If stock market volatility is keeping you awake at night, you may want to consider adding income property to your portfolio.

Let’s look at an example:
If you purchased a three bedroom property for $130,000.00 and put 20% down on a thirty year mortgage, then your monthly payment including principal, interest, taxes, and insurance could be expected to be about $800.00 a month. Considering that rents in desirable areas of greater Lansing can run between $1200.00 and $1400.00 per month, this can be a very good investment.

In addition to the potential of cash flow from real estate investments, there is also an opportunity to build wealth through price appreciation (or as the price of properties increase from what you purchased them at) and 1031 exchange opportunities down the road.
While the stock market is expected to continue to be volatile, many individuals are choosing to move investment dollars into hard assets that can be part of a balanced investment portfolio.

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood damage as a standard item. This type of coverage must be bought separately.

2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3. Know the replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

4. Know the actual cash value. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

5. Know the liability. Generally your homeowner’s insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.