Wake Up And Smell The Smoke
By William J Archambault Jr, Fri Dec 9th

Saturday morning I woke up alone. Slowly before opening my eyesI began to stretch. Taking inventory as I moved one limb at atime, yes, all the usual aches and pains were still there. Idon't know whether I felt or heard it, but there was a majorthump on the bed signaling the arrival of the very large cat,that I share living quarters and a wife with. My inventory hadreached my right hand, it was working and I could control it. Islowly reached for my glasses. Forcing my eyes open, I see avery agitated cat pacing back and forth like an expectant father.

Cat is shouting at me, I respond "what" the cat rushes to myhead. Now standing four inches from my face he explains loudlyin no uncertain terms that Brenda, our wife, is missing and hisbowl is empty! I remember now, Brenda left an hour earlier,she'd be back about noon. I tried to explain, but cat got evenmore upset. It was clear, I had to get up.

Finally 12:15 and Brenda arrived. I kissed her, told her I lovedher, and said I'm hungry. The cat demanded to know how dare sheleave before his breakfast, and he's hungry, despite his halffull bowl. She said lets go yard saleing and I'll buy you lunch.I was happy, and with a few strokes to his soft under belly thecat was placated.

Three disappointing yard sales and one garage sale later, nonehad really wanted to sell the yard, we reached Burger King.Hunger satisfied, we decided to drop in on our friend Jim Dixon.I write about Jim in "One House At A Time / Finding And BuyingSingle Family Rentals" he's the maintenance man for one of myreal estate investment students. Leaving Burger King we had towait for a speeding fire engine going our way. Finding two yardsales on our way to Jim's and still no yard for sale, we heardmore sirens. Leaving the second sale we spotted thick blacksmoke, in Jim's direction. Jim lives in one of three houses oneof our investor owns at that location and that's where the smokeis! No more distractions, we went straight to Jim's. Happily forJim and our investor the fire was a block away.

Real estate Gurus, myself included, tend to write about the sexyparts of real estate investing. Good Gurus do teach the mundanebut even we emphasize the exciting subjects. Smelling that smokehad me thinking about insurance! Most of us rarely think aboutInsurance, but we should!

Here in Las Vegas most homes have doubled in value in the lastthree years, yet very few home owners and investors haveincreased their insurance coverage. It's likely that yourmortgage lender is covered by your insurance, they are verycareful to protect their interest. But, are you covered for yourliability and your equity?

A few things home owners and

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investors need to know aboutinsurance:

1.You must have it! Insurance protects your liability, yourlender, and your equity.

2.You must have an insurable interest, if you don't really ownthe property you don't have any protection for your (potential)equity. If you control a property, by a lease option, option, orsales agreement, you may have liabilities regarding the propertybut you don't have insurable equity.

3.You must be "named" on the insurance policy, if your name isnot on the policy, you're not insured!

4.Don't depend on inflation protection! If your insurancecompany uses a inflation factor as opposed to a currentappraisal you're probably way under insured.

5.Your lender is only concerned that you have coveragesufficient to pay off their loan.

6.Your real estate agent, your guru, your escrow agent, yourattorney, and not even your insurance agent are responsible foryou having sufficient insurance!

7.You've worked too hard creating equity to lose it through thecareless acts of a tenet. Saturday's fire was caused by anoctogenarian on oxygen who had to have a cigarette beforegetting out of bed.`

Notes to investors flipping houses:

1.You are liable even if you haven't taken or recorded title.The seller's insurance never protects you and may not cover theseller for monies you still owe him.

2.Vacant houses are an attractive nuance they draw vandals,squatters, drugies, and young lovers, like bugs to a light.

3.It's insane to have people working, for you, in an uninsuredproperty. Your cheap help may get extremely expensive if theyhurt themselves.

4.It's hard to insure a vacant property because the insurancecompanies know the risk. If the insurance companies think thereis a big risk, how can you afford to be unprotected?

Flood insurance is not part of your hazard insurance! Lenderswill require flood insurance if you're in the hundred year floodplain. Many of the recent floods were on land never included inany previous flood plan. Water runs down hill, so unless youlive on top of a mountain, you maybe flooded someday. Floodinsurance is a federal government program, so your insuranceagent is not going to be reminding you, you need it. Floodinsurance is priced based on the risk factor, if you're at ahigh risk it's costly but cheap. If you're in a low risk areait's inexpensive.

So check your insurance before you wake up and smell the smoke.

About the author:William J Archambault, Jr has been in lending and real estatesince 1969. A mortgage broker in Las Vegas, NV He writes aboutup to the minute real estate, tempered with the wisdom of ourgrandfathers. He is the author of "One House At A Time / FindingAnd Buying Single Family Rentals" available athttp://www.reii.org e-mail: author@reii.org