How To Protect Your Real Estate Investment

Protecting Your Real Estate Investment

How can you better protect your Real Estate Investment?  Here are a few steps I strongly suggest.

1. Homestead

When you record a Declaration of Homestead, Nevada law protects the equity in your home up to $550,000 from general creditor claims (unpaid medical bills, bankruptcy, charge card debts, business/personal loans, accidents) but would not preclude a seizure or forced sale of your residence from general creditors if your equity exceeds the $550,000.

The Homestead law does not protect you against debts secured by a mortgage or deed of trust, payment of taxes, IRS lien, mechanic's lien, child support or alimony payments.

2. Homeowners Insurance

Typical homeowner’s insurance policies offer coverage for damage caused by fires, lightning strikes, windstorms and hail. In addition they cover losses/damage due to theft and accidents that occur on your property. However, it's important to know that not all natural disasters are covered by homeowners insurance. For example, damage caused by earthquakes and floods are not typically covered by homeowners insurance. Verify your coverage with your insurance agent and we suggest doing this annually.

3. Home Warranty

A home warranty is a one-year, renewable service contract that covers repairs and replacements of most major home appliances and system components due to failure, standard usage and other problems that happen due to age.

What does it cover?  A home warranty will typically cover most major components of large home systems, such as your HVAC (central heating ventilation air condition), hot water heaters, plumbing, electrical and more. It may also cover regular appliances such as washers, dryers, refrigerators and stoves. Some plans allow you to purchase optional add-on coverage for your spa, second refrigerator, swimming pool, pumps and more. Always ask about roof coverage, as some warranties do not include this as a standard item.

4. Credit Protection / Life Insurance

Mortgage Payment Protection typically covers your loan payments if you lose your job or become disabled, and/or it pays off your mortgage when you die. These products are often times frowned upon and not as easy to obtain as they once were sold with the mortgage, but with a little research, you can usually find a reputable agent to explain the pros and cons.  I am a fan of insurance and have seen many homeowners stay in their homes when they were disabled due this type of coverage.