I have come across many examples of landlords that require, in their lease, that the tenants carry an appliance service plan on the furnace, water heater, and kitchen and laundry appliances.  In Minnesota, this is called Centerpoint Energy Service Plus.  It costs about $8-15 per month, which is added to the tenant’s utility bill.

In the event that one of the covered appliances breaks, that “insurance policy” allows you to call Centerpoint and have a technician fix the broke unit.  Only if the appliance is completely unrepairable will you incur a cost.

Pros:

• The landlord shifts the cost of the plan to the tenants.
• You can virtually eliminate any appliance repair/replacement costs.
• The tenants can make the repair calls themselves without bothering you as the landlord.

Cons:

• Confirming the tenant has put the service plan onto their utility bill is difficult to police.
• Some states this may not be legal.
• Some tenants will simply refuse.

Other thoughts:

• As you increase the number of properties you own, it is NOT cost effective to pay this yourself.  With 28 rental units, I would be paying $300-400 per month in just service fees.  That would only be effective if I have something break every month.  Otherwise, I save the cash and just replace/repair units as needed.

I ran across this property in St. Paul on Marshall Avenue.  Nice looking Duplex on the outside.  Someone had too much time on their hands.  Now I understand what they mean by Wall to Wall Carpet and vinyl!

Clearly this homeowner worked somewhere to get all this vinyl and other floor covering!

Typically the purchase of an investment property is smooth.  Sometimes title work complicates the process or the buyer’s financing falls through.  Occasionally, you see a property seller start to do strange things.

My customer purchased a multi-unit property that had one vacant unit.  As part of the purchase agreement, we require that we are able to show and lease the property prior to the closing.  This helps us get a jump start on finding a new tenant.

The customer was at the property showing a unit and ran into one of the other existing tenants.  She told him she was moving out at the end of the month because the existing owner was a crook [her words].  Seems she claims that he stopped by looking for not just this month’s rent, but next month’s rent also (when my customer would actually own the property).  Luckily she was smart enough to realize that she had no reason to pay him next month’s rent early regardless of who owned the building.  Needless to say, my customer was quite upset.  A quick call to the listing agent put that problem to bed.

I recommend that when you buy a building that is currently rented, you as the buyer should go over to the property as soon as possible to introduce yourself and assure the tenants that you want them to stay.  Talk to them about what they like and don’t like about their unit.  Confirm that in fact there have not been any side deals made with the current owner.

This short 30 minute visit can help alleviate many silent deal killers prior to closing!

Have you always wanted to buy investment property, but never knew where to start? Don’t Wait! Get Started now.

In the spirit of the upcoming election, I thought it would be fitting to spin a little political terms and political history into this week’s Carnival.  (Don’t worry, I am not going to start a long diatribe on why I am voting one way or another.  I don’t want to be the first (I think), Carnival host censored by the Carnival Admin!~)

The United States Presidential Line of Succession was first passed into law in 1792 naming the Senate Majority Leader and then the Speaker of the House as in line after the Vice President to take office.  In 1885, the President’s Cabinet was added in place of the Majority Leader and Speaker, but, in 1947, the Speaker and the Majority Leader were added back in above the cabinet.  The only other changes were to remove the Postmaster General, in 1971, from being in the succession and add the Secretary of Homeland Security to the bottom of the list in 2006.

Despite there being many, many topics discussed in this election, between Joe the Plumber and arguing about how many houses McCain owns and what Obama paid for his mansion in Chicago, this election has been lately centered around the economy with the housing crisis in the spotlight.  Seemed only fitting that the top political office awards go to those posts about that topic.

The Presidential Award goes to The Digertati Life.  As SVB (Silicon Valley Blogger) states, we often disconnect the foreclosed home (that we are excited to get a good deal on) from the family that once lived there and lost everything.  The video is especially eye opening about Foreclosure Alley’s Personal Stories of Financial Loss: The Aftermath of Foreclosure.

Toby Boyce at Saide’s Take on Delaware takes home the Vice Presidential Award for explaining the recent market collapse associated with Mortgage Backed Securities.  He puts on his Bubba Gump hat to simplify the explanation and gets Forrest’s Take on Mortgage Backed Securities.

Even after all the doom and gloom you hear on television these days about the housing market, it was amazing to have Amy Bohutinsky at the Zillow blog tell us that 32% of the people they surveyed still believed their house when up in value over the last 12 months!  Amy gets the Speaker of the House Award as she explains Strangely, “Not My House” Sentiment Continues, Albeit a Smaller Group.

The Senate Majority Leader Award goes to The Mortgage Reports Blog that explains How Cutting The Fed Funds Rate Helps The U.S. Economy.  While many people believe cutting the Fed Rate helps the economy, Dan cautions that we could be overheating it.

After that big dose of reality and the stress of watching the political coverage you need to get a laugh now and then.  Two posts gave me a smile and are worth honorable mentions.

• Purva Brown at Sacremento Real Estate Girl gave me a fright when she perfectly described a customer that I am working with right now in her post titled: Who? Me? A Monster?
• Over at Mike’s  Corner, Mike  Price talks about How To Be A Clueless Twit and Social Media Failure and how as Real Estate agents, we need to remember that Blogging and Social Media is not an immediate return.

It’s late at night as I finish up this week’s carnival post.  I suppose I am just in training for another long night of watching returns on Tuesday.

Remember:  Get out and Vote!