A new study from the Center for Responsible Lending, “Fix or Evict? Loan Modifications Return More Value than Foreclosure,” found that families facing eviction outnumber those who received a loan modification by 12 to 1.
And argues that banks and loan servicers often foreclose on homeowners, despite the fact that investors (and clearly homeowners) have more to gain from a loan modification.
This goes against recent popular belief, which points the blame for a lack of loan modifications on the fact that many of these mortgages are in securitized bundles, making them difficult to modify.
The CRL found that even with a hypothetical re-default rate as high as 79 percent, which is significantly higher than actual rates, reducing a homeowner’s monthly mortgage payment by 20 percent is better for investors than foreclosure.
“It’s well documented how mortgage servicers’ unfair, shoddy practices have hurt homeowners,” said Mike Calhoun, president of the CRL, in a release.
“This research shows that servicers also routinely give the investment community a raw deal.”
And banks’ interests are often misaligned with the best interests of investors, according to Bill Frey, President of Greenwich Financial Services, and longtime investor advocate.
“It pays for banks to keep mortgages in a state of suspended animation, because they can collect late fees while also protecting second mortgages that are in the bank’s portfolio,” he said in the release.
Finally, the report contends that the poor track record of loan modifications can’t be blamed on homeowners who re-default, but rather on the use of proprietary programs that fail to adequately help homeowners.
“Servicers have been allowed to follow their own voluntary loan modification program, and the result has gone against the best interests of everyone but the servicers themselves,” said Calhoun.
“We need mandatory reforms that ensure servicers follow the law and act in the best interests of their clients—that would end up benefiting everyone.”
Unfortunately, most of these foreclosure prevention programs are coming to an end, with HAMP already under fire from House republicans, and expected to prevent just 700,000 foreclosures when all is said and done.
The initial HAMP re-default rate was seen at about 20 percent, well below the re-default rate for proprietary loan mods.
If you have an 810 credit score, congratulations. The score is considered excellent and could help you qualify for loans with more favorable terms or premium rewards credit cards.
Let’s take a closer look at what an 810 credit score means and some different strategies that could help boost your credit score.
What Is a Credit Score?
A credit score is a three-digit number that reflects a consumer’s creditworthiness, or ability to pay back loans in a timely manner. Scores range from 300 to 850. Generally speaking, the higher the credit score, the better you tend to appear to a potential lender.
The two most popular credit scoring models are FICO and VantageScore. To calculate your score, both use credit history information provided by the three major credit bureaus: Experian, TransUnion, and Equifax.
Check your score with SoFi Insights
Track your credit score for free. Sign up and get $10.*
Reasons to Care About Credit Scores
There are several reasons why a good credit score is essential to your financial health. Here are three to keep in mind.
It can increase your chances of being approved for a loan
The higher your credit score, the more likely lenders will approve loan or credit card applications. Whether it’s to purchase a house, buy a car or private student loans, having access to loans can help you achieve some big financial goals. Note that some banks may also run credit checks before issuing you an account.
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You may have access to better loan rates and terms
Lenders are more likely to offer consumers with better credit scores lower interest rates and more favorable terms because they’ve proven they pay back their loans on time. A higher credit score may also get you access to other types of products such as premium rewards credit cards.
You could save money
When you move into a new home, the utility company or your landlord may check your credit score to determine how much of a security deposit you’ll need to put down. Typically, the lower your score, the higher your deposit. Though the money is often refundable, it’s usually held in a third-party account that you won’t have access to. Potential employers may also run a credit check before you’re offered a job.
Recommended: Everything About Tri-Merge Credit Reports and How They Work
Is an 810 Credit Score Considered Good or Bad?
An 810 credit score is considered very good. In fact, just 21% of consumers in the U.S. have a credit score of 800 or higher. By comparison, the national average credit score is 714, according to Experian.
What Does an 810 Credit Score Mean?
Having an 810 credit score means you’ve proven through your credit behavior that you are likely to pay back loans on time. As mentioned above, a score of 800 or above places you in the top tier of consumers.
You are also considered to be in the “exceptional” range for your FICO score and “superprime” for your VantageScore. This means lenders are more likely to approve you for loans and offer you access to products such as loans with lower interest rates and premium credit cards. Landlords and utility companies may also ask for a lower security deposit amount (if at all).
How to Build Credit
Looking to build your credit? You have several avenues to explore. Below are a few to consider. Note that there’s no one-size-fits-all solution, so it’s a good idea to research all the options available to you.
Use a Credit Card
Even if you’re just starting out in your career or only have fair credit, you may still be able to be approved for a credit card. For instance, you can open a credit card that’s specifically for college students. Or you may want to consider a secured credit card, where you pay a refundable security deposit that acts as your credit line.
Whatever purchases and payments you make on the card are reported to the three major credit bureaus. This in turn helps to establish your credit history.
Become an Authorized User
An authorized user means that your name will be put on someone else’s credit card account. You can use the credit card much like the primary cardholder can, though this person is ultimately responsible for ensuring the minimum payments are paid on time.
If the primary cardholder has a good credit score, then their positive credit history may be added to yours.
Add Monthly Bills to Your Credit Report
Some free credit monitoring services will report your utility and rent payments to your credit report. Doing so can help build your credit history. Even if there is a small fee involved, it may be worth using for a few months, depending on your financial situation.
Recommended: How to Read and Understand Your Credit Report
Take Out a Credit Builder Loan
Credit builder loans are designed to help borrowers who are looking to build their credit. They’re similar to a personal loan, except you don’t initially receive the loan proceeds. Instead, the money will be held in a separate savings account until you pay off the loan. Meanwhile, your payment activity will be reported to the credit bureaus.
How Long Does It Take to Build Credit?
It can take several months for you to establish and build credit. This is because credit scoring models need enough information from your credit history in order to assess your creditworthiness.
As you work on building your credit, do your best to practice good financial habits, such as making on-time payments.
Credit Score Tips
Even if you have an excellent credit score, it’s a good idea to keep up good credit behavior. This includes:
• Consistently making on-time payments
• Keeping your credit utilization, or the percentage of the available limit you’re using on revolving credit accounts, as low as possible
• Avoiding applying for too many new loan or credit accounts at once
• Keeping your longest credit card or loan account open
• Regularly monitoring your credit score
• Checking your credit history and immediately disputing any errors you find
How to Check Your Credit Score
Wondering how to find out your credit score for free? You have several options. The first is your credit card statement. Many credit card issuers provide customers with a complimentary look at their score. To find it, you may need to log into your account or check your monthly credit card statement.
Another option is to use credit score monitoring tools; some are free, others require a payment. Before opening an account, compare each tool to see which one best serves your needs.
The Takeaway
It’s good news if you have an 810 credit score and a sign that you have a track record of paying back your loans. A good score may help improve your access to loans with better terms or premium or luxury credit cards. If you want to improve your score — or just maintain it — you can try practicing good financial habits, like consistently making on-time payments, keeping tabs on your credit score, and disputing any errors.
If you need help managing your spending and saving, consider using a money tracker app. The SoFi Insights app connects all of your accounts in one convenient dashboard. From there, you can see all of your balances, spending breakdowns, and credit score monitoring, plus you can get other valuable financial insights.
Stay up to date on your finances by seeing exactly how your money comes and goes.
FAQ
What is a decent credit score for a 23-year-old?
Chances are, at 23 you’re probably still building your credit. According to Experian data, the average credit score for people aged 18 to 25 is 679. If yours is higher, then it’s considered above average.
What is the highest credit score possible in 2023?
The highest credit score you can achieve is 850 for both FICO and VantageScore scoring models.
Is a credit score of 800 good at age 23?
Whether you’re 23 or not, an 800 credit score is considered excellent.
Photo credit: iStock/Makhbubakhon Ismatova
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners. Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website . Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit. SORL0423008
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.
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!
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California is home to hundreds of top-notch universities and colleges, including the California Institute of Technology, Santa Clara University, Stanford University and the University of California, Los Angeles or UCLA.
With so many higher education options, it’s no surprise that 3 million students attend college in California. While the cost of education in California can be expensive, the state operates various financial aid programs that can make higher education more affordable. From grants and scholarships to free college financing workshops, there are many resources California residents can use to pay for school.
The cost of education in California
California’s higher education system comprises three public segments: the University of California, California State University and California Community Colleges. Students can also choose from 150 private nonprofit schools and 160 for-profit schools.
If you are planning to attend a post-secondary school in California, here is how much you should expect your education to cost, according to data from the National Center for Education Statistics:
Public four-year school: The average cost of attending a public four-year school as an in-state student in California for the 2020-2021 school year was $24,015, including tuition, fees, room and board — nearly 13% higher than the national average.
Private non-profit school: Private schools are much more expensive than public institutions. The average cost in California is $53,680 — nearly 16% higher than the national average.
Public two-year school: The average cost of public two-year schools for in-state students was $1,285, less than half the cost of the national average.
Although those prices may be intimidating, keep in mind that you may not have to cover the entirety out of your pocket. You may be eligible for financial aid programs that reduce the cost.
Financial aid options in California
Regarding state-based financial aid, California stands out for its robust programs. From grants and scholarships to student loan repayment programs, students can qualify for a significant amount of assistance.
You must be a state resident to qualify for California’s financial aid programs. The residency criteria depend on your age and marital status.
If you are under 18, you must meet one of the following requirements:
Your parents must have been legal California residents for one year before the year in which you are applying for financial aid.
You have a parent in the U.S. Armed Forces, stationed in California and on active duty when you enroll.
If you lived with another California resident who is not your parent, you must have lived with them for at least two years.
If you are married or over 18: Married persons, regardless of age, and unmarried persons 18 or older must establish their own residency. You must live in California for at least a full year before applying for financial aid and show proof that you intend to make California your permanent home. Potential proof includes:
California driver’s license.
Mortgage statement for a residential property in California.
Active California bank account.
Voter registration card.
California car registration and insurance.
State income tax return.
California utility bills.
Under the California Dream Act, undocumented students and Deferred Action for Childhood Arrivals, or DACA, recipients can qualify for state financial aid, including in-state tuition rates. To qualify, students must meet the following requirements:
Three or more years of full-time attendance at a California high school, adult school or community college.
Three or more years of full-time high school coursework and attended a combination of elementary, middle and high school for three or more years.
As a California resident, you may qualify for one or more of the following financial aid options:
529 plans.
In-state tuition.
Scholarships.
Student loan repayment assistance.
California 529 Plans
Unlike some states, California does not have a prepaid tuition plan. However, it does have a 529 college savings plan called ScholarShare 529. Under this program, parents and family members can invest money on behalf of a child. The money can grow and deliver compound earnings over time, and withdrawals for qualifying education expenses are tax-free. You can open an account with any dollar amount; the maximum balance is $529,000.
Contributions to ScholarShare529 are not tax-deductible on federal or California income taxes. But California does offer one unique benefit: the CalKIDS program. Through this program, children born on or after July 1, 2022, or who attend an eligible low-income public school within the state will receive a seed deposit to pay for their future education.
Qualifying newborns will receive up to $100 in seed deposits, and low-income students will receive up to $1,500.
California In-State Tuition
Public universities are generally much less expensive than private schools, but only if you attend a school within your state. However, California participates in programs that may allow California residents to attend select colleges in other states and pay a lower rate than out-of-state tuition cost.
Western Undergraduate Exchange: Through the WUE, eligible California residents will pay no more than 150% of the college’s in-state tuition rate. On average, savings total $10,895 per student.
Western Regional Graduate Program: WRGP allows graduate students to pursue master’s or doctoral degrees at partner universities and pay no more than 150% of the in-state tuition rate.
Professional Student Exchange Program: The PSEP program is for students pursuing careers in specific healthcare fields. It allows them to attend school at partner schools at a lower rate. Eligible students can save between $34,100 and $133,600 throughout their programs.
California Grants
California has six major grant programs available to college students:
Cal Grant Program
The Cal Grant program is for qualifying residents attending the Universities of California, California State Universities, California Community Colleges or eligible independent colleges or technical schools.
There are several awards within the Cal Grant program, but students don’t have to apply for each individually. Instead, the state determines your eligibility for each based on your responses on the Free Application for Federal Student Aid, or FAFSA, or the CA Dream Act Application, household income, the schools you list on your application and whether you’re a recent high school graduate.
Cal Grant Community College Entitlement: Low- to middle-income students can receive assistance with tuition and fees at a California community college. Low-income students also may qualify for an additional award for living expenses.
Cal Grant High School Entitlement: This award is for low- to middle-income high school seniors and recent high school graduates. Students can use the grant to pay for their enrollment at two- or four-year schools. In addition, low-income students can qualify for an additional award for living expenses.
Cal Grant Transfer Entitlement: Students who intend to transfer from a California community college to a four-year school may qualify for this award. Low-income students may be eligible for an additional award for living expenses.
Cal Grant Competitive Awards: This award is only for students who do not receive an entitlement grant. It is a competitive award based on the student’s GPA, parent’s education level, family income and household size. Only 13,000 awards are issued per academic year.
Cal Grant Foster Youth: Current or former foster youth can qualify for this grant until their 26th birthday. It can help pay for up to eight years of undergraduate education.
Cal Grant C Award: Students who intend to attend technical or vocational schools can receive up to $2,462 for tuition and fees and up to $547 for tools, books and supplies.
California Chafee Grant for Foster Youth
Current or former foster youth can qualify for up to $5,000 through the California Chafee Grant for Foster Youth program. The money can be used toward your expenses at a qualifying California college, university, career or technical school.
California College Promise Grant
According to the Public Policy Institute of California, approximately 40% of California’s high school graduates enroll in community colleges — the fourth-highest percentage in the nation.
One of the reasons for the popularity of community colleges in the state is the California College Promise Grant. This grant waives student enrollment fees at eligible schools, and students can use other financial aid programs to cover the cost of textbooks or living expenses.
California Dream Act Service Incentive
The California Dream Act is for undocumented and DACA students attending school in California. Under the California Dream Act Service Incentive, students can get up to $4,500 per academic year in grants. To qualify for this award, students must complete at least 150 hours of community service or volunteer work for an eligible organization per semester.
The California Military Department GI Bill Award Program
This GI Bill program pays up to 100% of the tuition and fees at the Universities of California, California State Universities or a California community college for qualifying members of the California Army or National Guard, California State Guard or the California Naval Militia.
Golden State Education and Training Grant
The Golden State Education and Training Grant is a one-time award of $2,500 for Californians who lost their jobs due to the COVID-19 pandemic. It can be used to learn new skills or get additional training to reenter the workforce.
Law Enforcement Personnel Dependents Grant
The Law Enforcement Personnel Dependents Grant is for the spouses and dependent children of employees who lost their lives in the line of duty or were totally and permanently disabled due to an accident or injury caused by violence or force while on duty. Eligible employees include:
Department of Corrections and Rehabilitation.
Department of Corrections and Rehabilitation, Division of Juvenile Justice.
Firefighters.
Law enforcement.
Tribal firefighters
As of the 2022-2023 academic year, qualifying students can receive up to $9,358 per semester.
California Scholarships
In California, some students may qualify for the Middle Class Scholarship. Under this program, students pursuing a teaching credential with less than $201,000 in family income and assets may be eligible for this award. Scholarship amounts vary by school and student.
California Incentive Programs
California instituted education incentive programs to encourage residents to live and work in the state — particularly in areas with shortages of health care professionals or educators. Students can receive money for their education in exchange for committing to working in high-need areas for a specific period.
If the student fulfills their obligation, the award is treated as a grant and does not need to be repaid. However, if the student doesn’t complete their service term, the award is converted into a loan and must be repaid.
California has the following incentive programs:
Golden State Teacher Program
The Golden State Teacher Grant Program awards up to $20,000 to students currently enrolled in a professional preparation program approved by the Commission on Teacher Credentialing and working toward their preliminary teaching credential. In exchange, participants must commit to working at a priority California school for four years within eight years of completing their program.
California Department of Health Care Access and Information Incentives
Through the HCAI, students and graduates pursuing careers in health care — including dentists, mental health counselors, nurses, pharmacists, physicians and social workers — can qualify for up to $25,000 for their education if they make a 12-month service commitment to work in a qualifying facility in an underserved area.
Other California Programs
Besides its scholarships, grants and incentive programs, California also offers Cash for College Workshops. Families can attend and get one-on-one assistance with completing the FAFSA or the California Dream Act Application.
Student loan repayment programs in California
If you’re a California resident and have outstanding student loans, you may be eligible for repayment assistance through the state. To address worker shortages, the state will repay a portion of your loans. In return, you must commit to working in high-need areas for a specific period.
The following student loan repayment assistance programs, or SLRAP, are available in California:
Health care professionals
Health care providers can qualify for a substantial amount of money to repay their loans through the following HCAI programs:
Allied Healthcare
Eligible health care providers who commit to 12-month service obligations in approved counties and sites can get up to $16,000 in loan repayment assistance. Federal and private student loans are eligible for repayment.
Bachelor of Science Nursing Loan
Registered nurses with BSN degrees can get up to $15,000 in loan repayment benefits in exchange for a 12-month service commitment in a medically underserved area. Federal and private student loans are eligible for repayment assistance.
California State Loan Repayment
Through the California State Loan Repayment Program, eligible health care professionals can receive up to $50,000 for an initial one-year service obligation in a federally designated health care professional shortage area. Practitioners can qualify for up to $50,000 in additional assistance by committing to another three years. Both federal and private student loans are eligible for repayment assistance.
County Medical Services
Primary health care professionals at approved county medical services sites can receive up to $50,000 for an initial one-year term. An additional $50,000 is available for working for another three years. In addition, both federal and private student loans can qualify for repayment assistance through the County Medical Services program.
Licensed Mental Health
Licensed mental health providers can qualify for up to $30,000 in loan repayment benefits. In exchange, they must complete a 24-month service obligation. The funds can be used to repay federal or private student loans.
Licensed Vocational Nurse
Licensed vocational nurses in good standing with the California Board of Vocational Nursing and Psychiatric Technicians can qualify for up to $8,000. They must commit to working for at least 12 months providing direct patient care in an approved facility. Federal and private students are eligible for repayment assistance.
Steven F. Thompson Physician Corps
Physicians and surgeons can receive up to $105,000 in loan repayment benefits if they work for at least three years in a qualifying facility providing direct patient care. Through the Steven F. Thompson Physician Corps, you can use repayment assistance to pay off federal and private student loans.
Veterinarians
Like many states, California has a shortage of licensed veterinarians, leading to long waits for pet and livestock owners. As a result, the state has a loan repayment program to encourage veterinarians to practice within California.
California Veterinarian Shortage
Qualified veterinarians in California can get up to $25,000 per year (up to a maximum of three years) for student loan repayment by committing to working in high-priority veterinary shortage areas. Under the California Veterinarian Shortage program, veterinarians must care for food or large animals, practice in rural areas or work in public service. This program can be used to repay federal or private student loans.
How to apply for financial aid in California
To apply for California-specific financial aid, follow these steps:
Make a note of deadlines: The federal FAFSA deadline is June 30, but California’s deadlines are much earlier. The FAFSA or California Dream Act Application — and grant verifications — must be submitted by March 2.
Complete a GPA Verification: Work with your school counselor to complete the GPA Verification Form. Email the completed form as a PDF to [email protected].
Create a Web4Grants Account: After processing your FAFSA or California Dream Act Application, you will get an email telling you to create a Web4Grants account. You’ll use this account to upload additional information and view your grants.
Check for other instructions: Some California-specific financial aid opportunities, such as the California Chafee Grant for Foster Youth and the Golden State Teacher Grant, have their own applications and requirements. Review the program’s website through the California Student Aid Commission to see what steps to take for these awards.
Frequently asked questions
Who qualifies for free community college in California?
In California, students can qualify for a waiver of community college enrollment fees if they meet the following requirements:
They are California residents or qualifying undocumented or DACA recipients.
They are full-time students.
They are first-time college students.
Are undocumented or DACA students eligible for financial aid in California?
Under the California Dream Act, undocumented students and DACA recipients are eligible for state financial aid, including state grants and community college waivers. They also qualify for in-state tuition rates at California public universities.
Is the FAFSA required to qualify for California financial aid?
To qualify for California financial aid, you must complete the FAFSA or, if you don’t have a valid Social Security number, the California Dream Act Application.
What is the FAFSA deadline for California?
Although the federal FAFSA deadline for the 2023-2024 academic year is June 30, 2024, California has separate deadlines to keep in mind. Most state financial aid programs had a deadline of March 2, 2023.
President Bush has signed the economic stimulus package into law. This plan provides tax breaks to businesses that invest in capital equipment, temporarily allows larger mortgages through the Federal Housing Administration (and related entities), and provides a personal income tax cut for 2008. Instead of passing this on when we file taxes next year, the IRS will mail a tax rebate check to most Americans this summer. This is an advance on the reduced taxes for 2008.
How much will you get back? Flexo at Consumerism Commentary recently shared a handy little tax rebate calculator, which I’ve reproduced below:
The tax rebate will have no effect on your 2007 tax return, which you’re probably working on right now. These changes are for the current year. According to the IRS web site:
The vast majority of Americans who qualify for the payment will not have to do anything other than file their 2007 individual income tax return to receive their payment this year.
The IRS will use information on the tax return to determine eligibility and calculate the amount of the stimulus payments.
Taxpayers should be aware that there are identity theft scams involving the proposed advance payment checks (known informally as rebates to many Americans).
Checks will be sent out beginning in May. For more information, read facts about the 2008 stimulus payments from the IRS. Finally, Kathleen Pender at the San Francisco Chronicle was the best source I found on how tax rebates work in the economic stimulus package.
As always, the information in this post is correct to the best of my knowledge. If you spot an error, please let me know so that I can correct this article.
A cash-out refinance is one of the best tools an investor can use to take money out of their rental properties. A refinance is when you replace the current loan on your home with a new loan, and when you complete a cash-out refinance, you get cash back after getting the loan. One of the biggest roadblocks an investor runs into is finding the cash for down payments on new rental properties. A cash-out refinance is a great way to get cash to buy more properties. When I purchased my first long-term rental, I was able to buy the property from proceeds that came from a cash-out refinance on my personal residence. I was able to take out $40,000 in equity from my personal house, only one year after I bought the home. I have also refinanced multiple rental properties, which has allowed to buy more rentals and I now have 16 rental properties total.
How can you take a cash-out refinance?
Most people get loans on their homes when they buy them. At some point, you may want to consider refinancing that loan for a number of reasons:
Interest rates
If interest rates are much lower now than when you got the loan it may make sense to refinance your current loan into a mortgage with a lower interest rate.
Cash-out
There are many cases where you can get cashback after refinancing. A house could go up in value, you could get a different type of loan, you could make repairs, or make an improvement to a house to increase its value.
The video below goes over a refinance I did on one of my rentals.
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How much does a refinance cost?
The downside to refinancing your home is it costs money. You are getting a brand new loan that will cost about as much as the first loan you got on the home. That can be from 2% to 3% of the loan amount. You have to pay for an appraisal, origination fee, processing fees, flood certificate, and some other fees as well. The good news is that you will most likely skip a mortgage payment after the refinance, but don’t think you are getting an amazing deal because of that as the interest is still charged to you, just upfront in those loan costs.
How can houses increase in value?
Values are going up across the country, and that has created an opportunity for homeowners to do a cash-out refinance. Most banks are using stricter guidelines for qualifications and lower loan to value ratios than before the crash. However, if you bought your home at a great price or have owned it for a while, you still may be able to get cash out.
I do not like to depend on prices to go up. I buy all my properties below market value. I try to buy all my properties at least 20% below what they are currently worth. If they need work, I buy them for much less than 20% below market value. The BRRRR method is a great way to refinance properties and get cash back out by getting great deals and repairing them.
How much money can you take out?
Many banks will require an 80% or lower loan to value ratio when refinancing a rental property and they will use an appraisal to determine that value. It is imperative that you have a lot of equity in your property if you want to complete a cash-out refinance with an investment property. If you are refinancing an owner-occupied home, you may be able to refinance up to 95 percent or more of the value of the home. You must live in the house for a year after refinancing in most cases to get an owner-occupied loan.
What are the risks?
A cash-out refinance will increase the amount of the loan you have on your rental property. For some people who are averse to risk, paying off their home is a great option and they may not want more debt. However, I am not averse to risk and I want to maximize my returns. Debt can be a very bad thing if it is used for the wrong things, but if you use debt to buy cash producing investments it can be a great thing!
In my market, I can get a cash on cash return of 15 percent or higher on rental properties, while interest rates are below 5 percent. It makes more sense to me to refinance for 5 percent and use that money to buy properties that will give me over a 15 percent cash on cash return! That 15 percent return does not even include possible appreciation, tax benefits or mortgage pay down.
Yes, it is possible that values could go down and a cash-out refinance would reduce the equity in your home. If you don’t need to sell your home, then it will not matter how much equity you have in your home. However, if you are pushing how much you can afford with a monthly payment it may not be wise to refinance if it increases your payment. If you have a lot of cash flow and are comfortable with a higher payment, use that money to make more money.
If you increase your debt with a refinance, then you may be decreasing the amount you can qualify for on future homes. If you max out the amount of money a lender will loan to you with a refinance, then you won’t be able to get a loan on a new rental property. Before you refinance, make sure you know how much you will be able to qualify for.
How does a refi work on a rental property?
I recently did a cash-out refinance on one of my rental properties and I was able to pull out about $26,000 with my payment only increasing $136 a month. The terms are usually more restrictive and it can be difficult to refinance if you have more than four mortgaged properties. I was able to do a cash-out refinance with more than four mortgages because I used a portfolio lender. They are a local bank and are much more flexible than big banks.
When I did a cash out refinance on my investment property, the max they would lend was 75 percent of the value of the home. I also could only do a 5 or 7 year ARM or a 15 year fixed loan. I chose the 7 year ARM because I plan to pay off my homes quicker than the 7 year fixed term and the rates and payments are lower than the 15-year loan.
On the property, I paid $92,000 and put about $18,000 into it for repairs. I was able to turn it into a 5 bed, 2 bath and rented it for $1,100 (low because it is rented to my brother-in-law). I had to wait a year to do a cash-out refinance and the current value was determined by an appraisal. The appraisal came in at $140,000 which I thought was low, but I had to go with it. After all the lender fees, interest and miscellaneous costs of the cash out refinance, I was able to cash out over $26,000. My payment went up, but I am still able to cash flow every month and I took out more than enough money for a down payment on another rental property.
What about seasoning periods?
One restriction to completing a cash-out refinance is the seasoning period. Most banks, will not complete a cash-out refi right after you buy the home. They will complete a refinance but loan the lower of the appraised value or what you paid for the home in the last year or 6 months. If you bought the home for $100,000 three months ago, and it appraised for $150,000 last week, the bank will still only lend on the $100,000 purchase price if they have a seasoning period longer than three months.
If they will lend 75% of the value, that means they will only lend $75,00 on the home. Some banks have 6 month seasoning periods, some a year, and some will have none. Make sure you know what your bank will do before you make plans.
Is a HELOC better?
A HELOC (home equity line of credit) is much different from a refinance, because you may not have to pay off your current loan. If you have a $100,000 loan on your house, but your home is worth $200,000 you may be able to get an $80,000 line of credit and keep the $100,000 loan in place. When you take out a line of credit you do not have to use the money right away or ever. You can use as much of the money as you want and pay it back when you like. You can borrow the money again after you pay back the line. A refinance is a mortgage where once you pay off the loan or pay extra money into it, you cannot borrow it again.
A HELOC will have closing costs like a cash-out refinance, but many times they will be less. Depending on if you are getting a line on an investment property or a personal residence the terms and fees will differ. The term of the HELOC could be two years, five years or longer, but not 30 years like a refinance could be. The rates on a HELOC are also usually higher and can go up or down as interest rates go up or down.
It may be tough to get a line of credit on a rental as most banks only want to give lines of credit on primary residences.
Do you pay taxes?
One of the best things about a refinance is you do not pay taxes on it. You can buy a house for $100,000, and refinance it for $150,000 a few months later and the money you take out is almost always tax-free. You are not making any money, you are borrowing it so there is no income tax.
Conclusion
The more properties you can buy, the more cash flow builds up and the more wealth you can create. A cash-out refinance can help you purchase more properties and increase your wealth. Make sure the houses you purchase are bought below market value, and it will make a future cash-out refinance much easier. Make sure your payments are not so much that you are no longer seeing positive cash flow every month.
The average cost of car insurance in New Jersey is $1,754 per year for full coverage, according to 2022 data obtained from Quadrant Information Services. Minimum coverage costs an average of $782 each year. This means that New Jersey’s minimum coverage is above the national average of $622, while full coverage is well below the national average of $2,014. The higher minimum rate may be related to the high number of urban areas there are in the state, where you will often see elevated rates to reflect the increased possibility of accidents. Additionally, New Jersey has just implemented Phase I of a two-phased approach to raising the minimum levels of liability coverage required to drive legally in the state. You should keep in mind that your rates will likely differ from the averages based on your individual rating factors.
Also, compared to the rates of nearby states, New Jersey’s premiums come in below average. Take Pennsylvania, for instance. Although Pennsylvania and New Jersey are neighbors, the average cost for a full coverage policy in Pennsylvania is $2,040 per year, more than $200 higher than New Jersey. New York, one of the most expensive states for car insurance in the country, is even higher, averaging a whopping $3,139 annually for full coverage.
How to find the best car insurance in New Jersey
Drivers in New Jersey must maintain continuous coverage to avoid potential hefty fines and suspensions to their driver’s licenses and vehicle registrations. In addition to complying with the law, a sufficient car insurance policy could provide essential financial protection if you are involved in a car accident. Since every driver has their own needs when it comes to auto insurance, no one company will be best for all. For this reason, it may be a good idea to shop around and request quotes from multiple companies. We’ve compiled some things you might want to keep in mind while you’re shopping so that you can find auto insurance in New Jersey that fits your needs.
Consider minimum insurance requirements in New Jersey
New Jersey car insurance laws are unique, and it is a no-fault state. There are two options for minimum required coverage: the basic policy and the standard policy. Basic policies include just a required level of property damage liability per accident and personal injury protection (PIP) coverage and come with the option to purchase bodily injury liability coverage. If you choose a basic policy, your ability to add other coverage types could be limited.
Standard policies include bodily injury liability, property damage liability and PIP, and also come with a broader range of optional endorsements to choose from. Understanding New Jersey’s car insurance laws could help you decide if you need to purchase more coverage than just the minimum required. In 2023 and again in 2026, the minimum liability levels required to drive legally are increasing, which will likely mean a corresponding increase in your premium if you opt for minimum coverage car insurance.
Consider lender requirements
Drivers with loans or leases may have additional car insurance requirements to consider. Financing and leasing companies want financial protection for their asset (your vehicle) until it is paid off and in your name. They often do this by imposing insurance requirements that you must meet to comply with your financing or leasing agreement. To satisfy lender requirements, you may need to have full coverage insurance, which includes comprehensive coverage and collision coverage on your car insurance. Although not required, you could also consider gap insurance, which helps pay the difference between your loan balance and your vehicle’s cash value if your car is totaled.
Consider your individual needs
Auto insurance is a highly personalized product. Each driver has their own needs, but you might find that not every company offers what you are looking for. If you have a youthful driver in your home, you may need to tailor your search toward companies that offer cheap car insurance rates for teens. Those who work remotely may find savings by purchasing pay-per-mile insurance. If you drive for a ridesharing company like Uber or Lyft, you may need to find a company that offers rideshare insurance. Before you shop, it can be helpful to list your priorities and use this as a guide while requesting car insurance quotes.
2013 has been an incredible year thanks to aggressive real estate goals and I believe 2014 will be even better! My real estate investing continues to pick up momentum thanks to some major changes in 2014. I changed my attitude, hired a personal coach, bought a new personal residence, took over my parents’ business, bought three long-term rentals, purchased three fix and flips since September and sold four fix and flips since September. I also hired a good friend to help manage my business and help our real estate team continue to grow and expand.
My goal articles for other years
What were my 2013 goals?
I started making big goals in 2013 for the first time in my life. I have no doubt they helped me achieve more than if I did not have goals, or had small goals. I won’t go into all of my goals as they constantly change throughout the year, but I will mention a few. I wanted to sell 200 houses as a real estate agent, I wanted to buy 4 long-term rentals, I made a huge income goal for myself and I wanted to improve fix and flips (not a good goal). I’ll go over how I did on these goals and how I did on other items that were not goals. I did not reach all my goals, but that is okay!
My plan to purchase 100 properties progress
Many of you have read my plan to purchase 100 properties and I am making progress! I was hoping to buy four long-term rentals in 2013, but it doesn’t look like I will get to there. I did buy three long-terms rentals and I think that is an accomplishment even if I didn’t hit my goal. I have plenty of time to buy an extra house in the next 9 years to catch up to my goal (I give details on my rental properties in the rental property section of the blog).
Right now I have 8 long-term rental properties and I am bringing in over $4,000 a month in cash flow each month. For those of you wondering about rental property number 1 being paid off in 2013; it’s not going to happen. Due to the storm and some renter issues I wasn’t able to accumulate enough cash flow to pay off the house. The biggest issue was the massive hail storm that damaged four rental properties. I had to get new roofs on four properties and replace the siding on one home. Insurance covered most of the costs except for deductibles, but the way insurance works I still have not been paid in full. I was paid the insurance money for the cost of repairs minus the deductibles and recoverable depreciation. I don’t get paid the recoverable depreciation until I send in the invoices for the completed work. I have sent those in, but I am still waiting for the insurance company to send the recoverable depreciation which is around $4,000. Right now I owe about $7,000 on the mortgage on rental property number 1. Three renters are behind in rent right now! One had a heart attack, one lost his job and the other said the government shutdown delayed their retirement checks. We are on payment plans with all of them and hopefully they can get caught back up.
2013 was a huge year for me as far as personal improvement
I was never much for self-help books and working on myself before 2013. I figured working hard on my job was what made people successful. What I didn’t realize was it is just as important to work on yourself as it is to work on your job.
I started listening to self-help audio books and reading as many books as I could find. I learned about the law of attraction, being positive and many other techniques to help me succeed. I even started a new blog with some friends at www.victorycoaches.com to talk more about using your attitude to succeed. A few of the people I listen to are Jack Canfield, John Assaraf, T. Harv Ecker, Zig Ziglar, Tony Robbins and many more. I have even started researching the history of the law of attraction which dates back to ancient Egypt. It is fascinating to see the history and how far back these ideas originated from. The thing that got me hooked was not the spiritual side of the law of attraction, but the scientific side. I learned our subconscious can help us succeed if we give it a blueprint for what we want.
I took Jack Canfield coaching, which was an amazing experience. My coach was great and a huge help personally and with my business. Personal coaching allowed me to see why I needed to take over my parents’ business. The program claimed it would increase my free time and triple my income in a year. I was skeptical about those claims, but I think I may actually triple my income in 2014! My free time has definitely increased even though I have much more on my plate now than last year.
I started InvestFourMore in March of 2013 and it has been a wonderful experience. I would not have started the blog without my personal improvement discoveries. I have learned new investing techniques, met many new contacts, and much more from my blog. My blog even allowed me to publish a few books on Amazon (PDF versions here), which I had never thought would happen.
I bought a new personal residence in 2013
I bought a new house in July and we love it! I wrote an article about it here that describes the entire process. I wasn’t planning on buying a home, but it worked out perfect and the new house felt like home right away. This was not a goal of mine, in fact many of my goals revolved around our old house, but I was able to adapt to new opportunities. Buying the new house actually took care of about ten goals I had that involved the old house or buying a shop.
I mentioned I made a big income goal in 2013 that seemed very hard to reach in the beginning of the year; well I will reach that goal. The main reason I will reach my income goal is because I sold my old house. I don’t know if I am supposed to count it as income, but I made almost $100,000 on the sale of my previous home. It won’t be taxable since I lived there for three years! That is why I love big goals; you never know what will happen to help you reach them.
I took over my parents’ business in 2013
I had the idea of taking over in the back of my head for years, but never acted on it because I knew it would be a lot of work. My parents have always run the team, paid payroll, taxes and all the other fees associated with our real estate business and flipping business. My role was to sell houses, find flips, help manage repairs and make the majority of the money.
The problem with our previous deal was my parents did not like running the team and they did not do a lot to promote sales by the other Realtors on our team. I made a lot of sales, but had to give a large percentage to my parents and I made a small percentage on the fix and flips compared to what I did.
With the new deal I basically bought out my parents, which gives them long-term security and I get to run the team and keep the profits. It is scary taking over a business as we have high overhead with 8 team members and all the fees associated with the office, licensing, advertising and REO dues. I really don’t like accounting work and paperwork and that is one reason I didn’t take over earlier. I knew taking over the team would entail learning payroll, paperwork and many other unpleasant tasks that would take away from my selling houses.
The reason I made the switch, was I was able to hire my friend who took care of all the stuff I didn’t want to do. He wanted out of the corporate world and has a ton if management experience; perfect solution for both of us! He figured out the entire payroll, has been working in lead generation and helping manage everything. I love it! My free time has actually increased since taking over the team because I let others do the work I don’t want to do. My friend also bought my house, which allowed us to move quickly into our new house.
Taking over fix and flips
Part of taking over the business involved taking over the fix and flips. The fix and up operation was not small and took a lot of money and work. I had to set up financing, a bankroll and management to take over the fix and flips. Luckily the deal we worked out allowed me to obtain all of these things.
With our deal, I took over 6 properties that we were working on, which helped provide me with a bankroll to pay for down payments and repairs. Once those properties sold, I had money available for new purchases. We have sold four of those six, one is under contract and another is being worked on.
I have been able to purchase three more fix and flip properties since taking over the business and I have been able to do that with help from my portfolio lender. Not only have they been awesome with my rental properties, they gave me a commitment to do short-term financing on my fix and flips. They will give me 75 percent loan to value, can close in less than two weeks and don’t require an appraisal if the loan is under $100,000. They charge 5.25 percent with 1.5 points; hard to beat that deal.
I also have another fix and flip that should be under contract soon and two short sale offers we have accepted by the sellers that we are waiting to see if the banks will approve.
Real estate business goals
I wanted to sell 200 homes in 2013 as an REO agent. This was a huge goal and well above my totals from any other year. I mentioned I like big goals and that is because they challenge me and constantly motivate me. If I were to make a small goal, then I may slow down or stop once I reach that goal. I was going to fall well short of my goal to sell 200 homes, but taking over the business almost got me there. Since I was able to count all the homes sold for myself for other agents on our team after September first; we sold 184 houses in 2013. There are still a few days left and we have a couple of closings scheduled, but not 16 to reach that 200 mark.
I was able to drive a Lamborghini and Ferrari!
I have always loved cars since I can remember, especially exotic cars. I have never driven a Ferrari, Lamborghini or other exotic car before this year (unless my Porsche 928 counts). This summer I found a special on Travelzoo to drive a Lamborghini Gallardo! I wrote about my experience here and it was awesome! I also signed up to race a Ferrari F430 around a race track a few times and I have the video of that here. I was at a conference in Dallas in September and I was able to see a Lamborghini Diablo they had for sale there. I always wanted a Countach, but I barely fit in the Diablo and the Countach is a smaller car. It probably is for the best as the Diablo is a newer and better car than the Countach.
My other 100 goals
I have a plan to purchase 100 rental properties and I also have over 100 other goals. Part of my coaching was to create a list of 100 goals, which I review constantly, update and change. I won’t go into all of those goals, but they range from extremely small to very large. The list helps me keep fresh in my mind what I want and when I want it. Making small goals makes me feel great accomplishing them and big goals motivate me. Many times I forget about the small goals I had a few months ago, and that is why I have a list that reminds me of what I want.
Conclusion and a sneak peak for 2014
If you know me at all, you know I will have a lot of real estate goals for 2014. I will write another article for those goals and plans, and I hope to have it ready for Monday right before the New Year. Some of my goals for 2014 are going to include big jumps in all aspects of my business and possibly a new car.
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