Create a Home Emergency Preparedness Kit

Chip Plumley

Prudential Fox & Roach REALTORS^®

Having a home emergency preparedness kit could be the key to your family's safety if disaster strikes.

Preparing a home emergency preparedness kit you hope never to use may seem like a waste of time and money. But when disasters happen that are beyond your control, you can take charge of how you respond.

"What became clear in Hurricane Katrina is that in big events, the government isn't going to come to your aid right away. You have to be prepared to take care of yourself," says Rick Bissell, PhD, a professor of emergency health services at the University of Maryland, Baltimore.

According to a 2008 FEMA survey, more than half of all U.S. households have some sort of disaster preparation in place. If yours isn't one of them, here's what you need to do.

First, make sure important papers are in order
If a flood destroys your home, you could spend weeks or even months just trying to re-create the essential documents you'll need to get back on track. That's why it's critical to have backups of important papers, including the deed to your house, proof of insurance, medical records, passports, social security cards, and a list of personal contacts. Keep one copy at home in a portable case and another offsite in a safe place. And while you're at it, use the opportunity to check whether your insurance is up to date. "People often don't know what their homeowners' insurance policy covers, and most don't cover flooding," points out Bissell. Find out what hazards your area faces, and make sure you're protected against them.

Tailor a preparedness kit to your personal needs
Humanitarian organizations and government aid agencies offer guidelines for creating an emergency preparedness kit. But along with the basics like food and water, it's important to have what you need for your particular situation. You may not need extra blankets in southern California, but you do need escape ladders in case of wildfire. And you'll want extra extra blankets to survive a winter power outage in Maine.

Think about what you need for the safety of your house, too. Knowing where to find the main electrical and water shutoffs-and having the right wrench to turn them-can make the difference between a house that weathers the storm and one that experiences catastrophic flooding or fire.

A basic emergency preparedness kit:
FEMA recommends you keep a "grab and go" bag with these items in case you need to evacuate:

Water: One gallon per person per day for at least three days, for drinking and sanitation; double if you live in a very hot climate, have young kids, or are nursing. Bottled water is best, but you can also store tap water in food-grade containers or two-liter soda bottles that have been sanitized. Factor in your pet's water needs, too.

Food: At least a three-day supply of nonperishables and a can opener. Pack protein, fruit, and vegetables, but make sure they're in a form you actually like-it's bad enough not to have access to fresh food without also having to subsist on nothing but canned tuna. Include treats like cereal bars, trail mix, and Tootsie Rolls. Store food in pest-proof plastic or metal tubs and keep it in a cool, dry place.

Flashlights and extra batteries: "Candles are not recommended because there are many house fires caused by candles left unattended," says David Riedman, a public affairs officer with FEMA.

First-aid supplies: Two pairs of sterile gloves, adhesive bandages and sterile dressings, soap or other cleanser, antibiotic towelettes and ointment, burn ointment, eye wash, thermometer, scissors, tweezers, petroleum jelly, aspirin or non-aspirin pain reliever, and stomach analgesics such as Tums, Pepto-Bismol, and a laxative. (All those Tootsie Rolls can be hard to digest.)

Sanitation and hygiene supplies: Moist towelettes, paper towels, toilet paper, garbage bags, and plastic ties. You might also want travel-size shampoo, toothpaste/toothbrush, and deodorant.

Radio or TV: Keep a portable, battery- or crank-operated radio or television and extra batteries to remain connected in case the power goes out, as well as an extra cell phone charger. You can buy a good emergency radio online from the Red Cross.

Plastic sheeting, duct tape, and dust masks: In case you need to seal your home or shelter from airborne contaminants.

Extra items: A whistle to signal for help, a favorite toy or other comfort items for kids.

Cash.

Update your kit as your needs change, and replace food and water approaching its expiration date. You might pick a specific time each year to check, such as before hurricane season in the south or after Thanksgiving if you live in the north.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635. Prudential Fox & Roach is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

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A Financial Plan For Your Home.

Chip Plumley

Prudential Fox & Roach REALTORS^®

Your home is probably the biggest investment you'll ever make. Create a financial plan that takes into account repairs, upgrades, mortgages, insurance, and taxes.

You probably already have a financial plan for yourself in place. Most likely you sat down with an adviser at some point to set up a budget and diversify your investments. Or maybe you did it yourself online or at the dining room table.

But what about your home specifically, probably the biggest investment you'll ever make? Did you really take everything into account: repairs and upgrades, the mortgage, insurance, and taxes? Probably not.
You need a separate financial plan for your home. Spend a weekend creating one. Once you have a handle on your home's expenses, you can devise a long-term strategy that'll let you live there for years with maximum enjoyment and minimum anxiety.

The mortgage: Paying it and then some
Yes, you already shell out a lot for your mortgage, but can you pay more? Even a little extra each month can add up. Let's say you have $200,000 outstanding principal and a 20-year fixed-rate mortgage at 5%. Your monthly payment is $1,319.91. But if you can manage to pay another $100 a month, you'll save $14,887 in interest. Run the numbers for yourself.
Alan D. Kahn, a financial planner, likes the idea of early payoff because lowering debt leaves you free to spend money elsewhere later on. There's an emotional benefit as well. It can feel awfully good to own your house outright as soon as possible. And don't fret too much about losing the mortgage interest deduction come tax time. Toward the tail end of the life of a loan most of your payment is going to the principal, not the interest.
Nevertheless, the same extra $100 might also go into a retirement plan every month, or be put aside for the inevitable home repairs (more on those later). Michael Kay, a financial planner in Livingston, N.J., says while a debt-free life may be enormously important to your peace of mind, an extra $1,200 toward your child's college fund every year may feel even better. It's about what's ultimately important to you, both emotionally and financially.

Insurance: Protecting your property
You'll want homeowners insurance with full replacement coverage in case your house is burned to the ground. This sounds simple, but be careful on the calculation. Remember that you own a house as well as the land on which it sits. So even though you bought your home for $300,000, it may cost only $100,000 to rebuild it. Your policy limits should reflect this.
The differences are regional. Where land is at a premium, like much of Southern California, a higher percentage of the purchase cost is for the property rather than the structure. Where land is cheap, like much of North Dakota, most of the value of a new house is the house itself. Don't be deceived by shifts in market values. You may have bought a $1.2 million townhouse in Florida during the boom that now may only sell for $600,000. But the replacement cost of the townhouse hasn't changed much, so you can't cut insurance costs that way.
Do, however, try to cut costs by asking your insurance agent about discounts. Making structural improvements, such as adding storm shutters, can lead to lower rates. Membership is certain groups, such as AARP or veterans' organizations, entitles some policyholders to breaks on premiums as well.

Repairs and renovations: By choice or necessity
Throughout the life of your house, you'll be making two kinds of changes. The first is the fun kind, like a marble floor for the living room. The second is the essential, behind-the-scenes change: a new water heater. You don't have a choice about when you'll do the latter, but you can prepare for it financially.
It's a good idea to have a rainy-day fund. Start with the inspection report you received when you bought the house. Did the inspector indicate that you would need a new roof in five years? A new furnace in 10? Get estimates on what these repairs will cost and start saving. Consider ongoing non-emergency maintenance too. Do you live in the north east? Price a snow blower and get bids from plow services. Resist the temptation to take care of everything with home equity loans , which defeat efforts to pay off the mortgage early.
As for the discretionary upgrades, act prudently. According to Remodeling Magazine, an upscale major kitchen upgrade, for example, could cost nearly $112,000, but only about 63% of that will be recouped in the home's resale value. This isn't to say you shouldn't upgrade. If you can afford to redo your bathrooms, go ahead. Just don't confuse your necessary repairs (new oil furnace-about $4,000) with your discretionary upgrades (Viking range-$6,000 and up).

Taxes: (Almost) no way around them
Taxes are an essential part of your home's financial plan. The bank that holds your mortgage may already handle your real estate taxes with an escrow account. If so the expense is built into your monthly mortgage payment. Check your statements or call the lender. Otherwise create a dedicated fund for property taxes, which can run into the thousands of dollars annually.
You may be able to reduce your tax burden by getting a reassessment. Do your homework first. Are comparable houses taxed less than yours? Ask the local assessor what formula is used to set tax rates. Kay, a financial planner, researched and then challenged the assessed value of his own home and got a 15% rollback.
If you're in a special group, you might get some help from state or local programs. Check around to see what's available in your area. New York State, for example, has its Star Program for giving senior citizens some relief from school-related property taxes.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635. Prudential Fox & Roach is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

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It’s a Buyers’ Market for Real Estate Investors, Too.

Chip Plumley

Prudential Fox & Roach REALTORS^®

Turn on any financial news program and at some point you’ll hear the experts extolling the virtues of diversification. Real estate, even through the market downturn, has long been considered a conservative, long-term strategy to growing wealth.

In fact, that very downturn has created a historic buying opportunity for potential homebuyers and investors alike. The combination of lower home prices across American and historically low mortgage rates, two essential factors that usually don’t trend in the same direction, have triggered a buyer’s market in many areas of the country. For real estate investors who want to rent their properties, this can make the difference in achieving positive cash flow sooner or right off the bat.

While some seasoned real estate investors make it look easy, to be successful, beginners should follow some basic principles.

• Learn all you can. Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments. Barring exceptional circumstances, real estate does not sell at a moment’s notice. It could take days or months to sell a property, depending on the strength of the market in a particular region.
  
  
• Consider cash flow. You’ll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants.
  
  
• Start small. Look into buying a condominium, single-family home or a duplex. Leave large apartment buildings and commercial properties to the pros.
  
  
• Inquire at the local Chamber of Commerce about companies relocating into or out of the area. Company movement is one indicator of demand for rental and/or office space.
  
  
• Find a property that will be in demand. Look for a moderately priced home with three or four bedrooms, two bathrooms, and a garage that sits on a quiet street.
  
  
• Research the property. The most common way first-time investors lose is by failing to investigate a property thoroughly. Look beyond the front door. Investigate the reputation of the school district, the crime rate, and plans for expanding a nearby highway or developing vacant land. Ask a local real estate professional about the area, its history, and how fast (or slow) properties are moving.
  
  
• Inspect the home you’re considering for signs of water damage, such as stains on the ceiling and crinkling or gathering wallpaper; open and close every door and window; and check all electrical sockets by plugging in an appliance. Get an independent home inspection, roof inspection and termite inspection. Unexpected repair costs can eat away your cash flow. Because even the best inspection can’t always predict problems, try to set aside some of the rental income for unexpected repairs.
  
  
  
• Spend time driving the streets of the neighborhood noting the condition of other properties. Are lawns maintained? Are roofs in good shape? Are homes kept up?
  
  
• Be ready to make fixes quickly and respond to the renter’s needs. If you’re not prepared to be a hands-on landlord, consider hiring a property management firm.
  
  
• See your tax advisor for related planning and laws that can affect your investment decisions.
  
  
  

Remember, investing in a property is much different than living in one, and while emotion and attachment can be prime motivators when it comes to homes, it is return on investment that counts when investing in real estate.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635. Prudential Fox & Roach is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

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Make Your Case for a Property Tax Reduction

Chip Plumley

Prudential Fox & Roach REALTORS^®

To successfully challenge a real estate assessment and lower your property tax bill, you need to do a bit of sleuthing first.

Owning a home is an expensive proposition. There's maintenance, landscaping, utilities, renovations, and, of course, taxes. It's your civic duty to pay the latter, but it's also your right not to yield a penny more than your fair share.

It's possible to trim your property taxes by challenging the assessed value of your home. But making a convincing case against your real estate assessment, the basis for your property tax, requires doing a bit of homework first. Initial research can be done online or by phone over two or three days, but the process can stretch out for months if you're forced to file a formal appeal.

Read your assessment letter
A real estate assessment is conducted periodically by the local government to assign a value to your home for taxation purposes. An assessment isn't the same as a private appraisal, and the assessed value of your home isn't necessarily how much you could sell it for today. Real estate assessment letters are mailed to homeowners annually, or perhaps every two to three years, depending where you live.

The letter will include some information about your property, such as lot size or a legal description, as well as the assessed value of your house and land. Additional details-number of bedrooms, for example, or date of construction-can often be found in the property listing on your local government's website. Your property tax bill will usually be calculated by multiplying your home's assessed value by the local tax rate, which can vary from town to town.

If you think your home's assessment is higher than it should be, challenge it immediately. The clock starts ticking as soon as the letter goes out. You generally have less than 30 days to respond, though the time frame varies not just between states, but within each state. Procedures are often outlined on the back of the letter.

Gather evidence
Start by making sure the assessment letter doesn't contain any mistakes. Is the number of bathrooms accurate? Number of fireplaces? How about the size of the lot? There's a big difference between "0.3 acres" and "3.0 acres." If any facts are wrong, then you may have a quick and easy challenge on your hands.

Next, research your home's value. Ask a real estate agent to find three to five comparable properties-"comps" in real estate jargon-that have sold recently. Alternatively, check a website like ChipPlumley.com to find approximate values of comparable properties. The key is identifying properties that are very similar to your own in terms of size, style, condition, and location. If you're willing to shell out between $350 and $600, you can hire a private appraiser to do the heavy lifting.

Once you identify comps, check the assessments on those properties. Most local governments maintain public databases. If yours doesn't, seek help from an agent or ask neighbors to share tax information. If the assessments on your comps are lower, you can argue yours is too high. Even if the assessments are similar, if you can show that the "comparable" properties aren't truly comparable, you may have a case for relief based on equity. Maybe your neighbor added an addition while you were still struggling to clean up storm damage. In that case, the properties are no longer equitable.

Present your case
Once you're armed with your research, call your local assessor's office. Most assessors are willing to discuss your assessment informally by phone. If not, or if you aren't satisfied with the explanation, request a formal review. Pay attention to deadlines and procedures. There's probably a form to fill out and specific instructions for supporting evidence. A typical review, which usually doesn't require you to appear in person, can take anywhere from one to three months. Expect to receive a decision in writing.

If the review is unsuccessful, you can usually appeal the decision to an independent board, with or without the help of a lawyer. You may have to pay a modest filing fee, perhaps $10 to $25. If you end up before an appeals board, your challenge could stretch as long as a year, especially in large jurisdictions that have a high number of appeals. But homeowners do triumph. According to Guy Griscom, Assistant Chief Appraiser of the Harris County (Texas) Central Appraisal District, of the 288,800 protests filed in his Houston-area district in 2008, about 58% received reduced assessments.

How much effort you decide to put into a challenge depends on the stakes. The annual U.S. median property tax paid in 2008 was $1,897, or 0.96% of the median home value of $197,600. Lowering that assessed value by 15% would net savings of about $285. In some parts of New York and Texas, for example, where tax rates can approach 3% of a home's value, potential savings are greater. Ditto for communities with home prices well above the U.S. median.

There are a few things to keep in mind as you weigh an appeal. The board can only lower your real estate assessment, not the rate at which you're taxed. There's also a chance, albeit slight, that your assessment could be raised, thus increasing your property taxes. A reduction in your assessment right before you put your house on the market could hurt the sale price. An easier route to savings might lie in determining if you qualify for property tax exemptions based on age, disability, military service, or other factors.

Chip Plumley can be reached at (610) 444-9090 or (610) 357-8635. Prudential Fox & Roach is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.

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