeping them in force. Please contact MetLife or your plan administrator for complete details.
Disability insurance is issued by Metropolitan Life Insurance Company on IDI2000-P/NC, IDI2000-P/NC-ML, IDI2000-P/GR, AH 5-88, AH 6-90, AH 7-96-CA, AH 8-96-CA and IDIP12-01-IDIP12-05, IDIP12-08. April 2014 All policies, riders and provisions may not be available in all states, at all issue ages and to all occupational classes. Ask your representative for complete details. Eligibility is subject to underwriting approval. For policies issued in New York: These policies provide disability income insurance only. They do NOT provide basic hospital, basic medical or major medical insurance as defined by the New York State Department of Financial Services. The expected benefit ratio for these policies is at least 50%. This ratio is the portion of future premiums that MetLife expects to return as benefits when averaged over all people with the applicable policy.
Group dental insurance policies featuring the MetLife Preferred Dentist Program are underwritten by Metropolitan Life Insurance Company, New York, NY. Dental Managed Care Plan benefits are provided by Metropolitan Life Insurance Company, a New York corporation in NY. Dental HMO plan benefits are provided by: SafeGuard Health Plans, Inc., a California corporation in CA; SafeGuard Health Plans, Inc., a Florida corporation in FL; SafeGuard Health Plans, Inc., a Texas corporation in TX; and MetLife Health Plans, Inc., a Delaware corporation and Metropolitan Life Insurance Company, a New York corporation in NJ. The Dental HMO/Managed Care companies are part of the MetLife family of companies. "DHMO" is used to refer to product designs that may differ by state of residence of the enrollee, including but not limited to: "Specialized Health Care Service Plans" in California; "Prepaid Limited Health Service Organizations" as described in Chapter 636 of the Florida statutes in Florida; "Single Service Health Maintenance Organizations" in Texas; and "Dental Plan Organizations" as described in the Dental Plan Organization Act in New Jersey.
MetLife Vision benefits are underwritten by Metropolitan Life Insurance Company, New York, NY. Certain claims and network administration services are provided through Vision Service Plan (VSP), Rancho Cordova, CA. VSP is not affiliated with Metropolitan Life Insurance Company or its affiliates. In certain states, availability of MetLife's Group Vision benefits is subject to regulatory approval. MetLife VisionAccess is a discount program and not an insured benefit. It is provided through VSP.