Chapter 14: Insurance Is Not Very Reassuring

September 3, 2018

 Moving to Mexico:  USAdios.com

Chapter 14:  Insurance Is Not Very Reassuring

245 Pounds…10 pounds to my first goal of 235.  Holding steady with no change.  Stuck?

Part of leaving California and moving on to a simpler life is cutting some cords.  We just cancelled our longtime agreement with DirecTV.  As you see above, we had a LOT of remote controls…no we did not use all of them.  They just kept sending us replacements for the units we did not wear out fast enough and they stacked up.  The smaller one was for an outdoor, wireless unit on our deck.  All of it will be shipped back to them this week.

Spoiled?  Yep, believe it.  We had a total of six receiver boxes and used them all.  My mother used to comment,

“One thing I love about you, son.  You have a lot of things, but you use them all!”

And she was right.

 

We fell out of love with California years ago and tended to spend a lot of time at home.  We purchased the vacant land behind our home, turned our backyard into a small resort and added a second garage (Man Cave).  And we commenced to really using our home.  *You may be thinking, who is this jerk?  Always talking about what he has?  Truth:  we leased the land behind our house from a utility company for $100.00 per year, fenced it in and made it nice.  We invested in our #1 investment: our home, by improving as much as we could to include the landscaping and adding a second garage that someone could actually turn into living space later.  We’re not rich.  We’re smart.  Sometimes.  And we use what we have to make the best life possible.  Believe me, having two TV monitors next to each other in my shop is a blessing.  When I was a kid, having multiple TV’s stacked on each other meant that only the tiny one on top worked.  I was not born with a silver remote in my mouth.

 

We rented every single UFC pay-per-view and had a viewing party for our friends and family.  I lit up every TV in the house, deck and shop with the fight and people meandered to each screen.  Our house was alive with the sounds of the MGM Grand Hotel in Las Vegas and the excitement was palpable.

Our son had a dance at his school the night of the infamous McGregor vs. Mayweather fight, so I set him up to view the event on his iPhone via our Slingbox.  He said he watched the fight live, at the dance with thirty young men behind him staring at the tiny screen.  That is a moment he’ll never forget.  Yes, we have a lot of tech, and we use it.

If there was a party or event, it was held here.  We have had countless birthday parties, only one I regret:  we allowed an old assistant’s daughter and her freaky family to use our house, deck and yard.  Her special-needs brother, built like a linebacker, almost knocked the kids completely out of the bouncy-castle when he hit it, NFL style.

We have had two wedding showers (back to back weekends), graduation parties, and many calendared events like “End of Summer”, “Beginning of Spring”, “Cinco de Mayo” and the biggest one of all:  Christmas Day Night.  Betty’s birthday is on Christmas Day, so until around 2 PM, it’s Jesus’ birthday and after that it’s Betty’s party for the next 12 hours, aka, the longest day of the year…and my life.  Every year, we convert our home into a small restaurant where we host upwards of 25 guests for a Christmas dinner bash so fun, even our Jewish friends attend.  It’s sad (and just a little relieving) to think we will only have that dinner party one more

time before we leave.

I have had fun here, and I KNOW I will miss this house with all of my heart.  I have never lived in one place so long.  This has been my home more than any other place.  Even so, I’m ready to downsize soon and move on to the next phase of life.

 

Two things I have been dealing with our place in Mexico are:

  • Homeowner’s insurance
  • Marketing the home for rent.

Insurance in Mexico is vastly different from the USA and a LOT more expensive.  For our home in Walnut Creek, valued around $1.2 million (we’ll see…), typical ranch house, built in the 1960’s, three bed/two bath, nice neighborhood, etc.  We pay only $1,136.00 per year for insurance.  We had a pretty serious claim a few years ago when a local water utility pipe burst and flooded our yard yet our rate never went up.

Our home in Mexico, on a protected resort, non-waterfront, brand new, worth less than $265,000 to rebuild (land value separate) is costing almost $2,000.00 per year to insure.  Here in the USA, we pay biannually for insurance.  In Mexico (depending on your zone, we are in the Yucatan zone) you can pay biannually if you are not in a “coastal” zone, like we are.  We must pay annually.

I shudder to think what will happen if we actually have a claim.  Insurance is you’re an attorney:  you hate it until you need it.  And I’ve needed both, so I won’t complain too much.

The math on how a claim works in Mexico is very complicated but works like this: 

Example Home $100,000.00.

 

  • First you have your total value Deductible of 2% (can be 5% or more on the ocean). *2% x the total value of your home’s insured value.

That’s $2,000.00 right off the top for any claim on this example house.

  • Then you have your Co-Pay of up to 20% for the actual claim.

But that is only of the claim.  You may deduct the Deductible.

 

Yeah…it’s getting complicated, right?

 

  • If your claim was $50,000.00, you would get 80% of that less the Deductible.

Or…

  • $48,000.00 x 80% = $38,400.00 you would be paid for your $50,000.00 claim.

 

One last thing:  if you plan to rent your home in Mexico, you must get a Commercial plan and if you rent to someone who is injured and sues you outside Mexico, you are not covered for that suit.  Example:  You rent to a couple from Wyoming.  They get drunk and fall down the stairs.  They sue you in the USA where you are still a citizen and you must defend the lawsuit, regardless of how innocent you are.  Your Mexican insurance does not cover that lawsuit.

Not great.  See why I am praying we never have a claim?  I know that is normal, but it is clear to me why insurance firms are the richest companies in the world.

 

When we built our place, we were promised we could rent it for $20,000.00 per month in high season.  I wanted to believe it, but I’m not stupid so I cut that in half and figured if we got that much, we would still be thrilled.  We have listed our home for rent for $150.00 per night for each 750 square foot, 1 bedroom/1 bathroom unit and have had zero luck.  Our current property manager is not doing a very good job, so we have had to find another one.  I found one on one of my expat sites, email me if you need the site.  It’s been very useful.

The new property manager has informed us that our units should rent for about $80.00 to $100.00 per night.  Not good.  But if we get tenants who like our place and give us good reviews, we’ll get more tenants and the rent can slowly go up.

Some math:

  • $80.00 per unit, per night, for seven nights = $560.00 per week.
  • Full occupancy = two units for 30 nights = $4,800.00 per month.

 

That’s hardly the $20,000.00 per month I was promised, but we are not including the upstairs 2 bedroom/2 bathroom unit we could perhaps rent at $150.00 per night.

  • $150.00 x 30 nights = $4,500.00 per month.
  • Plus $4,800.00 per month for lower units = $9,800.00 per month.

Some have called my “cut it in half” policy of managing expectations on investments “pessimistic.”  I call it, “correct”, because it usually works.  And if I am wrong, I am happy to be wrong.  For now, it’s all just conjecture and hopeful guesswork.

 

We will see soon.

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