Cut Costs and Save Money

The following article was written by Dave Dinkle who is a real estate investor in Broward County.  I thought he explained the process pretty well of what you need to do if you want to fight your property tax assessment.  This is specifically for South Florida, but the process is similar in other parts of the US, too.  Check with your county about the specifics for where you live.

“The Tax Appeal Process

You think your property assessment is too high and decide to file a petition to appeal. What’s the next step?

First, get your petition filed on time. The filing deadline is September 18th in Broward County and September 14th in Palm Beach, Dade County has not yet announced their date.  Whether you try to do the appeal yourself or you engage a professional to do it for you, this is the first important step.  Secondly, 80% of success is showing up!  Make sure you complete the form in full and all information is correct.  VERY IMPORTANT – if you file your own petition and later realize that you are in over your head, you can still engage someone to take over as long as you have filed your petition on time.

What does a professional do for you? After filing the petition in person at the VAB office, they typically will go for a meeting at the office of the Property Appraiser to see if they can negotiate a reduction in the assessment.  WARNING – This is not for the novice or even for fee appraisers who do not understand the complicated appraisal process used by the county.

To get a tax assessment for your property, the county appraiser will go through the process of the determination of the value.  First, he or she will choose a land sale (hopefully in your neighborhood, but not always) on which to base your land value.  Land evaluations can be tricky especially since some areas have very few land sales. Values can change from neighborhood to neighborhood or even from block to block. If the land parcel they choose has more value than your land, it can adversely affect your assessment.

Let’s look at a typical example:
Your property is in Mudville, but there have been no land sales there in the base year. The county appraiser finds a land sale in the town of Happyville, just to the north, which he uses as a basis for the land valuation in your assessment. However, Happyville is a bit more upscale than Mudville, even though it is geographically close by.

The price per square foot of land in Happyville is greater than the price of land in Mudville, but the average citizen does not know the difference, and does not realize how much his assessment can be affected by an inappropriate land valuation. Let’s say that a 7,000 SF parcel sold for $140,000 in Happyville. That’s $20.00 per SF. A similar sized parcel in Mudville may sell for $70,000 or $10.00 per SF. You have an 8,500 SF lot which by Mudville standards should be valued at $85,000, but because there was no land sales in Mudville, the county appraiser uses the closest land sale which happens to be in Happyville. Your land then gets valued at $20.00 per SF or $170,000. Your taxes are already about $1,700 too high before he even starts on the house!

Then you say, “Mr. Appraiser, I don’t think you should be using a land sale from Happyville.” And he says, “OK, what land sale do you suggest we use?”…  This is where the pros make you money while the average homeowner goes home all bent out of shape.

An actual land example – In Broward County, the tax assessor’s office uses an adjusted front footage when dealing with land. If the land depth is not 100′, they adjust. For example, in one area, the standard lot is 50′ x 135′ or 6,750 SF, but what is shown on the tax record is 55.90 Front Feet. (FF). If a lot is 50′ x 100″ or 5,000 SF, you will see 50.00 FF. By using the FF, you would think that the size of the second lot is 89.4% of the size of the first lot (50/55.9 = .894), while in reality it is 74% of the size of the first lot (5000/6750 = 74.1%). What’s more, these adjusted FF are not uniform across the county. Remember, land is tricky!

Another and even a better example – one of the more confusing adjustments used in establishing assessments in houses is the “high ceiling” adjustment, which is either 1.1 or 1.3 times the area with a higher ceiling.  In a two-story house, if a 500 SF area has a volume ceiling, the SF used in calculating the assessment is 1.3 x 500 = 650 SF. If a 1-story house has high ceilings in the living areas, but not the bedrooms, the SF of just the living areas should be multiplied by 1.1. However, BCPA has been known to multiply the area of the entire house by the 1.1 factor. They claim that if they use this process uniformly across an entire neighborhood that it is fair.  However, if you don’t know what is used across the neighborhood, you can’t make an adjustment that you may be entitled to!  Remember, appeals are tricky!

An assessment can be challenged by using either the tax assessor’s method of adjusted SF or the traditional appraiser’s method of “under air” living area. Whatever method is selected, it should be applied uniformly across the subject property and all the comparables. Do not use adjusted SF on the comps and living area on the subject property only.  You must always compare apples to apples. Make sure your adjustments are plausible and you have data to back them up.”

Here are a few things you can do quickly to save a little bit on your power bill:

1.  Make sure your refrigerator temperatures are between 35 – 38 degrees farenheit.

2.  Your freezer should be between 0 – 5 degrees farenheit.   If you have either of them colder than that you are spending more money than you have to.

3.  Clean the dust from the condenser  coils in the back of the fridge.  This act alone might save you up to 6 % in energy savings.

4.  Put a dollar bill in between the door and the body of the fridge and close the door.  If it slips out easily, then either the hinges need adjustment or the seal is bad.  Either way, fixing that problem will require your fridge to work less, saving you money.

5.  If you have kids and the fridge door is opened constantly throughout the day, then take a few liter sized bottles and fill them with water.  Put them at the back of the fridge.  Since water takes longer to warm up, it will help the fridge return to a constant temperature quicker when the door is closed.  In the long run it makes your fridge work less hard.

Here is a trick I learned today.

In the picture you see two bottles of Dawn dishwashing liquid… the orange bottle is 3 years old and was empty and the green one I bought today.  The orange one is 13.5 oz and the new one is 10.1 oz.  I paid $2.99 for the new one today (August 28, 2009).

What you can do is buy a bottle of foam dish soap AND buy a bottle of whatever liquid dish soap you like (the non-foaming variety).  When the foaming soap is all gone, all you have to do is make a 7 to 1 ratio of liquid soap to water and you’ve just made your own foaming soap.

This sounds harder than it is.  The 13.5 oz bottle was empty, so all I did was round up… 13.5 oz is almost 14 oz.  at 7 to 1, that means I have 14 to 2… so, for 14 oz I will have 2 oz of liquid soap to 14 oz of water.  An oz is two tablespoons.

All I had to do is add 4 tablespoons of liquid dish soap to my bottle then fill it up with water (slowly so it doesn’t create too many bubbles).  Now I have a another bottle of foam soap that I didn’t need to pay $2.99 for.  (I had practically a full bottle of regular liquid soap…it will last me probably the equivalent of 10 – 15 bottles of foaming soap.)

So, lets say I can create 12 bottles of foam soap from 1 bottle of liquid soap.

That is the equivalent of 12 x $2.99 = $35.88  All I had to buy was 1 bottle of regular liquid soap ($2.20), 1 bottle of foaming soap so I could have the container ($2.99) and for an expenditure of $5.19 I have the eqivalent of $35.88 in foaming soap.

In the last few days I’ve heard two pieces of information that I thought were really useful and you could use this info if you are facing the possibility of foreclosure.  The big banks are getting billions of dollars from us and they themselves are not behaving responsibly in a way to help their clients who are facing foreclosure… They want our help, but they themselves don’t want to help us.  So do what you can to rescue yourself.

The first thing I heard was about a lady in North Florida who was facing foreclosure and who had the sense to approach the bank that was beginning the proceedings to ask for proof that they owned the house.  Well, guess what?  The bank couldn’t produce evidence that they owned the house.  The foreclosure has been halted (for now, at least) and that lady gets to live in her house months, maybe years longer.  I thought it was good because it forces the bank to come up with proof that they have the right to foreclose.  Obviously, with so many bundled mortgages and purchases/sales of bundled debt, nobody knows who holds what mortgage.  So, try that.  Ask the foreclosing entity to prove that they own your house.

The second tactic I heard about was suggested by a website run by Jeffrey Lerman in San Rafael, CA.   I heard him speaking on Fox News where he mentioned that there are 5 loan restructuring solutions that just about anyone can use to reduce your loan payments.  In some cases it has worked to get principal reductions, but generally speaking, most people see payment reductions and loan restructuring instead of principal reductions or forgiveness.

It is a course you buy, but if you are in trouble, then I think it would be worth every penny to learn this.  Loan Relief Help

A great way to save money is to avoid buying new dvds or books.  I know its great to browse around in Borders or Barnes and Noble, but the reality is… what they offer is generally high priced and readily available at the public library for free.

Most libraries have a large selection of dvds that you can check out on your library card (for free), keep for several days and then return.  Cost?  $0.00

Except for maybe the newest titles, most libraries will have the books you are looking for.  The advantage to using the library is that you won’t have to buy the book, and secondly, you won’t have to keep it once you finish reading it.

Storing books just takes up space in you home, and unless you really intend to read it a second time, its just not worth keeping at home.  By the way, if you move, its just more stuff to move.

One more word about books.  If you do have a bunch of books at home and you haven’t read them for years….read them again and then sell them on e-bay.  Put a little cash in your pocket and free up space in your house!

I don’t normally endorse stuff, but this site has tremendous value.  You can get free coupons for all sorts of things you use every day, including groceries.  Check them out…

Every day I take a look at some of the economic news and try to sift through the hype, fear and alarm that the journalists write about.  Today an article on which banks are safe from bank failure caught my eye.

I read it and then started researching on bank failures in the US and thought that I’d only find info about recent banking trouble, but guess what?  The first article I saw was from the BBC and it was about how the US banking system is in trouble, too many bad loans to utility companies, too many credit card defaults, etc… The date of the article?  Jan. 17th, 2001.

The next article I read was about how the number of US Banks that are struggling rose by 30% during the 2nd Qtr of 2008, and… (heres the kicker) the number of banks on the FDIC’s problem list rose from 90 to 117 at the end of June 08… “the highest figure since early 2003“!!!

Back in 2003 who knew that the list of troubled banks had over 100 institutions?  There was no mass hysteria about it.

In the 1980’s the S&L’s went through severe trouble with their loan portfolios, and I remember a lot of  ‘the sky is falling’ talk.

Yes, there are banks in trouble.  Yes, these are hard times for a lot of banks, people and businesses.  But in the end, economic woes and boom times are cyclical.  During the good times, people have the attitude that they’ll never end.  During the bad times people also have the attitude they’ll never end.

But guess what?  They will.  The key is to begin today to prepare so that you will weather the storms and good times equally well.

How do you prepare?  Some cliches come to mind:

Don’t put all your eggs in one basket.

Don’t believe Chicken Little.

During the summer you stash away for the winter.

Ok, I’m off my soap box.  Back to the article I read on which banks are solid.  It was by Jon Markham from MSN Money.

I read through the article and thought it was pretty good in that the fear tactics were kept to a minimum and it provided some good economic data on why it chose 5 banks as being fairly safe from failing.  This doesn’t mean that they are the only banks that are doing ok, but they are doing very well given very poor market conditions.  The reason they’re doing well is that they all have a really good return on equity and are relatively unaffected by a bad loan portfolio.

The banks are:

• Northern Trust from Chicago
• US Bancorp in Minneapolis
• Washington Federal in Seattle
• Charles Schwab Bank in San Francisco
• Bank of Hawaii in Honolulu

This list is meant to provide you with a safe place for your money. If you have a good size chunk of money, maybe you should split it between several of these banks.

Don’t you hate wearing your favorite shirt or blouse and then, all of a sudden, at lunch or supper some horribly difficult to get out sauce or drink makes a bee-line for the most visible part of your clothing?  It’s usually tomato sauce or wine or coffee or something else equally hard to get out.  Your next thought is “Oh well, there goes another $100 piece of clothing out the window…”

Anyway there are cheap ways to get most kinds of stains out.  You don’t need to rush out and spend$5.95 a bottle for some stain remover since most likely you already have common household items that can remove stains just as well.

Here are the most common items and the kind of stain they can remove:

Rubbing Alcohol – can remove ink, blood, red drinks, ices, berry juices.  You can use this full strength right on the cloth.

Baking Soda – add 1/2 cup to your laundry as a general stain remover.  You can also make a paste of itby mixing with a little water and rubbing it on grease or oil stains.

Corn Starch – Make a paste (just like Baking Soda) and rub it in grease or oil stains.  Let it dry and brush off.

Club Soda – good for most stains, but use it immediately after you stain the item.

Vinegar – Vinegar is great for getting rid of smells.  I had to clean out an apartment once that had been occupied by a chain smoker.  I thought the smoke smell would never come out.  I tried all sorts of expensive cleaners, but what finally worked was washing the walls with diluted vinegar (a cup of vinegar to 2 gallons of water or so) and leaving a bowl of vinegar in each room for 24 – 48 hours.  Somebody had told me this would work.  I was totally skeptical, but I tried it and guess what?  It worked like a champ.  Vinegar can also get rid of some hard water stains, but probably not as effectively as something like CLR.

Ammonia - mix a tablespoon with 1/2 cup water.  Gets out most stains.

 Bleach – This is about the only thing that ever works for me on white cotton.

Lemon Juice – Removes persperation stains

Lime Juice – Same as Lemon juice but with the added benefit of being a natural disinfectant.

Of course there are others but this little list might be able to save you a bit on expensive cleaners.  Try all of these and see what works best.

MSN came out with an article today about how the real estate market in the US has ‘dropped to 2005′ prices.  The article’s tone and sensational journalistic style made it seem as if that were an unprecedented disaster and the world was coming to an end.  Imagine!  House values are now at 2005 levels!

The surprising thing to me is that people have such short memories.  God gave us a brain and the ability to remember, so why not use it?  The real estate market in the US (or at least most of the US) was stagnant from the mid 80’s to the late 90’s with typical appreciation of 3-5% annually, maybe less.  It was common knowledge that to  break even you had to stay in your house for at least 5 years after buying it, otherwise you’d take a bath.

When the stock market went kaput in the year 2000 and the tech stocks plummeted in the year 2000, everyone dumped what little money they had left into real estate, thus dramatically increasing demand for real estate and coupled with low interest rates, created unprecedented ability to buy.  Naturally, prices started to rise and just like every other bubble,  everybody jumped on the bandwagon because nobody wanted to miss out on quick and easy money.

So, from the year 2000 through 2005 prices escalated very quickly (in real estate terms) and certain demand markets like California, Florida, Nevada and Arizona of course, went through the roof.

In 2005 fear started creeping into buyers since everybody already knew prices were too high (in the year 2005 mind you) and in 2006 demand started to slow down and the rest is history.

The point is prices were already way too high in 2005.  To read now, in 2008, how ‘tragic’ it is for housing prices to fall to levels that were already unsustainably high in 2005, doesn’t strike me as a tragedy.

I remember reading in the Fort Lauderdale Sun-Sentinel (in 2005) that the median wage of income earners in Broward County was approximately $46,000 a year and the median house price (in 2005) was approximately $325,000.  Now I ask you… how is somebody making $46,000 a year going to buy a $325,000 house?  They aren’t.

I can deeply and sincerely sympathize with people who bought their house at high prices and now their house is worth less than their mortgage.  It’s a terrible position to be in.  However, the same thing happened in the early 80’s when housing prices suddenly took off (although not nearly to the extent they did in the early 2000’s) and also at that time interest rates rose dramatically and people were scrambling to lock in their mortgages at 12%, 15% and even 17%.   But the point is that many, many people ended up owning a house where the mortgage was way more than the house was worth.  The suggestion of such a thing now-a-days is met with a look of horror and shock as if you were telling them a lie. They seem to think this is the first time it’s happened.

Nobody remembers.

But the answer is ALWAYS the same.  When you buy a property, buy it only if you can afford to hold on for the long term.  In the end, property is just about the surest way to build long term wealth.  It hasn’t changed.  Historically, it’s always been a long-term asset.

Are you worried about how horrible the crisis is in California, Arizona, Florida and Nevada?  Well, listen up…

One time I was on a plane and sat next to a realtor from Laguna Beach.  We were talking about prices in Orange County and she said that for the last 100 years  Orange County real estate has gone up, then dropped somewhat, then gone up again, then dropped, etc… The drop in price after the rise was NEVER as low as the previous low.  She then mentioned that people will ALWAYS want to live in Southern California.  Nice weather, beautiful scenery, healthy economy etc. etc…  Guess what?  She was right.  I would like to expand her comments to Arizona, Florida and Las Vegas too.  People will always want to live there.  Right now times are tough, but hang on to your house and someday, when you least expect it, the market will take off again, demand will increase and there will be a short supply.

I live in Florida and for most Floridians, the power company is called FPL or Florida Power and Light. Anyway, they sent out an email today that contained a few tips and a survey which will ask you some questions about your power consumption and then respond to you with ways you can cut back and save money. They also have a program where they will lower your bill if you voluntarily sign up for a program where you offer to have your power cut for a short period of time if they ever have excess demand and are short supply. Read the rest of this entry »