Lessons learned from buying my FIRST rental property

[Jin Park]

Hi BP Community!

I just wanted to share some lessons learned during my recent purchase of my first rental property through a turnkey provider. Overall, my experience has been smooth with only few minor hiccups along the way that can definitely be avoided in the future. I structured this post by tackling the items based on who you are working with.

Working with a Turnkey Provider

1. -Make sure you do a thorough research when picking your turnkey provider. In BP forum, search for "[turnkey provider name] review". Some turnkey providers today makes investors bid for their inventory, which I wasn't aware. I tried to stay away from these type of providers since your initial number that you analyzed will change based on the final purchase amount you bid for.
   
2. -Once you pick your turnkey provider, make sure you consider the following item list:
3. 1. Clarify if Property Manager is already selected. Many turnkey providers work with specific Property Managers, and they may have already selected an agent for you. I was not aware of this so I interviewed bunch of PMs and signed a contract before the closing, which I had to terminate since my provider already had a PM selected for me.
4. 2. Ask key property information such as the following. These information will be handy when shopping for your insurance.
5. --Roof Type
6. --Foundation Type
7. --Furnace exist
8. --External/Detached building(s) exist
9. --Porch exist
10. --Garage capacity
11. --What appliances are included
12. ***If your property is built prior to 1940, then some of the insurance providers will require proof of repair of the Roof, Electrical Wiring, and Plumbing. Some insurance providers will accept Appraisal document as an alternative proof.

Working with a Lender

• -Ask for the anticipated closing date so that you can use it as Coverage Start Date for insurance. I thought I was being smart and made the insurance coverage start date to 3 months from when I started this entire process (I started this process around mid August so I had my insurance coverage start in November 1st). Lender was able to process everything quicker and requested me to update the insurance coverage, however, even with gazillion phone calls with Allstate, they had so much issue updating my coverage start date. Long story short, Allstate could not update my coverage start date before November 1st, so my closing got pushed back by 2 weeks.
• -Ask your lender the following questions regarding your insurance coverage:
• 1. Should Insurance be based on actual cost or replacement cost?
• 2. What should be the minimum dwelling coverage?
• 3. What is the Loan number that needs to be specified on the coverage?
• 4. What is the exact lender P.O.BOX and exact contact info that needs to be specified on the coverage?

Working with Insurance Company

• -Ask if there are any discount if you looking to bundle your auto and primary home owner's insurance along with your new rental property.
• -Make sure the Loan Number is included in the policy.
• -Make sure coverage start date is correct.
• -Make sure your Date Of Birth is correct.