Purchasing surplus property at government auctions has been done for years. Many Americans have built their wealth by purchasing and reselling government surplus and land year after year. Instead of purchasing goods at retail or even wholesale prices from companies or ordinary stores, why not go to a government surplus property auction and possibly pick up the same piece of merchandise for a small fraction of the price?

Government auctions, especially surplus auctions, have proven to be an essential resource for individuals looking to acquire goods for pennies on the dollar for their business, and the great thing is, anybody can go to them. You don’t have to work for the government and you don’t need to know anybody to gain special privileges in order to attend the auction.

Now that know just how beneficial government surplus auctions can be, let me tell you what a surplus auction really is. Any property the government does not need is considered “surplus.” And if the property cannot be donated to a state or public agency or nonprofit organization, it ends up being sold to the general public. Federal government agencies such as GSA oversee the sale of federal surplus property to civilians. GSA is the federal government’s procurement agent. They purchase the supplies, equipment and vehicles that federal workers need to do their jobs. When items are no longer needed by the federal government, they stretch our tax dollars by offering them for sale to the public. Their auctions include a wide variety of items for sale to the public that would interest both individuals and businesses. Aside from GSA there are many other federal and state government agencies and departments that also sell surplus property — state DOT department, and many others.

You might be asking yourself what types of items you could possibly find at a surplus property auction. The answer is simple: almost anything you can think of! Items generally range from automobiles and other vehicles to tools, industrial machinery, or office equipment. The list goes on and on which is why everyone needs to check out these surplus property auctions now. There is even surplus land, buildings, and other real estate.

Since automobiles are a very popular surplus item I thought I’d tell you a little more about the process of how they are acquired and sold. Most of the surplus vehicles GSA purchases are new and driven by government or state agency employees for official purposes. They are sold when they reach replacement age and/or mileage limitations. Used government vehicles are one of the best buys in the marketplace today. The vehicles are well maintained, have relatively low age and mileage and have desired features like automatic transmission, air conditioning, power steering, and power brakes. They also come in attractive body styles and a variety of colors.

There are a number of websites out there that provide information and even services that allow you to bid and purchase surplus and confiscated items via the internet. Each participating agency has its own auction rules and regulations and may be subject to state and local ordinances. Some items are sold online by auction or fixed price and others are available by public auction or sealed bid. Buying new, seized, surplus merchandise and real estate from the government has never been so easy! Resources like GovernmentAuctions.org® provide some of the most comprehensive information on these surplus property auctions. Take a look at their site and see what I mean.

The proper rental property insurance coverage can protect you from losses caused by many dangers, including fire, storms, burglary, and vandalism. A comprehensive policy also includes liability insurance, covering injuries or losses suffered by others as the result of defective or dangerous conditions on the property. Liability insurance also covers the legal costs of defending personal injury lawsuits – a valuable feature because the legal defense costs of these cases are commonly much greater than the ultimate award of damages, if any.

Common coverage’s

The following list describes the three levels of coverage available for primary policies, all of which include liability coverage. Many insurance companies offer competitive insurance packages especially designed to meet the needs of rental property owners, so remember to shop around.

Basic coverage: Most companies offer a basic coverage package that insures your investment rental property against loss from fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, and even volcanic eruptions.

This coverage often doesn’t include certain contents, such as boilers, equipment, and machinery unless specifically added as an endorsement. Based on the type of property you have, you may need to consult with your insurance agent about additional coverage that may be beneficial.

But just because you own a small retail strip center with a couple of plate glass windows doesn’t mean you need to have the special coverage that’s offered. Insurance companies often have minimum policy premiums, so certain insurable items and acts aren’t worth insuring because the potential for a claim is minimal and the costs are high.

Broad-form coverage: You get the basic package, plus protection against losses of glass breakage, falling objects, weight of snow or ice, water damage associated with plumbing problems, and collapse from certain specific causes.

Special form: This coverage is the broadest available and covers your property against all losses, except those specifically excluded from the policy. It offers the highest level of protection but is typically more expensive.

An insurance company can pay owners for losses in two ways:

Actual cash value: The coverage pays the cost of replacing property less physical depreciation. The standard policies most insurance companies offer provide for actual cash value coverage only.

Replacement cost: This coverage pays the cost of replacing the property without subtracting for physical depreciation. You must specifically have an endorsement and pay extra for replacement cost coverage. However, we do encourage you to purchase it.

As with homeowners’ insurance policies, the location, age, type, and quality of construction of your property are significant factors in determining your insurance premiums. Be sure to get an insurance estimate before you buy your property to avoid unpleasant surprises (older properties with wood shake shingles located away from fire protection may not even be insurable, for example) and realize the benefits of lower risk properties. For example, newer commercial buildings, and even some residential proper- ties, were constructed with fire sprinklers and alarms that reduce your insurance premiums – so do as monitored intrusion alarms).

Some insurance companies have a coinsurance clause that requires rental property owners to carry a minimum amount of coverage. If you carry less than the minimum amount of coverage, the insurance company imposes a coinsurance penalty that reduces the payment on the loss by the same percentage of the insurance shortfall. For example, if you carry only $1 million in coverage when you should have $2 million, you’re only carrying 50 percent of the minimum required insured value. If the building suffers a loss, the insurance company pays only 50 percent of the loss.

Many rental property owners first become investors by renting out their former personal residences when they buy new homes. They may not realize they should immediately contact their insurance agent and have their home- owners policy converted to a landlord’s policy, which contains special cover- age riders that aren’t in the typical homeowner’s policy. Because of the increased liability risk for rental properties, some insurance companies may not even offer this coverage, whereas others specialize in this business. Either way, obtain proper landlord’s coverage for your rental property, or you may face the possibility of having your claim denied.

If you own multiple investment or rental properties, consider

A single insurance policy that covers all locations: Rather than have separate policies for each rental property, you can get better coverage with a single policy. For example, if you currently have three properties each with a $1 million policy, you could get a single policy with a $3 mil- lion limit at a more competitive cost.

An aggregate deductible: An aggregate deductible is the portion of your loss that you essentially self-insure, because the losses at any of your three properties can go toward meeting the aggregate deductible.

Excess liability (umbrella) coverage

Excess liability (umbrella) coverage can be a cost-effective way to dramatically increase your liability protection and is designed to supplement your main or basic policies. An umbrella policy provides both additional and broader coverage beyond the limits of the basic commercial general liability insurance and other liability coverage and this coverage is only available after the primary policy limits have been exhausted.

Your primary policy may have liability limits of $500,000 or $1 million, but an umbrella policy can provide an additional $1 million in vital coverage at a cost of $2,000 to $4,000 per year. Depending on the value of your property and the value of the assets you’re seeking to protect, buying an umbrella liability policy with higher limits may make sense. Umbrella policies are avail- able in increments of $1 million with even lower rates per dollar of coverage as the limits go higher. The most common umbrella coverage amount for the owners of large investment properties now is $5 million at an annual cost of approximately $7,500 to $12,000.

Purchase your umbrella policy from the same company that handles your underlying primary liability insurance package. The reason: If you have two different insurers rather than just one, the companies may have different agendas if legal problems arise.

Are you a property manager or landlord? You might be overlooking some important tax deductions that can help save you money. Knowing more about these deductions and taking advantage of them will help you improve profit margins. Let’s take a look at some of the deductions that most landlords don’t realize they can use to their advantage. Knowing about them can make a big difference in your tax bill this coming year.

1. Property Depreciation

When you buy a new rental property, tax law doesn’t allow you to claim the full amount as expenses immediately. The law instead allows you to depreciate it over a long time period. This period is usually twenty to thirty years. Since it’s such a long time, many landlords don’t bother to take it at all – a big mistake. Make sure that you’re getting the proper depreciation deduction for your property.

2. Insurance Premiums

If you’re a landlord, there’s a good chance you’re already paying for several different insurance policies. All of these premiums qualify as tax deductions, which many people don’t know. You can add in liability insurance, building insurance, worker’s insurance for people who manage your properties and several other types when you file your next return.

3. Mortgage And Credit Card Interest

Most individuals take out a mortgage to pay for our rental properties. This comes with a significant amount of interest every year. Fortunately, that interest can be deducted from the amount you have to pay in taxes. Any rental expenses paid by credit card can have their interest deducted in the same way.

4. Bills For Repair And Maintenance Of Your Property

Keeping your rental property in good condition is also a tax deductible expense. Any maintenance and repairs that are needed to make sure that the home you rent is up to code and safe to live in can be deducted. However, improvements to make the property more valuable do not count. Make sure you get a receipt from any contractor or repair person you deal with to help make filing your taxes easier.

5. Travel Costs

If you need to travel to fix property, collect rent, or engage in other property related activities, you can claim travel costs. If the properties are abroad, this means airfare, hotel expenses and more. If the properties are in the same country, fuel costs and vehicle repair bills related to the trip will apply. Keep a close watch on these, though – tax authorities are careful about allowing these deductions.

Your rental property is an important factor in the way that your taxes are figured. Make sure you understand the relevant taxes in your county and which deductions you’re allowed to take under the law. You could significantly reduce the amount that you have to pay each year, simply by reporting these expenses on your tax form.