Hi Len, I’m an avid reader of your website. Thanks for all the great information you share! I’m planning on buying a car soon. I’d like a decent car that won’t give me too many problems, but I’m not sure if I should pay in full for an older model, or put a down payment on a new one. I’m thinking that putting a down payment on a new car will help build my credit, but I don’t want to feel I owe anyone on something which isn’t an investment. Which option do you think is best? – Ama
Hi, Ama. I’m glad my website has been helpful to you and your friends! I think you answered your own question when you said you don’t want to feel you owe anyone on something that isn’t an investment.
Remember, you can build your credit in other ways besides getting a loan for a new car and making regular payments. One of the best ways to do that is by getting a credit card and make monthly purchases on it for everyday living (groceries, paying utility bills and other expenses) and paying off the credit card in full every month!
You can also build your credit by simply paying all of your bills on time. For more ideas, please refer to an article I wrote about awhile back on 40 ways to improve your credit score. Best wishes on the hunt for a replacement vehicle!
Hello Len: We’ve been following you for several years and think you’ve been spot on regarding the collapsing value of the dollar. However, we still have money tied up in investments, and wonder what to do. Both my husband and I are retired with government pensions. We own a house with a mortgage. We also have a small condo in a warm climate that’s paid for. If things go wrong, I’m afraid that our pensions would be affected. One thought we had was renting out the condo for income in case our pensions become decimated. Would it make sense to use some of our investment money to buy another rental property? Should we invest in precious metals instead? The real estate crash in 2008 has us understandably nervous. But we wouldn’t be “flipping” the property, just renting it out. – Alice
Alice, I can’t give you investment advice; I can only tell you what I am doing. While a growing number of people are finally realizing there is an impending financial system train wreck ahead of us, it’s impossible to say exactly how it will play out with even 90% accuracy. And that’s the unfortunate dilemma we all have to deal with. I’m handling this by minimizing my financial risk wherever possible by ensuring my return of investments rather than return on investments.
The nice thing about precious metals is that they’ll act as a bridge to the next monetary system – whatever that turns out to be after the current US dollar (USD) system is either replaced or sharply devalued, as it was by FDR in the early 1930s. Only then would you use those precious metals as the capital for starting a new business, or making new investments. For example, at current prices, the median US home is valued at approximately 7500 ounces of silver. In the event of a currency failure or sharp devaluation of the USD, I expect the median home price will fall to just 500 ounces of silver or less.
In short, physical precious metals minimize risk by allowing their owners to be patient. As a result, physical gold and silver holders can sit back, wait for history to play itself out, and then invest accordingly when there is more clarity.
If you have a question you’d like me to take a crack at answering, send it to: Len@LenPenzo.com — and please be sure to put “Mailbag” in the subject line.
Photo Credit: gajman
I bought a used car and I am happy that I did because it’s costed me less money and I felt lucky that I came across a good deal. My advice is know your situation, which really dictates you whether you buy a new or an used car. Good luck!
Alice: You’ve worked hard and you’re retired, congratulations. But do you really want a job as a landlord? Your tenants will trash the place, not pay rent on time, have a dog which bites a person and you as landlord will be sued because you have money and tenant has none, you can lose both your current houses to a dog bite suit. Your tenants will be slobs, the place will be trashed. because most new landlords are awful at their job.
Here’s a few tips for the new landlord:
1. Advertise on Craigslist and Facebook marketplace so you don’t hemorrhage away money on ads. Put in lots of photos.
2. Deal with potential tenants ONLY through email so there is a written record of what each party says. Do NOT give out your phone number. Do NOT call them even if they ask you to call. Ask these 5 questions BEFORE allowing them to tour the property: For whom is the apartment? Where do you work? What do you do? How Long? Where do you live now? Why do you want to move to Xtown? Many will refuse to answer these questions, usually it’s people working for the “sue you” law firms which are trying to gin up a fake case and extort $5-10 thousand for you to drop frivolous suit.
3. State you will do credit check and criminal background check, this gets rid of a lot of the bad ones.
4. When they come to see the place examine the INTERIOR of their car. If it’s knee deep in fast food wrappers, aluminum beverage cans, dirty diapers, and other trash, this is how they will treat your property. You do not want the terminally filthy.
5. Insist up front on the maximum security allowed by law, the first month’s rent, and an exit cleaning fee . Deposit security in a special landlord / tenant bank account. You want to make the amount of money they must raise to move into your apartment as high as legally possible which weeds out automatically the people who are unable to pay rent and support their lifestyle. This sounds cold but renting property is a BUSINESS and there is no point in taking a tenant who is unable / unwilling to pay the rent.
6. Have premises professionally cleaned when a tenant leaves and TAKE LOTS OF PHOTOS BEFORE AND AFTER THE CLEANING. ) Keep the photos. You can write off the cleaning fee and you have PROOF that the apartment was clean when the tenant moved in. If you clean it yourself you do not have PROOF of cleaning.
7. NEVER, NEVER, NEVER take a pet. Cats will urinate all over the apartment and scratch the woodwork and the rugs, they bite people. Dog will bite someone and you will get sued and possibly lose everything you have. No fish because that 100 gallon tank will crack joists in your floor and eventually leak. No pet bugs because they will get loose in the apartments, no reptiles, NO PETS.
8. Pay a professional to write the lease, don’t think a cheapo lease off the internet will suffice or you will have big problems. It is worth the hundred or so dollars to get a professional real estate attorney to draw up the lease. Don’t use a general attorney, ambulance chaser, etc., use a real estate professional attorney.
9. Enforce the lease. Lease should include clause that if you have to send them a certified letter to get them to pay rent or cease doing things contrary to the lease, that they must pay your cost of certified letter in cash immediately if they wish to stay.
10. First time they are a day late with rent after grace period, FIRE OFF CERTIFIED LETTER TO VACATE THE PREMISES FOR NON PAYMENT AND STATE WHAT THE LATE FEES IN THE LEASE ARE. They are testing you to see if you are a sucker and then they will start with the sob stories if you haven’t sent the certified letter.
Tenants are not your friends. This is a business and if they do not hold up ALL of their responsibilities, go the certified letter route and if they do not comply go to landlord tenant court and boot them out, THE SOONER THE BETTER. If they are late with the rent and you go along with that you will lose money as they will not pay. 98% of all landlord / tenant cases are for non payment. I learned this as I sat in landlord tenant court for the 198th time (197 victories, one draw!) last week because the judge told us this interesting fact.
Tenants will have all sorts of reasons why they do not pay the rent and it is up to you as the owner to accept NONE of them and to boot them out for non payment or bad behavior as quickly as legally possible. Tenants LIE when they say they will pay the rent late, will catch up with back rent, will pay you a week from Wednesday when the rent is due today.
Limit number of occupants allowed in apartment and enforce that rigorously.
You can make money with rentals, but you have to be professional about it from day one.
Wow! Great list, Karen. This should be a blog post unto itself!
Excellent Post/Comment!!!!! Excellent.
I’m a little less rigid only because my tenants have all been relatives of a friend and neighbour. I know if current tenants screw up she’ll tear them apart for me. But I also give them a deal beyond belief. Works both ways. Looking at buying a different neighbours place to protect ourselves and home. Why? I live rural and the problem is easily seen. You can get a Harley driving pitbull owner moving in next door who likes to party and then what do you do? Please rental powers, please, just someone normal. Please.
I would like to add two things to your list. In any rental agreement see if it is legal where you live to include a limit of one car per adult (listed on the agreement) and only one household amount of “stuff”. Another friend’s wife has an anxiety disorder and soothes it with buying ‘stuff’. She is a hoarder. Her husband also has 5 cars in various states of not running. They rent and her place is packed solid with her ‘things’. Think fire hazard. And I know another guy down the street who is always buying junkers. I don’t have a problem with dogs at all as long as they are nice ones. Cats? Nada, for all the reasons you mentioned.
Another friend owns a duplex and he rented out one side. It was originally rented to ‘the boyfriend’, who moved out and left his girlfriend. His name was on the agreement, not hers. The girlfriend then had a succession of new boyfriends, none of which was on the original agreement. That was the grounds for eviction, she wasn’t on the original agreement. Now he has a nice retired couple living next door.