Saturday, November 30, 2013

10 Companies voted to have the worst customer service.

Have you been stuck on hold for an hour when you call a companies’ customer service number, only to get hung up on?  Do you get 10 different answers from 9 different representatives?  Are they lighting fast to take your cash but impossibly slow to help you with any issues?  You’re not alone – welcome to the horrible world of customer service circa 2013.  For some cryptic reason, the premise of making customers happy and helping them has gone out the window in recent years.  Instead we get call centers of robots reciting companies policies but refusing to make a common sense decision to solve a problem, billing mistakes 100% in the companies’ favor, and an indecipherable maze of fees and charges penalizing we, the consumer, for daring to do business with them.

Dealing with the new Draconian corporate rules of customer service – namely, there is none.  Of course this isn’t always the case, and in a future blog we’ll heap praise on those companies and brands who still do value human relationships and service to their clients, but here I’ll investigate the 10 companies with the worst customer service. 

These numbers are based on a survey by MSN Money for their 2013 Customer Service Hall of Fame – and of Shame.  MSN’s researchers polled 1,500 consumers about their experience with 150 common companies over 15 industries, rating them “excellent, good, fair, or poor.”  The results tell us not only that sometimes the bigger the company, the worse the customer service, but bad service is rampant in certain industries, mainly banking and telecom.  That’s no accident, as it’s become a document facet of their business model to over promise, under deliver, lock people into long term contracts, and then squeeze every dollar out of them possible. 
Another scary fact?  Of the 10 companies voted worst for customer service, 6 gave higher CEO compensation packages than the median pay of the 200 top-paid CEOs of U.S. public companies!  We can only conclude that it’s conscious greed that’s driving this bad service, above all else.
Here are the worst 10 companies for customer service, #1 being the absolute worst.
10. American Express.  Poor Rating:  14%
Amex is a strange case, because the company is known for its high-end clients and excellent service.  In fact, it often lands on the list for top companies with good service!  But that warm, fuzzy feeling has seemed to recede in recent years, as Amex has entered and is looking to compete in the more traditional credit card market.  With that, apparently, comes bad service, felt by many long time customers, but that didn’t stop CEO Kenneth Chenault from taking home a $28 million compensation package, the highest in our bottom 10 Hall of Shame.
9.  Time Warner Cable.  Poor Rating 14.3%
TWC, the nation’s second largest cable provider reaching 15 million homes, is notorious for no-shows, missed appointments, late calls and customer service phones calls leading nowhere, and declined to be interviewed for this survey.  TWC posted a net income of $2.2 billion last year, a 29% one-year gain and up 65% from 2010.
8. Direct TV.  Poor Rating 14.4%
Direct TV has been on the receiving end not just of customer complaints, but court action based on serial improprieties meant to defraud their users.  In 2010 they were mandated to pay $14 million in fines for irregular termination fees and contractual gaffes, and again in 2005 they paid out $5 million.  Direct TV declined to be interviewed but released this statement:  "While we do our best to provide everyone with excellent service, we recognize there's room for improvement."
7. Discover Financial.  Poor Rating 14.4%
Discover’s favorite MO is to double a customer’s interest rates for no apparent reason, even when they didn’t miss a payment, a practice that led them to the courts, where they were forced to pay $14 million in fines and $200 million to more than 3.5 wronged consumers.  Among other things, Discover was offering services like payment protection, credit score tracking, identity theft protection, etc, for free, but really charging.
6. AT&T.  Poor Rating 14.7%
AT&T has taken the cake for last place in Consumer Reports three years running for its voice and data quality.  The mega-provider has 107 million wireless customers and growing rapidly, posting $127 billion in revenue last year, but consistently customers express shock and outrage how their customer service department is really a phone tree that almost never leads to a live, helpful human being.
5. Wells Fargo.  Poor Rating 16.8% (credit cards) and 15.7% (bank.)
Wells has become of pushing a customer’s issue to the next department, and the next, and still the next, until they become so frustrated they give up.  The company, posting $86 billion in revenue last year, is big on promises to get people signed up for their services, but consistently delivers on few of them.  No one can figure out their system or procedures, and customer service agents or personnel almost always contradict themselves.
4. Citigroup/Citibank.  Poor Rating 18.2% and 15.4% (bank.)
Citigroup hit rock bottom in customer service a couple years ago, when an astounding 31% of customers polled rated its service “poor.”  It’s improving, but still nowhere close to being a well-run and customer friendly organization.  For instance, despite rules set out in the $25 billion mortgage settlement, it’s failing to communicate effectively with mortgage holders.  Customer also complain of overseas transaction fees, website failures, taxing the value of airline miles, and other mysterious and erroneous practices.
3. Dish Network.  Poor Rating 19%
At Consumer, an unheard of 85% of reviewers gave Dish 1 star out of 5 for their overall service.  You have to try to be that bad.  Even worse, their sales agents have been reported as aggressive, rude, and pushy, practices that caused them to face two lawsuits.  Dish declined an interview, but in a written statement they said, “the company strives for excellence.”  How about starting just with mediocrity, because even that would be a huge improvement! 
2. Comcast.  Poor Rating 21.2%
Four years ago, 41% of customers polled called Comcast’s service “poor,” so it has been improving measurably.  That would be acceptable if it wasn’t providing still-horrible service to so many people, 21.9 million nationwide as the largest provider of internet-cable-phone.  They’ve lost more than a million dissatisfied customers with a three-year period, and at the same time posted a 75% increase in revenues, to $62.57 billion in 2012.  Hmmmm.
1.  Bank of America.  Poor Rating 23.4% (bank) and 21% (credit cards.)
B of A is the nation’s largest financial institution with $2.18 trillion in deposits, yet for the 3rd year in a row they rated in the customer service Hall of Shame for both banking and credit card service.  The banking giant is also fending off lawsuits left and right and leaning on any dissenters with criminal action, like they did to a San Diego man who wrote anti-B of A messages on the sidewalk out front of their office.  He was tried on criminal vandalism charges.  He’d written the messages in chalk.  Last year, B of A posted a net income of $4.2 billion, an astronomical increase from 2011’s $1.4 billion, though their service suffered almost conversely.  

Monday, November 25, 2013

Our favorite ski resorts a day trip away from Sacramento.

As the leaves change colors and nights grew cold, some of us just turn up the heat, reach for a sweatshirt, and prepare for another chilly, rainy winter in Sacramento.  But there are others who rejoice when the thermostat drops, eyeing the gray skies with eager anticipation for the start of snow in the nearby Sierras.  Yes, skiers and snow boarders, I’m talking to you, the people who love to bundle up and surf a white mountain in their spare time.  As we all know, when it comes to playing in a winter wonderland there are few places as great as Sacramento because of our easy access to ski mountains in Lake Tahoe and Nevada.  So whether you buy a season pass and shred the mountain every week, or just want to take the family for a nice day trip, your snowy playground is not far away.

Here are 7 of our favorite ski resorts that are close enough to Sacramento for a day trip.

Sierra At Tahoe
1111 Sierra-At-Tahoe Road
Twin Bridges, CA 95735

(530) 659-7453

Sierra is the closest resort to Sacramento , but just as nice as others further up the road.  Known for its glade skiing and exciting terrain parks, the family atmosphere and ease of accessibility make it an easy day trip destination for NorCal skiers and boarders. 

Number of Lifts - 12
Number of Runs - 46
Number of Acres - 2,000

Heavenly Mountain Resort
4080 Lake Tahoe Boulevard
South Lake Tahoe, CA 96150

(775) 586-7000

Heavenly is the favorite playground for those who like to ski by day and socialize by night, as its base village is located only one block from Nevada casinos.  Straddling the border with California, the lake shore resort contains 34 miles of groomed trails, bowls, parks, pipes and its signature Gunbarrel run,dropping 1,800 feet to lodge below.

Number of Lifts - 30
Number of Runs - 95
Number of Acres - 4,800

Sugar Bowl
629 Sugar Bowl Road
Norden, CA 95724
(530) 426-9000

Sugar Bowl was purchased and built up by the Walt Disney Company back in 1938, and is known for two things that the snow crowd loves: Wide open bowl skiing and it’s proximity, sitting 45 minutes closer to Sacramento along the I-80 corridor than most other ski mountains. It’s usually less crowded than most of the area’s top resorts, but isn’t short on fun or fantastic skiing. 

Number of Lifts - 13
Number of Runs – 103
Number of Acres – 1,650

100 Northstar Drive
Truckee, CA 96161

(530) 562-1010
Northstar, sitting among golden Lake Tahoe, is known for its dense tree-lined runs, offering natural protection on bad weather days with lots of wind or rain.  If it gets too stormy out you can simply go down to base village where there are plenty of fire pits, an ice rink, bars, and restaurants to choose from.  Northstar also has a multitude of condos and resort hotels to chose from, including the high-end Ritz Carlton, with its own lift sitting mid mountain.

Number of Lifts - 17
Number of Runs - 83
Number of Acres - 2,490

Alpine Meadows
2600 Alpine Meadows Road
Tahoe City, CA 96145
(530) 583-4232

Alpine Meadows may not be a front runner with tourists, but locals and hardcore skiers and boarders love it’s uncrowded and unpretensious slopes. The fact that that it isn’t overrun with hotels and base lodging make it even more of a local gem. It has plenty of challenging black diamond runs for experts, but more mellow hills for your average family who just wants to enjoy the snow without much fanfare.

Number of Lifts - 13
Number of Runs - 100+
Number of Acres - 2,400

Squaw Valley USA
1960 Squaw Valley Road
Olympic Valley, CA 93675
(530) 581-7225

Squaw Valley sat in relative anonymity until it hosted the1960 Winter Olympics, and since then it’s been a favorite for serious skiers from all over the world.  Its famous tram will take you all the way up the mountain amid some breathtaking views, and it offers plenty of lodging in the base village.  Even if you don’t ski like an Olympian, you’ll enjoy the best that Squaw Valley has to offer.

Number of Lifts - 34
Number of Runs - 170+
Number of Acres - 4,000

Kirkwood Mountain Resort
1501 Kirkwood Meadows Dr, Kirkwood, CA 95646
(209) 258-60001

This year-round resort on the southern shore of Lake Tahoe is a favorite for skiers and boarders in the winter, and then hikers and mountain bikers in the summer. Year after year, Kirkwood with its unique 2 mile ridgeline, has been voted one of the top resorts for snow, terrain challenge, and variety.  It also has one of the highest snowfall counts in the Sierras, a fact that gets snow hounds in Sacramento excited to pack up the car and make the drive! 

Number of Lifts - 65
Number of Runs - 12
Number of Acres - 2,300

Tuesday, November 19, 2013

The most famous financial criminals in U.S. history.

Today, news came down that J.P. Morgan Chase, the disgraced Wall Street giant that had its collective fingerprints all over the mortgage and financial collapse of 2008, is set to pay a $12 billion settlement.  The payment is restitution, levied by the US Justice Department, for its illegal misspelling of mortgage-backed securities.

While many consider the settlement “A good start,” we can hardly expect it to act as a deterrent to future financial criminals.  In fact, United States history is rife with fraudsters and sham artists who chose not to use a mask and gun to rob the American people, but a three-piece suit and their business acumen. 

Let’s look at the most famous financial criminals in U.S. history:

Bernard “Bernie” Madoff.
Madoff was the poster boy for Wall Street greed and larceny, defrauding the US people to the tune of $65 billion dollars in the greatest Ponzi scheme in history.  His “client” list of 1,300 included Stephen Spielberg, Kevin Bacon, and many other notables, including financial institutions themselves.  On June 29, 2009 he was sentenced to 150 years in prison with no parole.  He was incarcerated and soon transferred to a federal prison in North Carolina, where reports of his quality of life differ.  Some say he was admitted to the Duke University health center in 2009 with facial fractures, broken ribs, and a collapsed lung consistent with an attack by a fellow inmate, though the prison claims he was admitted for hypertension.

Kenneth Lay.
Lay was the chairman of the Enron energy company before being indicted in 2002 on 11 counts of securities fraud, revealing his chief role in a massive accounting and corporate abuse scandal that stole billions of dollars.  In 2006 he was found guilty on 10 of those counts, which would have landed him a cell without a view for up to 30 years.  Only about three and a half months before his sentencing, Lay died suddenly of a heart attack while on vacation in Colorado.  Some would say he got off easy, and his funeral was attended by more than 1,200 well wishers.

Bernie Ebbers.
The Canadian-born Ebbers was an original founder and former head executive at telecom giant WorldCom when they were convicted of fraud as investors lost more than $100 billion, the largest accounting scandal in U.S. history at that time (until Bernie Madoff came along.)  He is currently serving a 25-year sentence in Oakdale Federal Correctional Facility in Louisiana.  CNBC named Ebbers the 5th worst CEO in American history and the 10th most corrupt CEO of all time.

Charles Ponzi.
A list of financial robber barons wouldn’t be complete without their patron saint, Charles Ponzi himself, who the term “Ponzi scheme” was named after.  Ponzi, who lived from 1882-1949, devised scams that actually paid off early investors with the funds from later investors, making forming a pyramid in structure.  As long as people keep paying in, someone get’s paid, and the rush and greed of easy money usually fuels these fires for a long time before they fall apart suddenly.  Ponzi’s first schemes promised a 50% payoff within 45 days, or 100% for every 90 days, and the premise of his pyramid Ponzi scheme hasn’t changed much since.   He served several short sentences throughout his life until he was finally deported to Italy upon release in 1934, where he lived in poverty and obscurity until his passing.

Lou Pearlman.
Pearlman, often described as “bloated and soul-less” had his hand in many pots – and very few of them legitimate.  He was the manager of famous by bands the Backstreet Boys and N’Sync, but his greatest accomplishments in business turned out to be one of the biggest shams in US fraud history.  For over 20 years he charmed investors for his conglomerate Trans Continental Airlines.  The only problem was it never existed, except for on paper, and a means to siphon approximately $300 million he’d amassed in debts into his own pocket.  When exposed, he went on the run, but was caught and arrested.  Pearlman tried to cover his tracks by filing bankruptcy, but even lied and attempted to defraud the courts in those proceedings.  In 2008 he was sentenced to 25 years in prison after being found guilty of money laundering, perjury, and conspiracy charges.  By the way, the BackStreet Boys and N’Sync eventually sued Pearlman for misrepresentation and fraud.  Pearlman is still behind bars, with a projected release date in 2029.

Frank William Abagnale.
Abagnale’s story came to public awareness with the film about his life, Catch Me If You Can, in which Leonardo DiCaprio played the charming and brilliant conman who lived high and played fast.  He easily shifted into different personas, including an airline pilot, doctor, and even US Bureau of Prisons Agent, and his fraudulent forte was passing bad cheques.  After a long and exhausting pursuit, he was caught and charged with cheque fraud to the tune of $2.5 million dollars (in 1960 dollars) in 26 countries.  He served a five-year sentence in prison before the federal government released him on the condition that he would work for them, helping identify and catch other financial scammers, and also check in once a week.  The arrangement worked so well and his inside input became so indispensible, that he later formed Abagnale & Associates, a financial fraud consulting firm.  Abagnale wasn’t one of the biggest financial criminals of all time, but he certainly was one of the most interesting, and elusive to catch, including escapes from prison and from a taxing airliner as authorities moved in.

Dennis Kozlowski.
Kozlowski, once the CEO of mega firm Tyco International, was convicted of embezzling over $400 million of the company’s funds.  Those included paying himself $81 million I unauthorized bonuses, adding $14 million in art to his personal collection, and $20 million dollar payments to a crony.  His super luxurious lifestyle became the thing of legends, as he owned a $30 million dollar Manhattan apartment (on the company dime) with $6,000 shower curtains and $15,000 umbrella stands!  His parties also became legendary for their opulence, risqué, and lack of class.  Originally from New Jersey, Kozlowski almost got away with his daft and obvious financial crimes, as a juror sided with him in his first trial and forced a mistrial, though it came out that she had been physically threatened.  He was tried again and convicted in 2005 and sentenced to an approximately 8-year prison term, which he is still serving. 

Thursday, November 14, 2013

The 10 most expensive works of art of all time.

How much did you pay for the artwork in your home?  $50 for that cityscape print in your living room?  $29 for the Italian-inspired plaque with a wine glass and grapes in your kitchen?  Or even nothing, for the weird painting of clowns and monkeys your mother-in-law made for you, which you have prominently displayed in the back of the storage closet, only to be removed and hung upon her annual Christmas visit?  For the average person, that’s the extent of their art collection, but there are still people who will pay more for their artwork – and I mean a LOT more.

Just this week, Francis Bacon’s triple rendition of contemporary painter Lucian Freud sold for a whopping $142 million dollars at Christie’s auction!

So today, let’s look at the 10 most expensive pieces of artwork ever sold:

$112 million.
Pablo Picasso’s “Nude, Green Leaves and Bust,” painted in 1932 with his mistress Marie-Thérèse Walter, as the model, was purchased by an anonymous buyer.  The price tag?  $112 Million.


$119.9 million
Swedish expressionist Edvard Munch’s famed painting, “The Scream,” one of a 4-part composition he made with paint and pastel 1895, was picked up by the Royal Family of Qatar.  Rumors that Munch painted this work using a single mother in the morning before her Starbucks are untrue.


$126.4 million
“Garçon à la Pipe” a 1905 work by Pablo Piccaso during his more vibrant and cheery Rose Period, was purchased by European pasta makers, Barilla Group.  $126 mil is a lot of spaghetti!


$138.7 million
Pierre-August Renoir’s 1876 painting “Bal du Moulin de la Galette” was sold to Japanese paper mogel Ryoei Saito.  Was he making money, as part of his line of paper products?


$142 million
The afore-mentioned Irish figurative painter Francis Bacon had his 1969 triptych, “Three Studies of Lucian Freud” (1969), purchased by Acquavella Galleries at Christie’s auction in Manhattan this week.


$146.5 million
Dutch post-impressionist Vincent van Gogh – he of one good ear – would have still heard the sound of cash registers ringing as his 1890 work, “Portrait of Dr. Gachet” was added to Saito’s prominent connection.


$152.6 million
Gustav Klimt’s, an Austrian symbolist and part of the famed Vienna Secession Movement, had his 1907 masterpiece “Portrait of Adele Bloch-Bauer I” purchased by Ronald Lauder for his chic Fifth Avenue gallery, Neue Galerie.  Reports are that he did not pay with a check.


$156.5 million
American hedge fund manager Steven A. Cohen recently purchased the prolific artist Willem de Kooning’s “Woman III.”  Let’s hope that Cohen didn’t use taxpayer bailout money to buy it!


$159.4 million
Jackson Pollock, abstract expressionist famous for his “drip” style, hit big with the sale of his 1948 work “No. 5, 1948,” to an anonymous buyer.  We can certainly say that Pollock painted better than he named them!


$254 million
The biggest art purchase of all time was not a Picasso or Van Gogh, Monet or Dali, but Paul Cezanne’s 1892 “The Card Players,” purchased, again, by the art-loving and free-spending Royal Family of Qatar.  Cezanne, a Frenchman who lived his whole life in Aix-en-Provence, is credit for transitioning the art world from 19th century Impressionism to the 20th century’s Cubism, made popular by predecessors Picasso and Matissee.

Monday, November 11, 2013

A history of mortgages in the United States.

1781 – The first legitimate commercial bank is founded in America, introducing a new system of banknotes for exchange, government involvement, and decreased liability for bankers, spurning the modern mortgage.

Early 1800’s - Commercial, mutual savings, and property banks expand their role.  Each bank specialize in the needs of regions they serve, for instance, rural banks issue mortgages to farmers.

1820-1860 – The number of banks increases dramatically, as mortgage loans rise from 55 million to 700 million dollars in that period. 

1864 - The National Bank Act helps develop a national currency to assist in financing the Civil War.  This currency replaces bank and state bonds, though investment in mortgages is prohibited.

Late 1880’s. The United States mortgage market faces disruption, falling into a disorganized network of uneven allocated mortgage loans. Regional favoritism by banks sees favoritism in the Northeast and higher rates in the West.   
1905 - Only 4 in 10 Americans own homes.  In urban areas, up to 75% of people are renters.

1929 - The Great Depression sees a collapse of the US financial system, including banking collapses in which they called mortgage notes due in a cash crisis.  1 in 10 US mortgages end up foreclosed.  Property values drop and consumer confidence and bank lending are almost nil.

1934 – the modern mortgage is born as government intervention stabilizes the banking industry and injects confidence and safeguards into mortgages and lending.  This government intervention in mortgages sets it apart from rest of world.

As part of the New Deal, the Federal Housing Authority was established and enacted changes in mortgages like lower down payments, 30-year amortization, 80 and 90% loan-to-values or higher, and universal standards for qualifying as well as construction standards.

But mortgages were first introduced not as a brainchild of banks but insurance companies, as a way to make money by seizing homes if people didn’t pay.
Initially, mortgages were interest-only with a big balloon payment after 5-7 years and homeowners had to put at least 50% down. 

1938 - Fannie Mae was founded by the government.

Post World War II – As troops returned home, the G.I. bill for veterans, was enacted, along with the VA mortgage insurance program.

1949 – 1960’s – The measures to stabilize and ensure banking confidence work, with mortgage debt to income ratio rising from 20 to 73 percent during this time, and mortgage debt to household assets ratio rising from 15 to 41 percent

1968: The Housing and Urban Development Act of 1968 looks to promote lending and home ownership to people all over the country.

1970 - The Federal Home Loan Mortgage Corporation was established to help promote home ownership.

1970- Freddie Mac is chartered by Congress.

1974 – the Equal Credit Opportunity Act seeks to prohibit financial institutions from discriminating based on race, color, religion, national origin, sex, age or marital status. 

1977 – the Community Reinvestment Act is enacted to promote lending by banks and savings and loan associations and home ownership among minority and low income groups, ostensibly eliminating the practice of “redlining.” 

1980’s - Adjustable rate mortgages returned to the market under the guidance of the Federal Reserve bank.

1986 – the Tax Reform Act of 1986 eliminated tax deductions for interest paid on credit cards, encouraging the practice of using home equity lines of credit and second mortgages. 

1991- A US recession looms and new construction prices fall.

1991–1997 – housing prices are flat until we go into the tech bubble.

1997 – Important tax legislation is enacted, with the Taxpayer Relief Act, including certain exclusions on capital gains, encouraging people to buy bigger, more expensive homes, vacation homes, and rental properties. 

2000-2003 – Early 2000’s recession.  Government mortgage institutions accounted for nearly 43 percent of the total mortgage market

2001 – The US Federal Reserve lowers the Federal funds rate an unprecedented eleven straight times, from 6.5% to 1.75%.

2003 - Fannie Mae and Freddie Mac buy $81 billion in subprime securities.

2004 – US home ownership increases to 69.2%, the highest of all time.

2004–2005 - Arizona, California, Florida, Hawaii, and Nevada record price appreciation in excess of 25% per year

1997–2005 – Mortgage fraud increases by 1,411%!  

2007 The Subprime Meltdown - New century, American Home Mortgage, and other huge subprime lenders file bankruptcy.  Countrywide, the nation’s biggest lender, narrowly avoids BK, while Ameriquest goes out of business.

2008 – according to the National Association of Realtors, 2007 had the largest decrease in existing home prices in 25 years

2009 - A total of 3,957,643 foreclosures were filed on 2,824,674 properties during the year, up 21 percent from 2008.

2010-2012 – the real estate market finds its “bottom,” as record foreclosures, defaults, modifications, and short sales sweep the nation.  New regulations are enacted.  Housing tightens and lending standards become more conservative.  Institutional investors snatch up REOs and distressed sales.

2013 - A total of only 801,359 properties receive foreclosure notices during the first half of the year, a 19 percent decrease over the previous six months, and 23 percent down from the same period in 2012. 

Thursday, November 7, 2013

20 Tips to buying your first rental property.

Investing in a rental property can be one of the best long-term financial moves you ever make, but it’s not without a fair share of risk and hard work. They say most first-time landlords actually lose money, or at least get supremely frustrated, because of the 4 T’s.  What are the 4 T’s?  They are taxes, termites, tenants, and toilets!

For those reasons, it’s best to do a fair share of research about buying and owning profitable rental properties.  An experienced, local realtor can be your greatest asset, and also talk to other successful long-time landlords and read up on the subject.  You’ll hear plenty of conflicting information, but that’s because there are different strategies based on where you live, your cash position, your capacity to fix up a property, etc. 

For the average first time investor, here are some general parameters for purchasing a rental property, so that you’ll be able to put cash into your pocket, not losing it because of the 4 T’s!
  1. A standard 3-bedroom/2-bathroom house is your best bet for a single-family residence.  Usually a whole family can’t fit into a 2-bedroom house, and 4 bedrooms and up typically have a higher price tag-to-rent payoff.
  2. Depending on your strategy, also check out halfplexes, townhomes, duplexes, triplexes, and even fourplexes, all of which still qualify for residential )non commercial) real estate purchases.  Definitely consult your realtor on this to learn the pro’s and con’s of each of these properties, because hidden issues like HOA fees and managing multiple tenants may make or break your investment. 
  3. Be careful with condominiums.  In some markets, they are amazing investments because you can get them so cheap.  But often it’s very hard to get a mortgage loan on a condo (especially if the renter-to-owner ratio is too low) and byzantine HOA rules and restrictions make them unattractive.  Remember this: people buy condos because they are new, easy, and cheap.  After the first wave of ownership the new part and often the easy part go away.  However, condos can be great if you can scoop them up for cash, and your maintenance and landscaping costs may be nil.
  4. Look for a humble house in the best neighborhood you can afford, not the best home in a marginal neighborhood, where appreciation won’t work in your favor.  Working class neighborhoods are great because there are always families who work hard, pay their bills on time, and need a safe, nice place to live.
  5. Stay away from high-end rental properties.  They rarely cash flow because your initial investment and mortgage payment are too high.
  6. NEVER bet on appreciation – only purchase a property that pencils out to cash flow immediately.  That’s the mistake too many of us made in the past, pre-mortgage bust; we bought homes betting that they’d appreciate quickly, even though they didn’t make money (or break even) in the short term.  That’s not investing – that’s gambling!
  7. When factoring all of your income and expenses for the property, make sure you over-estimate all expenses, probably by about 25%.  Factor in 3 months vacancy a year, and plan on the water heater blowing, unexpected roof fixes, etc.
  8. A house near parks or elementary schools is gold!
  9. Don’t buy on a street that is too busy.
  10. Don’t buy an older house – they require WAY too much fixing and unexpected maintenance.  Depending on the era, they might have nob and tube electrical, rusted pipes, asbestos, etc.  Your rental property doesn’t have to be brand new, but post 1978 is a good bet because construction was modern enough and you won’t have issues with lead paint.
  11. Make sure you get a great home inspector to check out the property, but spend extra attention on the roof, central heat and air systems, foundation, electrical, and plumbing.  Review seller disclosures carefully and get roof certifications or warranties when possible. 
  12. Have the seller pay for a detailed pest inspection, and if there are problems (like termites) request that they pay for a year's pest control service.
  13. As you are buying the property, ask the realtors if you can put up a “For Rent” sign in the front yard, even when in escrow.  Definitely put one up when you close on the property, even if it still needs some work – you probably will get a lot of phone calls from drive by traffic and have a renter the first day it’s ready.
  14. Find a house in close proximity to shopping, people’s workplaces, highways, etc.  Don’t buy a house that’s too isolated.
  15. Make sure the house you buy is consistent with the neighborhood.  For instance, don’t buy a 2-bedroom house when all of your neighbors are at least 3 bedroom homes.  Your house appreciates in value only based on closed comparable sales, as done by a licensed appraiser.  If there are no similar properties, there are no comparable sales, and the value won’t go up.
  16. Try to find a house with a clean, open, standard floor plan.
  17. Look for a property that you can improve with easy projects: paint, tile, landscape, fixtures in the kitchen and bathrooms.  Those are easy, cheaper than big, complicated fixes, and most of the time you won’t need a permit.
  18. Stay away from homes with “funky” rooms.  Homeowner additions, converted porches, garage conversions, etc. are all always liabilities, not assets, and never count the square footage to these rooms in your calculations.
  19. Owners vs. renters.  If you’re purchasing a single-family residence, try to buy in an area with a healthy portion of homeowners, not just renters.  Homeowners usually take more pride in their homes and improve them more, because they have pride of ownership – and a big financial interest.   
  20. My best advice?  The old adage, “Location, location, location,” is true – buy in the best neighborhood you can!