Today we’ll check out Florida-based lender “The Mortgage Firm,” which has been originating home loans since the mid-1990s.
That’s a lifetime in today’s world of nascent startups, and shows they’ve been able to weather the ups and downs of the housing market while earning a stellar reputation at the same time.
In fact, they were recently named the top mortgage lender by SocialSurvey for customer satisfaction, beating out dozens of other companies in their category.
Let’s learn more to see if they could be a good fit for you.
The Mortgage Firm Fast Facts
Direct-to-consumer retail mortgage lender
Offers home purchase financing, refinance loans, and reverse mortgages
Founded in 1995, headquartered in Orlando, FL
Funded about $3.5 billion in home loans last year
Licensed in 22 states and the District of Columbia
Does most of their business in home state of Florida along with Georgia
The Mortgage Firm is an independently operated direct-to-consumer retail mortgage lender that offers home purchase financing, mortgage refinance loans, and reverse mortgages.
They primarily serve home buyers and existing homeowners in the Southeastern United States, with their home state of Florida providing most of their overall volume.
Last year, they funded roughly $3.5 billion in home loans, making them a large-sized regional lender.
About two-thirds of their volume was dedicated to home purchase loans, with the rest mostly comprised of mortgage refinances.
At the moment, they’re licensed to do business in 22 states and the District of Columbia.
Those states include Alabama, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, North Carolina, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, and Washington.
How to Apply with The Mortgage Firm
You have the option of working online or visiting a physical branch
Either way their digital mortgage application makes it easy to get tasks done
Borrowers can scan/upload documents, link bank accounts, and eSign disclosures
The entire loan process can be managed via the online borrower portal 24/7
To begin, you can either visit their website or go to a physical branch in-person. Most of their offices are located in Florida and adjacent states.
If you go online, there is a branch directory along with a loan officer directory. Assuming you know who you want to work with, you can simply click on “Apply.”
This will launch the digital mortgage application that is powered by ICE Mortgage Technology, formerly known as Ellie Mae.
It allows you to perform most tasks electronically, from the scanning and uploading of documents to the eSigning of disclosures.
Once your loan is submitted, you’ll also be able to manage all aspects of the process via the online borrower portal, which can be accessed via their website.
And they’ll send automatic updates to you throughout the process along with continual status reports to ensure there are no surprises.
After closing, The Mortgage Firm automatically provides a “HomeBinder” to all borrowers as a digital closing gift.
It puts all your closing documentation in the cloud so you can access your forms securely from anywhere if and when needed.
All in all, they appear to be big on the latest technology, which should make the entire loan process both convenient and hopefully fast as well.
Loan Programs Offered by The Mortgage Firm
Home purchase loans
Refinance loans
Home renovation loans
FHA/USDA/VA loans
Conforming loans backed by Fannie Mae and Freddie Mac
Jumbo loans
Reverse mortgages
Fixed-rate options: 10, 15, 20, and 30 year terms
Adjustable-rate options: 5/1 and 7/1 ARM
Can finance primary, second homes, and investment properties
One advantage to using The Mortgage Firm is their deep menu of available loan programs.
Whether you’re purchasing a home, refinancing an existing mortgage, or renovating a property, they should have a loan to fit your needs.
They offer just about anything you could ask for, from government-backed stuff like FHA and VA loans to jumbo loans and even reverse mortgages in some states.
They can finance primary residences, second homes, and investment properties, along with condos/townhomes.
With regard to specific loan types, you can get a fixed-rate mortgage in a 10, 15, 20, or 30-year term, or an adjustable-rate mortgage such as a 5/1 or 7/1 ARM.
The Mortgage Firm Rates
Unfortunately, The Mortgage Firm doesn’t post its daily mortgage rates online like some other lenders.
As such, you’ll need to get in touch with a loan officer to discuss loan pricing and eligibility before proceeding to the application.
The same goes for their lender fees, which appear to be absent from their website. Be sure to inquire about all fees, including application, loan origination fee, and so on.
Once you know all those things, you can shop their quoted mortgage APR with other lenders to find the best deal.
Ultimately, I don’t know how competitive they are relative to other companies, so do take the time to obtain other quotes.
However, their fantastic reviews and customer satisfaction awards tell me they must be doing something right on the pricing front.
The Mortgage Firm Reviews
On SocialSurvey, The Mortgage Firm has a strong 4.91-star rating out of a possible 5 from about 30,000 customer reviews.
The sheer volume of reviews shows they’re consistently making their clients happy.
Additionally, they were ranked the top mortgage company for customer satisfaction in 2019 by SocialSurvey in the “large” category and previously won the “medium” category in 2018.
So it appears they’re growing and maintaining a very strong reputation at the same time.
Over at Zillow, they have a super impressive 4.96-star rating from about 1,000 customer reviews. Be sure to filter by loan officer to find those who go above and beyond.
On Google, they have a 4.9-star rating from about 1,000 reviews as well.
And while they aren’t an accredited business with the Better Business Bureau, they do maintain an ‘A’ rating based on complaint history.
To sum it up, if you’re looking for a convenient loan process from a very highly-rated mortgage lender, The Mortgage Firm could be for you.
Their wide range of available loan programs coupled with their many ways to apply makes them appealing to both first-time home buyers and existing homeowners.
The Mortgage Firm Pros and Cons
The Good
Offer a fully digital mortgage application
Can apply for a home loan directly from their website
Also have physical branches in many Southeastern states for those who wish to do business in person
Lots of different loan programs to choose from including reverse mortgages
Excellent reviews from thousands of customers across multiple ratings websites
Won multiple customer satisfaction awards
Free mortgage calculators and mortgage glossary online
Free HomeBinder account as a closing gift
The Maybe Not
Aren’t licensed in all states
Do not list mortgage rates or lender fees on their website
The massive inflation and double-digit mortgage rates of the 1970s and early 1980s seem to haunt the Federal Reserve, which wants to cool the economy and even provoke a job-loss recession to avoid that scenario.
But the latest Consumer Price Index inflation report shows how the fear of 1970s-style inflation is wildly overblown. Today’s numbers don’t look like the 1970s at all, when rent, wages, and oil shocks sent inflation running hotter than anything we have seen in recent modern-day history.
Shelter inflation
Shelter inflation had a mild lower print month to month in April. Since this data line is the most significant component of CPI — accounting for 44.4% of the index — the fact that this index is set to slow down over the next 12 months guarantees that we won’t see the boom in inflation that we saw in 1970s.
Rent inflation
We don’t need to worry about 1970s-style rent inflation. That kind of inflation couldn’t happen today because the shelter inflation growth rate has been cooling off already, and we have seen this in more real-time data.
Also, we have over 900,000 apartment units coming on line soon, and the best way to defeat inflation is with more supply. If you try to beat inflation by destroying demand, that is only a short-term fix. This is excellent news for mortgage rates, since falling rent inflation makes a better case for mortgage rates falling in the next year than rising.
In September on CNBC I talked about how the positive story for 2023 would be apparent by the start of the year: that the inflation growth rate was going to cool down, driven by shelter inflation. The inflation data lags, so I knew it would take time, but it happened.
Today, with massive rate hikes in the system and a banking crisis making credit tighter, the outlook for 1970s inflation is looking less and less. In reality, it never had a chance.
From the CPI report: The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in April on a seasonally adjusted basis after increasing 0.1 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index rose 4.9 percent before seasonal adjustment.
How did mortgage rates react?
After the report, what did the 10-year yield do? It fell just as it should have, but it has still, held the Gandalf line in the sand — the area between 3.37%-3.42%. The chart below shows the 10-year yield versus the headline year-over-year inflation growth rate. As you can see, we have had much lower yields with hotter inflation data.
However, the 10-year yield looks like it has peaked unless the economy gets another wind and starts expanding much faster. On Oct. 27, I made the case for lower mortgage rates and bond yields in 2023. I believe the mega-bearish housing camp was counting on the 10-year yield getting toward 5.25%, and with bad spreads, that would get mortgage rates to 8%-10%.
My 2023 forecast for the 10-year yield and mortgage rates had one clear view, the 10-year yield should be between 3.21%-4.25 as long as the economy stayed firm. Staying firm means the labor market doesn’t break and jobless claims, people filing for unemployment benefits, stays under 323,000 on a four-week moving average. I have been more focused on the labor market this year than the inflation growth rate because I believe the market knew inflation was falling.
Of course, the banking crisis has added a new variable to the economic picture this year. However, even with that, the labor market, while getting softer, hasn’t broken yet. Mortgage rates did fall Wednesday to 6.57%, and that’s still higher than they should be because spreads between the 10-year yield and the 30-year mortgage rates are still historically high. If we had regular spreads today, mortgage rates would be roughly around 5.25%
Can you all imagine the housing market if mortgage rates were at 5.25% today? The Fed, which has said it wants a housing reset, would completely lose it. Under that reset, it’s older Americans who can buy homes, not younger Americans looking to start their life. This is one reason you haven’t heard a whisper from the Fed about helping the housing market during this time.
Labor market cooling
The labor market has been cooling recently, as job openings have fallen nearly 2.5 million from the peak in 2022. The Fed doesn’t fear a job-loss recess, and in fact their unemployment rate forecast for 2023 calls for one. They think they have a cover until job openings fall a lot more.
It looks to me that they will be more comfortable with job openings getting back to 7million, which was where we were before COVID-19 hit us. I wrote about the recent jobs report and broke down a lot of labor data lines that matter to my 10-year yield mortgage rate forecast.
While the labor market is cooling, it hasn’t broken yet. If we had the 1970s inflation story, then the mortgage rates and bond yields could rise during a recession as they did back then. However, as we can see, the bond market never bit on the 1970’s inflation premise. Remember, these two loves have been slow dancing since 1971, and they never stop. Sometimes they’re closer to each other, and sometimes they’re farther apart. However, they are always together.
Overall, the CPI report didn’t have too many surprises, even though the headline number was lower than some anticipated. With the Federal Reserve, they’re looking at inflation without the shelter component because that data line lags and service inflation has been firm lately.
However, the story is set in stone: the Fed wants its recession because it will be a badge of honor for them when they pass off into the afterlife, as Paul Volcker has. They chose to hike rates more even though they knew credit was getting tighter and the banking crisis might help them hit their inflation target.
So, the reality is, what does the Fed do when the labor market breaks, with headline inflation looking like this? We are seeing the growth rate relax, and now the most significant variable in CPI will have a 12-month cooling-down tour.
This is why tracking weekly housing data will be more critical than ever this year. I don’t just track housing data, my primary job is to track economic cycles first and housing is a secondary data line. With all the drama we have going on in 2023, the rest of the year will get exciting week to week.
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Each year as you await your tax refund, you face the same question – what to do with that money once it arrives? For some, the money immediately goes to cover basic needs, but for others, the money goes to far less-essential items.
According to a 2020 survey by Self Financial, 44% of respondents said not getting a tax refund this year would completely derail their budget for the rest of the year.
So how do you use your tax refund to plan ahead, build your wealth, financial health, and ultimately, your credit?
Here are 5 ways to put your tax refund to work to build your credit.
But first…
Why use your tax refund for credit-building?
Maybe you’re itching to spend your tax refund to treat yourself. While there’s nothing wrong with using a bit of that money for fun, tax refunds are a great opportunity to get ahead with your finances too.
But why, of all things, focus on your credit?
First, bad credit could cost you thousands of dollars more over your lifetime, since you often get charged higher interest rates (if you can get approved at all). Your credit can also impact your ability to rent an apartment, qualify for certain jobs, or even get a cell phone.
Good credit, however, creates a financial safety net to fall back on if you need it. If you have good credit, you may have an easier time qualifying for personal loans, credit cards, or other credit products if you need to borrow money, often at a lower rate.
If you don’t have an emergency savings fund, credit may be your only other option to lean on if you face job loss, an unexpected medical emergency, etc.
You have to build credit before you need it though. Otherwise, you might not be able to access it when you actually do need it.
5 ways to build credit using your tax refund
Once you have your tax refund in hand, here are some ways you can put it to work to help your financial health.
1. Pay down debt
While paying down your mortgage or other personal loans may help your credit score, it may be a good idea to focus on higher-interest, more expensive consumer debt (like credit card debt) first.
Not only could paying down this higher-interest debt save you the most money in the long run, but it could also have a bigger impact on your credit score. That’s because credit usage, or how much of your available credit you use at any given time, counts for 30% of your FICO® credit score.
While installment loan usage (like personal loans, car loans, or home loans) does count somewhat towards this factor in your credit score, revolving account balances (like credit cards or HELOCs) count more, according to credit bureau expert Barry Paperno.
That doesn’t mean you have to pay your credit card debt off completely to see benefits to your credit score. Even paying your balance down 5-10% may have a positive impact.
According to credit scoring agency FICO, people with the highest credit scores tend to have credit utilization between 6-10% on their revolving credit accounts. While that’s a great goal to aim for, start with paying down what you can, no matter how small that amount may seem at first. Small wins can add up to big ones over time.
Aside from credit utilization, the only other factor that impacts your credit score more is your payment history. Which brings me to my next point…
2. Get your current accounts in good standing
If you have late payments or missed payments on your current credit accounts, make up those payments if you can. While many lenders report a late payment to the credit bureaus if it’s more than 15 days late, how late your payments are can impact your credit score in different ways. A payment that is 30 days late affects your score differently than one that is 90 days late.
For example, according to one FICO score simulation, if you have a 793 credit score and miss a payment by 30 days, your score could drop 60-80 points. In that same situation, if you missed a payment by 90 days, your score could drop 100 points or more.
So the sooner you catch up on a late payment, the better. Besides, making those payments could keep more late fees from adding up.
While catching up on payments may not undo the damage of a late or missed payment on your credit (it can take years for just one late payment to fall off your credit report), it could prevent any more damage from being done.
If the late payments were on property, or loans that were secured by property, like a home loan or car loan, catching up on payments could also prevent you from losing your home or car.
3. Open a Credit Builder Account
This next one is for people who either have no credit history, a limited credit history, or need to rebuild credit after financial hardship such as bankruptcy, foreclosure, or identity theft, to name a few examples.
Unlike a traditional personal loan, credit builder loans don’t give you the money upfront.
Instead, the lender holds the loan amount in a bank account. Each month, you pay into this account and the lender reports your payment history to the credit bureaus, which helps you build credit history.
Once you pay off the loan amount, the money inside the account comes back to you, minus the interest charged on the loan. In other words, these loans give you the opportunity to put some money away for savings while you build your credit.
If you have trouble gaining access to other credit products or want to build credit while you build some savings, a Credit Builder Account could be the right option for you.
4. Use it as a deposit on a secured card
For many, a secured credit card may be a good entry point for accessing credit cards. A secured card works just like a regular credit card, except you put down a security deposit that is usually equal to your credit limit.
For example, you may have a secured card with a $100 credit limit and a $100 security deposit. Like a deposit for utilities, a secured card deposit is used to cover your bill if you don’t pay back what you owe.
Some companies (like Self Financial) provide an option for you to build your way slowly towards a secured card through a Credit Builder Account, no extra deposit or hard inquiry needed. Bonus: Self doesn’t deny you if you have a history of bankruptcy or foreclosure, unlike some other credit card issuers.
There are many different secured credit cards to choose from, so shop around to decide which one is right for you.
5. Work with a credit counselor
Not sure where to start when it comes to your credit? Or what product might work best for you? You may want to use some of your tax refund to hire a qualified professional to help you come up with a credit action plan.
Here are a few reputable places to start searching for a credit or financial counselor:
National Foundation for Credit Counseling (NFCC). This nonprofit provides financial counseling services through their member organizations across the US. Visit their website to connect with free or low-cost help in your area.
Association for Financial Counseling and Planning Education (AFCPE). AFCPE has over 3,200 certified financial counselors, planners, educators, and researchers around the world. You can find local or virtual financial counseling through their online tool.
Operation Hope. Operation Hope is a national nonprofit that provides financial coaches to help people “develop customized action plans around building their own businesses, raising their credit scores, buying homes, or simply making better decisions with the money they have.” Their website also has tons of free resources about financial basics.
These organizations provide access to qualified financial counselors who can help you create plans that align with your financial goals, whether that means building your credit, paying down debt, budgeting, or working towards buying a house, to name a few examples.
Depending on your current income and situation, you may also qualify for no-cost or low-cost help, since many financial counselors offer a sliding scale based on financial need.
Be careful when browsing for professional help with your credit though, especially if you search for credit repair. While there are some good players in the space, you have to be really careful to pick the right one. The Federal Trade Commission provides some guidelines to help you find legitimate credit repair help, which you can view here.
Bonus: Build an emergency savings
Okay, so this one isn’t exactly credit-specific, but having an emergency savings fund could help reduce the amount you need to borrow if you ever did need to lean on credit during times of financial hardship.
Research from SaverLife shows that even just $100-$200 in savings could mean the difference between keeping your housing during hard times or having your utilities cut off.
According to the IRS, the average tax refund in 2020 was $2,741, which for people who make about $30,000 is roughly one month’s salary – a pretty healthy cushion if you lose your job and need time to find something new.
The good news is, there are tools that could help you build both your credit and some savings at the same time.
Bottom line
While credit may not usually be top-of-mind when you get a sudden rush of cash, it’s a key building block for your financial health, and can help open doors to your future.
So if you have a little extra money, whether it’s thanks to a tax refund, stimulus check, bonus, raise, inheritance, or even just finding $20 in an old pair of pants, put that money to work for your future self.
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Homes are bought every day around the country using the VA loan. Even in the current housing shortage, veterans and active duty military members are still finding homes to purchase.
Of course, some areas are going to be easier to buy a home in than others, and some places have more homes available for people to buy.
But where are veterans buying homes?
Fortunately, the VA keeps track of all mortgages processed through their system. A recent data series was released by the VA showing the counties with the most VA loans, IRRRLs and cash-out refinances. It sheds a little light on where the most popular spots for veterans to buy a home are.
Click to check today’s VA rates.
The most popular spots for veterans to buy a home
The VA took data from all 3,076 counties that process some type of VA mortgage product between 10/01/2017 – 5/31/2018. In that period (what is just about half a year), the VA closed a total of 411,282 loans. Of those, 236,501 were purchase loans. That means that veterans are on pace to purchase over 500,000 homes using the VA loan in a one-year period.
The VA breaks it down further, showing how many of each mortgage product were used in each county. Here were the top 10 for purchase loans:
Maricopa, Arizona – 4,850
Bexar, Texas – 3,899
El Paso, Colorado – 3,822
San Diego, California – 3,792
Clark, Nevada – 3,297
Riverside, California – 2,591
Pierce, Washington – 2,083
Hillsborough, Florida – 2,018
Harris, Texas – 1,981
Tarrant, Texas – 1,839
Based on the data, veterans are mostly moving west or to Texas, with three of the top 10 counties being in Texas. Aside from that, the west coast (California and Washington) has three as well, with Nevada, Arizona and Colorado being popular picks.
Unsurprisingly, Florida was also a popular spot for veterans to buy a home. Not only is Florida a traditional retirement spot, but it also has affordable housing relative to some of the other counties on this list.
What’s interesting is that a lot of veterans are moving to areas with big cities. San Diego is a larger city, and Clark, Nevada is home to Las Vegas.
Cash-out refinance loans prove popular
Along with purchase loans, the VA offers two types of refinances: the IRRRL and the cash-out refinance. Of the two, the cash-out refinance proved to be much more popular with 112,594 refinances closing during the same period, as compared to 62,187 for IRRRL.
Cash-out refinances are different from IRRRL for a few reasons. First, veteran homeowners are allowed to take cash out of their equity and use it for whatever they want – be it a renovation, a new boat or even a vacation.
Second, cash-out refinances are available to all veterans, even if they didn’t use a VA loan to purchase their house.
Also, many veterans that have lived in their house for over 10 years may be able to reduce their mortgage rate as well, saving on monthly payments. There are a variety of reasons that veterans get refinances, but cash-out proves to be the most popular.
Alabama may be known for Southern hospitality, Gulf Coast beaches and some serious football fans, but it also has a few hazards to look out for. Alabama homeowners should make sure they have insurance coverage for hurricanes, tornadoes and other natural disasters that could strike their homes.
NerdWallet analyzed rates from insurers across the state to determine the best homeowners insurance in Alabama.
Note: Some insurance companies included in this article may have made changes in their underwriting practices and no longer issue new policies in your state.
Why you can trust NerdWallet
Our writers and editors follow strict editorial guidelines to ensure fairness and accuracy in our writing and data analyses. You can trust the prices we show you because our data analysts take rigorous measures to eliminate inaccuracies in pricing data and may update rates for accuracy as new information becomes available.
We include rates from every locale in the country where coverage is offered and data is available. When comparing rates for different coverage amounts and backgrounds, we change only one variable at a time, so you can easily see how each factor affects pricing.
Our sample homeowner had good credit, $300,000 of dwelling coverage, $300,000 of liability coverage and a $1,000 deductible.
The best homeowners insurance in Alabama
If you’re looking to buy homeowners insurance from a well-rated national brand, consider one of these insurers from NerdWallet’s list of the Best Homeowners Insurance Companies.
More about the best home insurance companies in Alabama
See more details about each company to help you decide which one is best for you.
Farmers
Those seeking benefits like diminishing deductibles and claims forgiveness may want to consider Farmers.
Coverage options
More than average
Average set of discounts
NAIC complaints
Fewer than expected
Farmers
Those seeking benefits like diminishing deductibles and claims forgiveness may want to consider Farmers.
Coverage options
More than average
Average set of discounts
NAIC complaints
Fewer than expected
Homeowners policies from Farmers may include two valuable types of insurance: extended dwelling and replacement cost coverage. Extended dwelling coverage gives you extra insurance for the structure of your house, while replacement cost coverage offers higher reimbursement for stolen or destroyed belongings.
Some Farmers policies also come with perks that can save you money. For example, with claim forgiveness, Farmers won’t raise your rate for a claim as long as you haven’t filed one within the past five years.
State Farm
Well-established insurer with a lengthy list of coverage options.
Coverage options
More than average
Average set of discounts
NAIC complaints
Fewer than expected
State Farm
Well-established insurer with a lengthy list of coverage options.
Coverage options
More than average
Average set of discounts
NAIC complaints
Fewer than expected
As America’s largest insurer, State Farm stands out for its long list of coverage options. Its policies generally include extra dwelling coverage in case it costs more than expected to rebuild your home after a covered disaster. You may also be able to add coverage for things like identity theft, damage from backed-up drains and personal injury liability.
State Farm offers a free Ting device as a perk for home insurance policyholders. Ting is a smart plug that monitors your home’s electrical network to help prevent fires.
Cincinnati Insurance
Sells homeowners policies through local independent agents across the U.S.
Coverage options
More than average
Average set of discounts
NAIC complaints
Far fewer than expected
Cincinnati Insurance
Sells homeowners policies through local independent agents across the U.S.
Coverage options
More than average
Average set of discounts
NAIC complaints
Far fewer than expected
Cincinnati Insurance sells homeowners policies through independent agents, with various options for standard and high-value homes. You may be able to add coverage for issues like identity theft, personal cyberattacks or certain types of water damage.
Cincinnati may offer you a discount for bundling home and auto insurance, having a newer home, installing a centrally monitored alarm system or going a certain amount of time without filing a claim.
Country Financial
Best for those who prefer to have a personal conversation with an agent when choosing coverage.
Coverage options
More than average
Great set of discounts
NAIC complaints
Far fewer than expected
Country Financial
Best for those who prefer to have a personal conversation with an agent when choosing coverage.
Coverage options
More than average
Great set of discounts
NAIC complaints
Far fewer than expected
Country Financial has three levels of homeowners coverage to help you choose the package that’s best for you. You also have the option to add extra coverage for the structure of your home, in case inflation drives up the cost of rebuilding more than you expect.
Country Financial sells homeowners insurance through local representatives. The company has drawn far fewer complaints than expected to state regulators, according to the National Association of Insurance Commissioners.
Nationwide
For shoppers seeking a broad range of coverage options, Nationwide may fit the bill.
Coverage options
More than average
Great set of discounts
NAIC complaints
Close to expected
Nationwide
For shoppers seeking a broad range of coverage options, Nationwide may fit the bill.
Coverage options
More than average
Great set of discounts
NAIC complaints
Close to expected
Nationwide’s standard homeowners policies include ordinance or law coverage, which pays to bring your home up to the latest building codes after a covered claim. They also include coverage for unauthorized credit or debit transactions. For an extra cost, you may be able to add coverage for things like water backup, identity theft and stronger materials to replace your roof.
The Nationwide website offers plenty of ways to manage your policy, including filing and tracking claims, paying bills and getting quotes.
USAA
Offers perks and affordable rates for the military community.
Coverage options
Below average
Average set of discounts
NAIC complaints
Far fewer than expected
USAA
Offers perks and affordable rates for the military community.
Coverage options
Below average
Average set of discounts
NAIC complaints
Far fewer than expected
USAA sells homeowners insurance to veterans, active-duty military members and their families. If that description fits you, you may want to consider a USAA policy. The company’s homeowners insurance has certain features that other insurers may charge extra for.
For example, USAA automatically covers your personal belongings on a “replacement cost” basis. Many companies pay out only what your items are worth at the time of the claim, which means you may not get much for older items. USAA pays enough for you to buy new replacements for your stuff.
How much does homeowners insurance cost in Alabama?
The average annual cost of home insurance in Alabama is $2,385. That’s 31% more than the national average of $1,820.
In most states, including Alabama, many insurers use your credit-based insurance score to help set rates. Your insurance score is similar but not identical to your traditional credit score.
In Alabama, those with poor credit pay an average of $4,420 per year for homeowners insurance, according to NerdWallet’s rate analysis. That’s 85% more than those with good credit.
Average cost of homeowners insurance in Alabama by city
How much you pay for home insurance in Alabama will depend on your ZIP code. For example, the average cost of homeowners insurance in Birmingham is $2,270 a year, while homeowners in Mobile pay an average of $2,690 per year.
Average annual rate
Average monthly rate
Albertville
Birmingham
Enterprise
Huntsville
Montgomery
Phenix City
Prattville
Tuscaloosa
The cheapest home insurance in Alabama
Here are the insurers we found with average annual rates below the Alabama average of $2,385.
What to know about Alabama homeowners insurance
Alabama faces more than its share of risks for homeowners. When shopping for homeowners insurance, you’ll want to consider hurricanes, flooding and tornadoes.
Hurricanes and tropical storms
With its Gulf Coast location, Alabama is susceptible to hurricanes and the property damage that comes with them. For example, in 2004, Hurricane Ivan passed through Alabama, causing 117 tornadoes over three days due to the high winds. These severe weather events can cause significant damage to your home.
Review your policy to see what coverage you have. Your policy likely covers wind damage, but you may have a separate wind, hail or hurricane deductible. (A deductible is the amount subtracted from your claim payout.)
For example, your policy may have a $1,000 deductible for most claims and a 1% deductible for wind claims. So if your house has $200,000 worth of dwelling coverage, you’d be responsible for the first $2,000 of wind damage yourself.
Hurricanes can also cause flood damage, which most homeowners insurance doesn’t cover. If you live in a high-risk area, you’ll likely need a separate policy for flood insurance as well.
Flooding
Beyond the hurricanes and tropical storms mentioned above, Alabama homeowners may experience flooding due to any type of heavy rain. Because standard homeowners insurance policies don’t pay for flood damage, you’ll want to consider purchasing flood insurance if you live in a flood-prone area.
To find out whether you’re at risk, check the Federal Emergency Management Agency’s flood maps or visit RiskFactor.com, a website from the nonprofit First Street Foundation. Because flooding can happen anywhere if it rains hard enough, you may want to consider buying flood insurance even if you’re in a relatively low-risk location.
Note that while you can purchase flood coverage anytime, there’s typically a 30-day waiting period before the insurance takes effect.
Tornadoes
Parts of Alabama are likely to experience tornadoes, as the state sits in Dixie Alley, Tornado Alley’s Southeastern counterpart. The forceful winds from a twister can damage or even destroy a house.
Your homeowners insurance policy probably covers tornado damage. Still, as with the hurricane wind damage discussed above, it’s important to review your policy to determine how much coverage you have. Some policies have a separate deductible for wind damage, meaning potential extra costs for you in case of a claim.
Alabama insurance department
The Alabama Department of Insurance oversees the state’s insurance industry and provides consumer protections. On its site, you can search for licensed insurance companies and access information for homeowners. If you have a complaint about your insurance company, you can file it online with the department. You can also call the agency’s consumer services hotline with insurance questions at 800-433-3966.
Looking for more insurance in Alabama?
Frequently asked questions
Is homeowners insurance required in Alabama?
Homeowners insurance isn’t required by Alabama state law, but your mortgage lender will likely require you to have it.
How can I save money on home insurance in Alabama?
There are several ways to save money on homeowners insurance in Alabama:
Shop around for the best rate. An independent insurance agent can help.
Choose a higher deductible. In case of any claims, you’ll pay more out of pocket, but you’ll pay less in annual or monthly premiums.
Does Alabama home insurance cover flooding?
A standard home insurance policy in Alabama won’t cover flooding. That means you may want to buy separate flood insurance if your home is in a high-risk area.
A restored 1725 farmhouse in Falmouth, ME, is the oldest home on the market this week on Realtor.com®.
The property also comes with an accessory dwelling that’s “waiting for you to complete,” according to the listing. The spacious estate offers lots of period charm and character, as well as expansion possibilities.
Other homes to hit the market this week include a restored Cape in Massachusetts and a saltbox in Connecticut featuring many original details.
Scroll down for a full look at this week’s 10 oldest homes.
Price: $1,990,000 Year built: 1725 Family farmhouse: This farmhouse with an accessory dwelling on 23 acres is an ideal setting for a large family.
The four-bedroom home features restored hardwood floors and built-in cabinets. A two-story, sunken living room is surrounded by windows, and the kitchen offers a fireplace and exposed, wood-beam ceiling. There is also a fitness room with a sauna, a new deck with a hot tub, and an outdoor pool.
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Price: $985,000 Year built: 1730 Cute Cape: This post-and-beam construction boasts many historic details, including a stone fireplace with a beehive oven and wide-plank wood floors.
A renovation in 2006 opened up the great room with its dramatic wall of windows that overlook a natural duck pond. The formal living room has wood-paneled walls, built-in shelves, a walk-in fireplace, and an exposed-beam ceiling. The main-level primary suite features a custom dressing closet.
The 1.5-acre property includes a two-story barn with a heated office/yoga studio, potting shed, and detached garage.
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Price: $550,000 Year built: 1731 Recently renovated: This cute Cape was recently renovated with custom millwork and leaded glass windows throughout its 1,903 square feet of living space.
The delightful domicile features three bedrooms and three full baths. Details include coffered ceilings, restored hardwood floors, fireplaces, and built-in shelves. The main-floor primary suite has a walk-in shower, and the two bedrooms upstairs come with a beautiful bathroom with marble flooring.
The home, which is just minutes from Nemasket River, is pending sale.
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Price: $545,000 Year built: 1734 The Cummings House: Highlights of this historic home include original paneling, milk-glass light fixtures, and three fireplaces.
Restored hardwood floors, including wide plank, can be found throughout the 3,754 square feet of living space. The five-bedroom home features a living room with wood-paneled walls, an exposed-beam ceiling, and a wood-burning stove. A cozy kitchen with a wood-burning stove was recently updated with granite countertops and a center island.
A sun-filled family room overlooks the private backyard of the 4-acre lot.
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Price: $495,000 Year built: 1735 The Millers House: This adorable, two-bedroom abode has been thoughtfully modernized and expanded.
The 1,096 square feet of living space boasts period details such as original doors, restored wood floors, and built-in cabinetry. The living room comes with a gas fireplace, and the updated kitchen has an exposed-beam ceiling, quartz countertops, and stainless-steel appliances.
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Price: $1,175,000 Year built: 1739 One of the oldest homes in Amherst: This well-maintained home has been carefully modernized.
The four-bedroom house features two fireplaces, hardwood floors, and crown molding. The living room comes with a fireplace and bookshelves, and the dining room opens to a brick patio. The updated kitchen still features wide-plank floors and an eye-catching wood ceiling.
A back staircase leads to a reading nook that is said to be part “of the original Asa Adams Farm,” an inn from the 1700s, according to the listing.
The 1-acre lot comes with a two-bedroom guesthouse and pool.
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Price: $549,900 Year built: 1740 Charm galore: This three-bedroom home still has many period details, including three fireplaces, wide-plank floors, and two staircases.
The 1,637-square-foot home also has two front parlors with fireplaces, and an additional room found on the main floor could be transformed into a bedroom.
The 3.6-acre property includes a barn that was the former home of Sundial Gardens tea garden.
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Price: $599,900 Year built: 1740 The Tavern House: This beautiful antique overlooks the Nanticoke River and still features the original blue-gray paint on the front staircase.
The waterfront property boasts original wood floors, moldings, and trim. Fireplaces can be found throughout the 3,426 square feet of living space. The updated farmhouse kitchen now offers a wood-burning stove, granite countertops, and custom cabinets. An original icehouse has been transformed into a pantry.
Enjoy views of the pool and outdoor kitchen from the enclosed side porch or back deck. The property also comes with a deeded boat slip across the street.
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Price: $1,285,000 Year built: 1741 New England saltbox: This renovated residence features three fireplaces, wood paneling, and lots of built-ins.
The updated kitchen has a vaulted ceiling with exposed beams, wide-plank flooring, custom cabinets, and stainless-steel appliances. The dining room features a walk-in fireplace with two Dutch ovens. One bedroom can be found on the first floor, with two more upstairs.
Featuring beautiful landscaping, the property also comes with a heated pool, detached garage, and one-bedroom guesthouse.
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Price: $589,000 Year built: 1743 Comfortable Cape: This 1,953-square-foot home features a comfortable family room with wide-plank wood flooring, an exposed-beam ceiling, a wood-burning stove, and built-in cabinetry. The formal living room and the wood-paneled dining room each feature a fireplace. Three bedrooms can be found upstairs.
A three-season room overlooks the backyard, which includes a bluestone patio and built-in fireplace. The property is pending sale.
When the snow melts and bulbs are blooming, buyers are out in force. If you’ve heard that spring (and leading into summer) is a good time to sell, you can tell whoever told you that they’re right for the most part! In many areas, the warmer weather means that people are eager to get out of the house, move while the kids are out of school, and are ready to look at homes with beautifully manicured yards. While hotter climates might have a slight downturn in the market during the 100+ degree weather, other markets thrive. If you’re considering listing your home this spring, you can optimize your home for higher offers with these seven timely tips.
1. Embrace Every Blooming Thing
Crocuses, hyacinth, and tulips peeking through your soil? Great. Blooms can be one of your greatest spring selling assets. If you don’t currently have bulbs in your yard, hit the nursery and purchase sprouted bulbs or opt for plants like pansies and primrose that look great and can withstand an unpredictable spring. Add additional color and curb appeal with planters and pots. You can even plant blooming daffodils or tulips to beds that need a refresh.
Brighten up porches, decks or balconies with potted blooms.
2. Touch Up the Yard and Exterior
When the snow melts, it reveals all the blemishes and flaws that were covered all winter. Before you list, give your home’s exterior a good once-over. Note any dead grass, chipping or fading paint, and damaged sections of fence. Turn your observations into a to-do list and get to work. Rake the grass, clean out beds, fertilize, lay sod, and edge the lawn. Do you need to repair fences, railings, steps, or decks? What about adding paint and stain in those well-worn areas? Even if you don’t find much to fix, consider giving your home an instant facelift by rubbing mineral oil on a painted front door or adding new house numbers.
Paint your front door new leaf green or robins egg blue to make your home one to remember when it comes time to put in offers.
3. Deep Clean
It’s called spring cleaning for a reason. After months shut inside the house, everything can use a good, thorough scrubbing. Have carpets cleaned and wash the windows both inside and out. Clean out closets and attack junk drawers. Wipe down the walls, make tiles and counters gleam, and pay attention to smaller things like grout, which can take a room or wall from dull to sparkling with just a little elbow grease. Clean the oven, and organize and wipe down the laundry room. Sort through towels, sponges, and other cleaning tools and toss ones that are shabby or smelly. Have slipcovers, upholstery, and pillow covers cleaned.
Do your spring cleaning before you list; they might want to buy the furniture too!
4. Perform Pre-inspection Repairs
If you’re selling your house, then you know a buyer is going to want to have ahome inspection completed before they seal the deal. Why not perform a preemptive strike and do your own inspection first? Identify small things that you can update or repair before the buyer can point them out. Often small issues lead buyers to fear there are larger maintenance issues, so making simple repairs before you list is smart. Change out filters, fix that wobbly banister, and take care of small things like torn screens or loose shingles.
Free painted-shut windows, repair screens, and fix broken panes.
5. Box Up Winter
You can make your house and yard feel bigger by simply packing away winter toys, tools, and clothes. Put your winter wardrobe in storage to make closets feel larger. Box up mittens, gloves, hats, and boots. Trade out ice melt and shovels for watering cans and gardening tools. If possible, store winter items neatly in sealed boxes or containers in a shed or off-site storage facility. You don’t want to crowd the garage or yard with items you’ve packed up. Trade out heavy, wintry throws and pillows for brighter, lighter pieces that feel more like spring.
Don’t crowd the garage when you clean out the house; organize it or get a storage unit.
6. Brighten the View
After you’ve cleaned those windows, let the sun shine in. Wash window coverings and trade out dark, dingy drapes for sheers that give your home an airy feeling. Clean blinds and make sure to keep them open during showings. Consider removing valances, which tend to box windows in and create a more formal, stuffy feeling. Add brighter light bulbs to every room to add more light. Outside, add window boxes full of flowers or herbs to set off windows and provide a pleasing view from every angle.
Add sheer drapes inside heavier ones.
7. Bring Spring Inside
Don’t let buyers lose that bouncy, spring feeling once they cross the threshold of your front door. Continue the colors and scents of spring throughout your house. Open windows and let fresh air blow away the remnants of a closed-up winter. Add fresh flowers to mantles, side tables, and the dining room. Display fresh fruit in the kitchen. Use diffusers and candles to bring the crisp, inviting scents of spring inside. Trade out linens, towels, and accents for light, bright colors and clean patterns that make buyers want to cozy up and call your house home.
Fresh flowers will put a spring in buyers’ steps.
Spring is a time for new beginnings, and it can be the perfect time to sell your home, especially when you use Homie! With our low flat fee, you get a dedicated agent who can advise you on how to make your home appealing to buyers, from staging to pricing! Click here to learn more about listing your home with Homie.
Hard money is used by many investors as a short-term solution to fund real estate deals. Hard money can be used to fund fix and flips or buy rental properties until long-term financing can be put in place. I fix and flip homes as well as invest in long-term rentals, but personally, do not use hard money. When you use hard money it is usually more expensive than traditional financing and I have other short-term financing in place. Hard money is still a great option for many investors, but I will also discuss other short-term financing options. There is also a way to use hard money or private money to buy rentals with no money down using a conventional loan refinance.
What is a hard money loan?
Hard money is a type of financing used to finance properties for a very short-term like 6 months or a year. Hard money-lenders use different terms than a traditional bank. The first thing you will notice when you finance with hard money lenders is they charge a very high-interest rate. Most hard money-lenders are charging 10 to 16 percent and points for their money. Points are a percentage of the total loan and can add costs quickly when a hard money-lender is charging 2, 3 or even 4 points on a loan. Hard money loans are typically used for fix and flips because they usually have a one year term.
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Why would investors use hard money to finance a rental property?
The advantage of a hard money-lender is they may loan the entire amount of money you will need to complete a deal. Most hard money lenders base the amount of the loan on the after repaired value or ARV. You may hear they will loan 65 or 70 percent of ARV; that is not the purchase price, that is how much the house will be worth once you fix up the home. With a hard money loan, a rental property could be financed with much less money down.
How can a hard money loan be refinanced on a rental property with no money down?
Here is an example of how one hard money-lender structures a deal. You buy a home for $60,000, the ARV is $130,000 and the lender says they will go up to 70 percent ARV on the property. The hard money-lender will loan up to $91,000 on the house based on the ARV. The hard money-lender will need bids or estimates for repairs, and they will pay out the money for the repairs like a construction loan. They will pay 25% of the repairs needed at closing, and the other payment will come in 25 percent increments as the repairs are completed. The lender won’t charge you any interest or points until you sell the home and then you pay them one large payment for the loan principal, interest and points. This particular hard money-lender charges 15% interest and 4 points, but they will reduce the points paid after you do a few deals with them.
The cost to do this deal with a hard money-lender can add up very quickly. On this deal, the interest will cost you $6,825, and the points will cost you $3,640 if you use the money for 6 months. There are also hard money-lenders that will charge lower interest and points but will want a split of your profits. I don’t use hard money-lenders myself, because of how much they charge, but for investors who have no other options it can work out well. Hard money-lenders can help you secure a property below market value when you do not have other options.
Where can you find hard money-lenders?
There are many hard money-lenders out there. Many only lend in specific states, while some lend nationwide. The best way to find a hard money-lender is to search for one in your state on any search engine. If you want a few companies to talk to, I have listed some hard money-lenders below.
Lima Capital Hard Money
Fund that Flip
Can you refinance a private money loan on a rental with no money down?
Private money is money that comes from a private person. The person loaning the money is not a bank, mortgage company, hard money-lender or portfolio lender, they are just a person. Regular people will lend money on real estate because interest rates on other secured investments are really, really low now. Have you looked at what the rate is on a CD? For a five-year CD, the average is less than 1 percent! You can’t even come close to keeping up with inflation with that rate. Many wealthy people are looking for a higher yield investment that is still secured. Loaning on real estate may be the perfect answer for them to increase returns and create great opportunities for investors. A private money loan can be used in the same way a hard money loan is used.
How do you find private money for a rental property?
The biggest problem with private money is finding the person to lend you private money! There are many websites that claim to have private money lenders they can connect you with for a small fee. In my experience, those websites take your money and connect you with a hard money-lender at best. A real private money-lender wants to lend their money to someone they know and trust. They don’t want to lend money to a complete stranger who may or may not be trustworthy and do not have a clue what they are doing. I am still trying to find a source for good private lenders, but I think I am limited to one option; people I know. I use private money from many sources who want a better return on their money.
How to buy a rental property with no money down using hard money
It is possible to buy a rental property with no money down using hard money. If you were to finance with a hard money loan and finance repairs as well, you can refinance the hard money loan with no seasoning period according to Fannie guidelines. Fannie guidelines do not allow a cash-out refinance without a seasoning period, but the home has a higher loan than the original purchase price because the repairs were financed. You can get a long-term loan to replace the hard money loan without waiting a year like you would with a cash-out refinance.
For example, if you buy a home for $100,000 with hard-money loaning 100 percent of the purchase price and financing $35,000 in repairs. The total loan is now $135,000, you fix up the home and refinance using a Fannie loan, which will loan up to 75 percent of the new appraised value. If the appraisal comes in at $185,000 then you could finance up to $138,750, but Fannie guidelines will not allow a cash-out refinance. You would be able to refinance the full $135,000 that was loaned to you by the hard-money lender. This technique can be rather expensive because you have to pay the higher interest rate on the hard-money loan, the initial points and then the refinance costs with Fannie Mae. However, you just bought a long-term rental and fixed it up with almost no out-of-pocket costs!
Using traditional banks to finance short-term loans on rental properties
There are some banks who do short-term loans for investors. They are very hard to find and usually, you must have a great relationship with the bank. We use a portfolio lender to finance many of our short-term investments. They charge around 5.25 percent interest and 1.5 points on our loans. They will only give us 75 percent loan to value on our original purchase price and can complete the loan in two weeks. In the past, banks would finance 100 percent loan to value and fund us the same day. I am afraid those days are gone forever.
Traditional banks can offer another short-term option in the form of lines of credit. Most banks will want collateral in the form of real estate to issue a line of credit. If you have a house with equity in it, you should be able to get a line of credit from your bank. My bank charges a 5 percent interest rate and will go up to 90 percent loan to value on my personal residence or 80 percent on an investment property.
Conclusion
I use a mix of traditional banks, lines of credit and private money to fund my deals. I am lucky that I have private money available and cash to complete a lot of deals. I will usually get the bank loan for 75 percent of the purchase price, use private money for the rest of the down payment and my own money for repairs. Don’t be afraid to finance real estate with hard money if that is your only option.
I am a big believer in making big goals and one of my goals is to purchase 100 rental properties by 2023. I have been a real estate agent and investor for more than 15 years, and I love the income my rental properties provide. Buying 100 rental properties will allow me to retire with more than enough money to reach my current dreams and goals. I do not want to buy 100 properties quickly without concern for the returns or risk. It takes a lot of money, time, and effort to buy 100 properties in the right way. I only buy houses that are well below market value and have great cash flow.
I first wrote this article in 2013, but have tried to update it frequently. I now have 20 rentals that make me over $10,000 a month after expenses. I am way behind on my goal, but many things happened that I could not have predicted like our housing market going crazy. I have bought commercial properties in the last few years instead of residential because they have been better money makers in my market.
Why I made a more challenging goal
In 2010, my original goal was to buy 30 rental properties in ten years. I based that goal on what I thought I could realistically achieve when I started buying rentals. A couple of years ago, I realized my goal was too easy because I knew I could buy 30 houses in ten years. I had given myself no room for improvement in my investing strategies or real estate business! At the start of 2013, I reworked all my goals including my rental property purchase schedule. My new goal was to buy 100 rental properties by January 2023 because it challenged me and would make me work hard. I had no idea when I first made this goal how I could buy 100 rental properties, but that is why we make big goals; to challenge us to do more and to change the way we do things.
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Why real estate?
I want to buy 100 rental properties because of the income and freedom that 100 houses will give me. I make over 15 percent cash on cash returns on my rentals because I purchase them below market value with great rent to value ratios. If I can buy 100 rental properties with the current cash flow requirements I have, I will make a lot of money. According to my calculations, I will be making over $900,000 a year in cash flow, have at least 60 houses paid off, and have over 11 million in equity in my rental properties. Those figures are not adjusted for inflation and assume no appreciation or rent increases. That kind of income should allow me to afford whatever my family and I want and allow us to do whatever we like. We only live once and I want to get everything that I can out of life.
The first part of this article discusses the philosophy behind buying 100 rental properties, why it is important to have big goals, and why it is important to think big. The second half of the article discusses the numbers and a detailed purchase schedule.
Is it possible to purchase 100 rental properties?
To be completely honest, I do not know how I am going to buy 100 rental properties by January 2023. I do not make nearly enough money to buy 9 or 10 houses a year. I have barely been able to buy three houses a year. I bought my first rental property in December 2010, and I started my rental property purchase goal on that day. I should have had three by December 2011, six by December 2012, and nine by December 2013. I started out very slow buying only one rental in my first year. I have picked up speed and as of March 2016, I own 16 rentals, still behind where I had hoped to be. That does not mean I will not reach my goal. The reason I have not purchased as many rentals lately is they are much harder to find in our market. Our prices have increased significantly making it harder to cash flow. I have been buying many more fix and flips since I cannot find rentals.
Why do I think I can purchase 100 rental properties by January 2023 if I am so far away? After reading and listening to books on how to become wealthy I started reworking my life goals. A couple of ideas are repeated in books and audio tapes beginning with Think and Grow Rich by Napoleon Hill. Think and Grow Rich was published in the early 20th century after Napoleon Hill followed Andrew Carnegie for decades. Carnegie was one of the richest men in the history of the world and wanted someone to study rich people in the world and write a book about how and why they became rich. Because Carnegie was one of the richest people in the world, he was able to grant Hill access to most of the world’s wealthiest people. Think and Grow Rich is now known as one of the first self-help books, and many of its basic ideas are still taught today by the world’s most famous life coaches and teachers.
How will my attitude affect my success?
Being positive is a theme that is repeated in every self-help book and audio recording I have ever listened too. I am a strong believer that our attitude has a huge influence on our success in life. The books range from slightly crazy to extremely scientific reasons for how being positive can greatly affect the success we have in our lives. You may have heard of the law of attraction, which states that the universe will return to us whatever we put out. If we are positive and happy, we will get positive and happy things back. If we are negative and sad, negative and sad things will come our way. I am a very logical and scientific person and was not sold on this idea right away. I had to know why this would happen. How could being positive magically bring positive things into our lives?
I started doing research on the brain and on how the law of attraction theory worked. I found out that it is not all magic, there are scientific reasons why the law of attraction works. It is based on the subconscious part of our brain and on how it operates our bodies. We know that our conscious mind is only a fraction of what our brain is responsible for. Our subconscious mind is constantly working to keep us alive by telling our heart, lungs, muscles and the rest of our bodies what to do. Most of our movements and actions are performed by our subconscious, not our conscious mind. We do not have to think about walking, talking, driving, writing, or even most of our daily tasks. By doing those things repeatedly, we have programmed our minds on how to do them.
Tying this back into the positive thinking idea, if we are always thinking positively, our subconscious will think positively, too. If our subconscious thinks we are happy all the time, it will do what it can to make us happy. Why do we care what our subconscious thinks? It is much smarter than our conscious mind. The subconscious is responsible for handling millions of tasks at once, while our conscious mind can only handle a handful of ideas at once. If we let our subconscious know what we want it will help guide our lives and help us to get what we want. Whether it is love, happiness, money, or material items our subconscious has much more power than we think. The theory also states that you must think about what you want, not what you do not want because our subconscious cannot tell the difference. If you are constantly thinking about not having money, then your subconscious will do its best to make that come true as well. If you are constantly thinking of not getting sick, our subconscious will do its best to get you sick. Think of being healthy, think of being rich, and think of the good things, not the negatives.
Why such a big goal?
Almost every self-help book will tell you goals are extremely important. Without goals, we have no direction, no path, and no idea of what we really want in life. There are varying ideas of how our goals should be constructed. Some say we just need broad wide-open goals such as being as happy as possible all the time to make whatever is best for you to come to you. Others say to be as specific and detailed as possible with your goals, break your goals into smaller goals, and then have a period for when those goals will be accomplished. Eventually, you will have a detailed blueprint for how you will get to where you need to go.
Some people say you need realistic goals and others say you need outrageous goals. As you have probably guessed, I like outrageous goals! The reason I like outrageous goals is that they are challenging! If I know that I can reach a goal and if I know exactly how to reach it, where is the motivation for me to push myself? I want goals that make me think and reach for new ideas and systems. I have no idea what opportunities or challenges will face me in the future, so why should I limit my future goals to what I can do now? I may have a huge increase in income or find a new system that allows me to buy houses cheaper. I have such a lofty goal because I have no idea what could happen.
Who will I need help from?
Many of the self-help books also talk about how we all need friends, co-workers, or acquaintances to help us reach our potential. Some use the term mastermind to describe groups of like-minded people who meet to help each other succeed by offering advice and motivation. The idea is that the more people to brainstorm ideas, questions, problems, etc. the better the chance a great idea or solution to a problem will come about. I do not have a mastermind group (this has since changed), but I have recruited my best friend to work with me and learn the real estate business. He was a top-level manager in the corporate world and left his six-figure salary behind to learn real estate from me. I benefit by having a new mind to bounce ideas off and have more help in the office. He benefits by getting out of the corporate grind and learning how to be truly wealthy. He also has a flexible schedule and he is not stuck behind a desk all day.
Why focus is so important
The self-help teachers also say how important it is to focus on one task or goal. All the greats had something in their mind that they really wanted. They did not let anything stop them until they got what they wanted or died trying. I have always thought of myself as being able to multitask, a jack-of-all-trades type of person. So far, it had worked out well, but I know I can do better. I know there are things I can improve in my business to make it run better and make more money. I have always thought that I knew everything about finding good deals in real estate. After starting this blog, I have realized that there is a whole world I have been missing in direct marketing to off-market properties. Instead of trying to manage five different sources of income myself, I need to delegate less important tasks to my staff and focus on the real moneymakers. If I can focus intently on a couple different areas of my work instead of just skimming over 50, I know I can improve my numbers significantly.
Why visualizing the goal being achieved is important
Many great athletes will tell you how important visualization is to succeed in sports. Great golfers visualize exactly how their shot will look before they hit it. Basketball players repeatedly visualize hitting the game-winning shot. The wealth teachers are all huge supporters of visualization. They say visualization will give your subconscious a clear picture of what you want and then your subconscious will do its best to make it happen. If you want to change your life, start visualizing how it should be every day. Better yet, go see, touch, and smell the things you want. Test-drive the car you always wanted, look at your dream home, or immerse yourself with the things you want and your subconscious will get to work. I wrote a ten-year dream story on exactly how I wanted my life to be. I described a beautiful house and in three months, I bought that house. I was not even planning to move and in no way thought I could afford a house like the one I have now, but it became a reality.
Using all I have learned to reach my goals
Based on the ideas I have just discussed, I think I have a good chance of reaching 100 rental properties. I still do not know exactly how it will happen, but I know it will or I will find a better and more challenging goal. I have to train my subconscious to help me reach my goal. I have to be positive all the time. I have to think about my goals constantly and break it down into manageable pieces. I must have help and I have to focus more intently on my important goals. I also have to visualize myself already achieving my goals and having everything I want. Even if not all of this makes me rich, worst-case scenario, I am a positive, determined, focused person who knows exactly what he wants.
Breaking down big goals makes them more realistic
I have broken down other goals in my life, but I have yet to break down a goal this big! I am going to work through the goal while writing the blog and see where I end up in 9.5 years. I wanted to write this article to help convince myself that it is possible to buy 100 properties. The first part of this article was all about my mindset. Now, let us get down to the numbers. Here is a year-by-year breakdown of how I plan to purchase 100 rental properties.
Year one
With my current income, I can purchase three rental properties a year and I have purchased that many in the last three years. I should be able to do a cash-out refinance on at least one rental property in 2014 and get enough money to buy another property. I am also counting on my new attitude and work ideas to create enough extra income to purchase one more rental property. I also just acquired a HELOC on my personal residence for $60,000. I think that will allow me to purchase one more rental. New goal for 2014 is to purchase six long-term rentals.
I will have 15 houses with about $9,400 in monthly cash flow. That is $112,800 a year all going toward paying off mortgages on my properties. I will have paid off one house at the beginning of 2014 and will pay off one and a half more in 2014.
Year two
In 2015, with income and savings, I should be able to purchase four properties. I should be able to do another cash-out refinance and buy another rental property as well. I also believe my continuous improvements will allow more increases in income, through either listing or flipping houses. The increased income will allow me to add another rental and HELOC another as well. I am hoping the addition of my friend beginning to work with me will bring in more income from his real estate activities, which will allow another purchase. My goal for 2015 is to purchase nine rentals.
I will have 24 houses with about $15,200 in monthly cash flow. That is $182,400 a year all going toward paying off mortgages. I will pay off the other half of one property and two more rentals in year two and will have four properties paid off.
Year three
I believe I will increase my income and savings enough to be able to buy five rentals. I will have 24 rentals and I should be able to refinance at least two of those properties. That will allow two more purchases and the HELOC should add the flexibility to add another rental. I am still planning to add to my income every year with increased business. This year I see a big jump in income with my friend being around for his third year and our new marketing and listing techniques taking off. I see three more rental properties being purchased from new income. My goal for 2016 is to purchase 11 rentals.
I will have 35 houses with about with about $22,200 in monthly cash flow. That is $266,400 a year all going to pay off mortgages. I will pay off four and a half more properties for a total of eight and a half properties paid off.
Year four
From my current income, I will be able to buy eight rental properties. I will continue to refinance two properties a year, which will allow at least two more purchases. I am also going to use the HELOC to buy another, and I am still planning to increase my income. I am going to stay conservative and assume enough income to buy one more property this year. My goal for 2017 is to purchase 12 rental properties.
I will have 47 rental properties at this point with about $31,400 in monthly cash flow. That makes $376,800 a year all going to mortgage payoff! I will pay off the half of a mortgage left over from 2016 and five more properties in 2017, making 14 properties paid off.
Year five
From my current income, I will be able to purchase nine rental properties. I will refinance two more properties and use the proceeds to buy two more rentals. I may not have enough money in the HELOC this year so I will not count on that, but I will count on my income increasing enough to purchase one more rental. My goal for 2018 is to purchase 12 rental properties. Note: To buy this many properties I will need about $300,000 in cash for repairs and down payments.
I will have 59 rental properties with a monthly cash flow of $41,000. That makes $492,000 a year all going to mortgage payoff. I will pay off seven and a half more properties in 2018 making 21.5 properties paid off.
Year six
From my current income, I will be able to purchase ten rental properties. I will refinance two more properties and use those proceeds to buy three more rentals. With inflation and appreciation, I should be able to refinance the properties for more money than in previous years. I will not use increased income to buy another property. If my income increases, I will use it for fun stuff such as vacations or cars! My goal for 2019 is to buy 13 rental properties.
I will have 72 rental properties with a monthly cash flow of $51,600. That is $619,200 going toward mortgage payoff. I will pay off the half mortgage from 2018 and nine more properties in 2019 making 31 properties paid off.
Year seven
From my current income, I will be able to buy ten rental properties. I will refinance two more properties and use that money to buy three more rentals. I will not count on any more raises in income since I do not need it at this point. My goal for 2020 is to purchase 13 rental properties.
I will have 85 rental properties with a monthly cash flow of $63,400. That is $760,800 a year going towards mortgage payoff. I will pay off 11 more properties in 2020 making 42 properties paid off.
Year eight
From my current income, I will be able to buy ten rental properties. I will refinance two more properties again and purchase three more rentals with that money. My goal for 2021 is to purchase 13 rental properties.
I will have 98 rental properties with a monthly cash flow of 75,600. I will have $907,200 a year going towards mortgage payoff. I will pay off 14 more properties in 2021 making 56 houses paid off.
Year nine
I only need to buy two more properties to reach my goal! I made it ahead of schedule and when I started writing this article, I was not sure how I would be able to reach 100 properties by 2023. I do not need to refinance any properties at this point and I can start using my income any way I want or I could retire!
I will have 100 rental properties with a monthly income of $82,400. I will have $988,800 a year going to whatever I want it to go to at this point. I can stop paying down mortgages if I want to or I could keep buying properties if I get bored. I came really close to the figures I estimated before writing this article. Falling just short of one million in income from my rental properties (which was more than I thought) and just shy of 60 properties paid off.
Assumptions in my plan to purchase 100 rental properties
You may be wondering how I came up with my figures. To be honest I used very basic figures to make things easy on myself.
I assumed $600 in monthly cash flow per property. I am making between $500 and $700 per property now.
I assumed each mortgage that I paid off would increase monthly cash flow by $400.
I do not assume any inflation because that would cause the numbers to be much more difficult to figure!
I assume my portfolio lender will continue to lend on as many properties as I want. I will have 43 houses financed at one time and then those will start to decrease as I pay them off.
I assume I can continue to do cash-out refinances with my portfolio lenders.
I assume interest rates will not increase significantly.
I assume rental rates will not go up.
Additional benefits of rental properties that my income projections did not account for
Rental properties have great tax advantages, which I discuss here. Every rental property can be depreciated, which will save me thousands in taxes each year. I assume my rental properties will not appreciate, but they have already seen huge appreciation in the last two years, increasing my net worth by $600,000. I assume rents will not increase, but my rents have increased as well over the last couple of years. I rented my first rental property for $1,050 a month in 2011 and it now rents for $1,300 a month. I will most likely be better off than my projections indicate if I can buy 100 rental properties.
Potential roadblocks
These are many assumptions and one or more of them may not work out as I plan. However, other factors may help me do even better than I planned or balance out any roadblocks I run into.
New ways to find properties: I am going to start direct marketing to off-market owners. This should allow me to buy properties even further below market, and I may even find a few owners who will finance down payments. I recently realized I could use my IRA to buy properties!
Private money: One of my goals is to find new sources of private money that will allow me to finance more repairs and down payments. This would allow me to put less money into properties and buy them faster.
New income sources: I have no idea what the future holds as far as opportunities and money. I may find a gold mine that will allow me to buy properties for cash and not have to worry about financing at all!
I assume I will not do anything with the houses I pay off free and clear, but if needed to I could easily get a line of credit or refinance one of these houses to bring in enough money to buy a few new properties.
What will I do in 2023 if I reach my goal?
I have many things I would love to do if I did not have to work. Here is a list of a few of the things I would love to do with one million dollars a year coming in and no job!
Start a pizza restaurant
Start a car dealership
Travel the world with my family
Donate time and money to those less fortunate
Play in the World Series of Poker
Attend a Super Bowl
Play golf all over the world
Buy a Lamborghini Diablo (done!)
Buy a beach house
Help teach others about real estate (doing my best now)
I have a much longer goal list than what is above and I hope to do many of these things before 2023. I know I will have time, money, and the freedom to do these things at that time.
Conclusion
I plan to purchase 100 rental properties by January 2023, but I realize that may not happen. If something better comes along to change my plan, I am ready to embrace fully any new opportunities.
Update on my plan 2014
I have already changed focus slightly in 2014 to fix and flipping over buying long-term rentals. I have done this for two reasons:
There have been more fix and flip opportunities than rental opportunities in my market.
The money from flipping will help me buy more rentals; rentals take a great deal of cash.
It seemed crazy to think I could increase my income enough to buy this many properties when I first made this goal in 2013. However now that it is late 2014, I can easily see myself making more than enough money to buy 100 rental properties and have plenty of money left over to do other fun activities. At some point, I may decide it is better to buy larger multifamily buildings than single-family homes, but for now, I see more opportunity in the single-family market in my area than multifamily.
Update on my plan 2016
The market has gotten even crazier in Colorado. Houses I was buying for $100,000 are now at least $160,000 or more. The rents have not increased nearly as much as house values have increased. It is very hard to find rentals and I have stopped buying them in Colorado. I have started to look at other states including Florida for a new market.
I also stopped paying off my mortgages early. I decided my money was better used to buy as many homes as I could. It has paid off buying 16 rentals in the last five years since our market has gone up so much. I have invested about $300,000 in buying my houses and my equity is close to $1.5 million. I have even decided to sell some of my rentals and re-invest that capital into more properties in another market.
I wrote this goal out in 2013 and updated it in 2014, and it is now 2016. I think goals are vitally important to achieving what you want in life. Will I reach this goal? I do not know. If I don’t reach it, will I be a failure? No! I am already way ahead of where I would have been without this goal. That is the point of goals, to motivate you to go farther than you think you can.
Update on my plan 2018
Right now it is the middle of 2018 and I have not come close to where I should be with my goal. Am I disappointed? No. Many things have happened that are out of my control; good and bad. The biggest challenge I have faced is the housing market in Colorado. Prices have almost tripled since I made this goal. Some of the rentals I bought for less than $100,000 7 years ago are worth close to or more than $300,000 today. I can no longer cash flow on residential rental properties in my market. I have thought about buying rentals in Florida, but in the end, decided to buy commercial properties here. I even bought a 68,000 square foot strip mall this year. I am buying rentals worth a lot of money, but not as many as my plan called for. Sometimes we have to change our plans based on changes in our lives or markets.
I have also focussed more on flips because I can make money with those in my market. I flipped 26 houses last year!
It’s no secret mortgage rates have been on sale for a while now…the problem is homes aren’t anymore.
Instead, they’re hitting new all-time highs in many regions of the country, and inching closer to their previous highs in plenty of other areas from coast to coast.
Overall, the national median sales price is still quite a bit lower than it was back in the mid-2000s when home values peaked. But for most folks, prices are still stretching wallets, even with those super low interest rates available.
In fact, thanks to massive home price gains in hot spots like Denver, Portland, and Seattle, the benefit of a low mortgage rate has essentially been wiped out, this according to a new analysis from Black Knight Financial Services.
You Might Be Saving Absolutely Nothing
The company noted that 30-year fixed mortgage rates have fallen about 35 basis points (0.35%) since the start of 2016, which would have saved the average borrower roughly $44 a month on their mortgage.
Instead, the monthly savings now stand at just $18 because of ongoing home price increases since the beginning of the year.
In Colorado, Oregon, and Washington, it may wind up costing the average home buyer more in the way of monthly payments to purchase the median-priced home than it did at the end of last year, despite the favorable mortgage rate environment.
It could be worse though…imagine if mortgage rates didn’t fall to start 2016, or if they increased like so many pundits predicted. One could argue that the low mortgage rates are becoming more necessity than gift.
Had rates stood pat this year, homeowners would be on the hook for another $28 a month in mortgage payment when buying a median-priced home.
While that might not seem like much, it’s not uncommon to see borrowers disqualified for a mortgage over a few bucks, not to mention the larger down payment required thanks to a higher purchase price.
The Low Rates Still Benefit Those Looking to Refi
There is some good news though. The lower mortgage rates have increased the refinanceable population to 7.5 million borrowers, defined as those with 30-year fixed mortgages who stand to benefit from a refinance at current interest rates.
Black Knight said this group has grown in size by some 2.3 million in just the past two months alone since it last ran the numbers.
Somewhat amazingly, nearly half (40%) of these refinance candidates took out their existing mortgages between 2009 and 2011.
The company added that this was during the downturn when few homeowners had sufficient equity to qualify for a standard refinance.
If that’s the case, and these borrowers now have 20% of more in equity, they could probably benefit considerably from a refinance (and they wouldn’t have to worry much about resetting the clock).
This short holding period is pretty common – most borrowers don’t hold their mortgages more than a few years, yet nearly all of them are opting to go with long-term fixed mortgages that carry higher rates relative to ARMs.
Black Knight said around one million borrowers have hit the crucial 20% equity threshold over the past 12 months, meaning they can refinance with ease LTV-wise and also avoid mortgage insurance if taking out a non-FHA loan.
Of course, over two-thirds of the total population met refinance eligibility requirements early last year as well and didn’t take advantage for one reason or another. So it’s hard to say if they will today.
By the way, if you’re wondering if there’s a correlation between home prices and mortgage rates, it’s not quite clear. One would assume they’d have an inverse relationship, but it’s yet to be proven.