Buying and quickly reselling property can earn tremendous returns, thanks to what is called financial leverage. But real estate investments face commensurate risks, also due to leverage. If you have real estate investments, please consider permanent life insurance.

You capture the growth on a large asset – a house – using a much smaller asset, your down-payment. In a market increasing at 7%, a 20% down payment can produce as much as a 35% rate of return.

Here’s how: You purchase a rental property for $100,000 with 20% down. (For simplicity, let’s assume your rental income exactly covers your interest-only mortgage payments and other costs. So from a rental income and cost perspective you are at breakeven.) Now assume that your investment appreciates in value at 7%, a conservative average for California housing (using 30 years ending 1998).

At the end of one year, you will have a house worth $107,000. Therefore, your gain will be $7,000 on an investment of $20,000, or 35%. This is an enormous return. To put it in perspective, the S&P 500 averaged an 11.7% return (over the same 30-year period ending 1998). If you averaged this return each on $20,000, in nine years you would have nearly $300,000!

But using leverage is risky, because it magnifies both positive and negative returns. For example, let’s say during a market downturn your property is worth $90,000. If you were forced to sell, you would lose $10,000, or half of your $20,000 investment!

If you have money invested in properties in today’s market, you may very well be experiencing negative leverage. How would your legacy look if your heirs were forced to sell your properties now due to your death?

California real estate can be an excellent investment choice, but if you intend to hold properties throughout your retirement years, please consider permanent life insurance as a protection against the forced sale of your properties due to death.

Image by respres via Flickr

Mike Zagaris has been talking about it since this market cycle began. The foreclosure crisis has been a bane to some, and a boon to others. However, “We’ve found the bottom,” Zagaris said. “The financial institutions have seen the light and are allowing the market to find its own level.” Banks are moving their inventory of foreclosed upon houses, bringing qualified homeowners into the market with heavily discounted properties and sound lending strategies amidst great interest rates.

At PMZ Real Estate, we’ve seen the bottom in our rear view mirror and we’re riding the wave back to the top. Bloomberg points out in there most recent Exclusive story, California’s Discount Foreclosure Sales Point to Housing Bottom, that there are, indeed, good times coming and that there is opportunity available now in the housing market.

Right now there is EXCELLENT opportunity for homebuyers and investors. Home prices are on an average discount of 30-40% according to Bloomberg. Even with the bidding wars going on with foreclosed properties, people are still walking away with huge discounts on the properties they purchase. And, interest rates are still attractive; no where near the 14% they were in the 80’s.

Interested in learning more? Check out the Bloomberg article for an even more informative look at where the housing market is taking us.

PMZ Real Estate is proud to announce that Pam Harmon was voted in as LAR Director by the members of the Lodi Association of Realtors.

The Lodi Association of Realtors® is in its 86th year of operation. It serves a membership of more than 1,600 as a service and support organization to help individual Realtors® and Affiliates. LAR is a member of the California Association of Realtors® (CAR) and the National Association of Realtors® (NAR). LAR currently has four Directors that serve on the state association. It also is an Administrative Office for the Metrolist Multiple Listing service and currently has three directors that serve on its board. LAR operates a full supply real estate store which carries forms, all the necessary tools industry professionals require, and continuing education options for area licensees.

Congrats Pam!

We Americans are living longer than ever before. Someone aged 65 today is expected to live to an average of 83.7 years of age.

And, “The longer people live, the greater the chances are that chronic conditions may develop, resulting in an increased need for assistance with everyday activities. (from National Alliance for Caregiving)

That means you – or your parents – could maintain good health and independence for many years. However, at some point, you may experience an injury or illness that leads to a need for long term care. An estimated 70% of people who reach age 65 will need some form of long term care before they die.

What if you had to care for an aging parent? How would it affect your practice?

Here’s the typical profile of family caregivers:
• Two-thirds of caregivers are women.
• Caregivers are twice as likely as non-caregivers to have health problems of their own.
• Working caregivers are more likely than non-caregivers to miss work.
• Women ages 50 to 64 are most likely to be caring for sick or disabled family members.
from (“A Look at Working-Age Caregivers’ Roles, Health Concerns, and Need to Support.” The Commonwealth Fund. Issue Brief. 08/05)

What if you needed long term care? What does long term care cost?
Long term care services can be very expensive. The national average to have a home health aide for 8 hours a day is $4,623 a month or $55,480 a year. With home care, you also have ordinary home and living expenses. The national average daily cost for a private nursing home room is $213, or $77,745 a year. And those numbers can be almost double in some areas of the country.

Long term care insurance can help you plan for the high cost of future care. You probably have health, homeowners, and auto insurance to help protect you from everyday risks. Now is the time to consider long term care insurance to help protect you and your family from the high cost of long term care.

Long term care insurance can help you:
• Protect your assets, investments, retirement funds and your estate – including your home
• Maintain your spouse’s standard of living, financial security, and peace of mind
• Relieve family and friends from the emotional burden of providing for your care
• Preserve your independence, allowing you to live where you wish
• Give you more choices and control over your future care
There’s a clear advantage to buying long term care insurance at a younger age. Premiums are typically lower than if you wait. You’re more apt to be healthy and qualify for coverage.

Discounts on long term care insurance are available to PMZ agents and staff.

I was at a meeting over in Riverbank earlier today and Richard Hundley came up to me and said, “Hey Roy, I bet you’ve never seen an office with them before.” I turn around to see where he is pointing and there stands a peacock, right outside the front doors of PMZ Real Estate.

Apparently there are 3 or 4 of them that live near by. They hop the fence during business hours to check out the people and for any extra food scraps people leave behind. “They really like white bread,” Richard said.

The birds are so docile that when called with food, they come right on over. Sometimes, they even sit right in front of the door, admiring their reflection in the glass.

Weird eh?

(via The Riverbank News)

Would you insure your smile for $1,000,000? How about your voice? Or your legs? What if your income depended on them? Protecting one’s livelihood with insurance has a long and interesting history, thanks to Lloyds of London.

Consider celebrity leg insurance. It started in 1940 with Betty Grable, an actress, singer and dancer. She insured her legs for a cool million. That’s nearly $15 million in today’s dollars. And soccer star David Beckham has insured his legs for an astounding $70 million. Quite a hefty sum! But considering that his total salary for 2007 is estimated at $37.4 million, he is insured for only about two years of income. Would two years of coverage be enough for you?

Your ability to earn an income is probably your greatest asset. For instance, if you earned $75,000 for the next 20 years, you would take home a total of $1.5 million. But what if you got sick or injured and couldn’t work?

We are three times more likely to suffer long-term disability than to die. As of 2005, disability was the leading cause of personal bankruptcies and caused 46% of all mortgage foreclosures. So if you think life insurance is a good idea, you may also want to consider disability coverage, too.

Long-Term Disability Insurance benefits include:

• Disability due to injury or illness, physical or mental.
• “Own occupation” coverage.
• Covers earnings and bonuses.
• Waiting period as short as 90 days.
• Benefit period up to age 65.
• Portable, you own it.
• Discounted up to 40%.
• Guaranteed renewable.
• Non-cancelable.

Though it is probably only a rumor that Jennifer Lopez has insured her body for $1 billion, considering her lifetime earning potential, maybe she should.

The California Independent System Operator (CAISO), charged with managing the electricity grid in California, has issued a Flex Alert for Tuesday, July 8th through Thursday, July 10th.

Due to the current hot weather, electricity conservation is necessary. As a result, state officials have called a Flex Alert.
It’s important that you:

- Turn off all unnecessary lights
- Postpone using major appliances until after 7:00 PM
- If you must use an air conditioner, turn it up to 78 degrees
or higher

For updates, please visit www.FlexYourPower.org. We ask that you pass this e-mail along to your friends and colleagues.

And thanks for Flexing Your Power.

PMZ Insurance Services has aligned with MassMutual Financial Group in order to bring our clients and agents flexible programs that offer a variety of financial products, services and analysis to meet your particular needs. Whether youa re just beginning to design a plan or already have some strategies in place, this alliance can help you accomplish the following financial goals:

• Protect family needs through insurance planning
• Plan for the preservation of your estate
• Maximize business potential through proper business planning
• Plan for a comfortable retirement

With products including investment, business, insurance, retirement and estate planning, you can be confident that a PMZ Insurance Professional can help you meet your financial needs.

For more information on these and other services, contact us at (209) 338-0385 or visit our website at www.pmzinsurance.com

At PMZ Real Estate, our agents are anything but short of amazing.  That’s why I’m pleased to announce that Barbara Miller, at age 68, has been inducted into the USA Masters Track and Field Hall of Fame. Miller holds 8 of 10 US records for different track events.

Congratulations Barbara and keep up the pace!

Qualifying for the Beijing 2008 Olympics must be an amazing experience.  Suzy Powell of Modesto has qualified with 2 other women for the 2008 Beijing Olympics discus throw event. This is her third Olympic qualification.

Go for the Gold Suzy!