All Forum Posts by: Aaron Porter

I have seen claims denied for what Deb suggested... if the property is a rental you should have a landlord policy.  most carriers also differentiate between short term rentals and long term rentals.  Don't cheap out and get the wrong policy it will cost you BIG if you have a claim.

Florida is a tough market for property insurance.  I don't know your current policy but you are probably best off replacing the roof and letting your current insurer know so they keep your policy in force.

Dave,

I agree with John.  Personal umbrella, USLI and RLI are 2 that we use in house.  There are a few other companies that have good umbrella policies as well. Just make sure your underlying policies are set up correctly. An umbrella doesn't offer coverage that isn't already covered under your "baseline" policies.

The only way it is a total loss is if you don't opt to rebuild.  your insurance if set up correctly should pay for the cost of rebuilding... unless you have actual cash value, in which case they will pay out the ACV (cost to rebuild minus depreciation)  this is why it is imperative that you have a good insurance agent who has your best interest in mind.  

It sounds to me like you need to get into contact with your agent, have them explain what your insurance will and won't cover and maybe hire a litigation lawyer to help you.  

Iit is hard to give anymore advice than that without looking at your policy, and the communication that you have had with both the insurance carrier and your lender.

you definitely need to work with your agent and your lender.

the mortgage has to be paid back whether or not you decide to rebuild the property, but lenders do not usually call for repayment of the loan unless you decide not to rebuild.  

The age or condition of a roof doesn't have any relation to the amount or substance of liability coverage that you can place on any given property.  The roof does come into play with the overall cost of your insurance policy though as having to replace the roof on a property is a risk for the insurance carrier.  

My agency is having very hard time finding carriers that are willing to insure homes in Florida because so many carrier have left the state which has left Citizens as one of the few carriers able to insure properties.  Citizens is owned by the Florida Government so they are not going to leave the state.  Which is a pro for individuals who own property in the state.  

My general recommendation for clients is to only carry the amount of liability coverage needed to have an umbrella policy.  Your umbrella policy will add more coverage to not only your property but it can also add coverage to your primary residence, and auto policies.  much better value especially when you consider most umbrella policies cost somewhere between $250-$325 annually for $1million...

water leaks could be covered by your insurance.... that is if you have the proper insurance.  Some of my clients don't want the extra monthly expenses of having anything but base level insurance.  Get insurance that fits your personal level for risk. 

Also with dogs causing damage that could be covered under the tenants renters insurance.  Damage caused by the tenant can be covered by the liability portion of a renters insurance policy... If you maintain a good relationship with your tenant, the tenant can submit the claim and make the process easy.  If you have to sue the client and go through the court process to claim against their insurance.  

Moral of the story put requirements on tenants having and maintaining renters insurance... and you the landlord having and maintaining good property insurance.

I have clients that give discounts on rent for their tenants having and maintaining renters insurance.  

You definitely want to have your "tenants" get their own renters policies.  They are super cheap and a lifesaver if the tenant needs to make a claim.  Your homeowners policy (yes it should be a homeowners policy because you will be living in the home, a Dwelling fire will not have enough coverage for contents among other provisions) will not cover your tenants property.  they are tenants as they are not your dependents.  

Most "owner managed" rentals that we write insurance for, the owners do a google search for a blanket renter/landlord agreement for their jurisdiction (state and maybe even city)  You could have an attorney draft something but it usually isn't necessary anymore with how powerful the free information on the internet is.  

make sure that your tenants include you as an additional insured on their renter's policy.  That gives you extra protection in liability claims and it gives the tenant protection a better standing as it provides a unified front for legal litigation.   

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $165,000
Cash invested: $80,000
Sale price: $295,000

Originally purchased the property with the intent of living in it. We bought it out of foreclosure and in need of major TLC and updating. Property is located in Cardston, Alberta Canada

What made you interested in investing in this type of deal?

The property sat on a 1/2 acre lot with a huge backyard. It had 4 bedroom and was cheap. We were able to pick up the home way under appraisal out of foreclosure. I have a lot of experience doing the labor part of renovations as that is another thing that I have done in my very extensive work history. I knew not only would the house be a good house to live in it would make a great investment after the renovation.

How did you find this deal and how did you negotiate it?

found the home on realtor.ca, and used a good friend who is a local realtor to submit the offers and close on the property. We were negotiating with the bank and luckily there were no other competing offers.

How did you finance this deal?

The purchased with cash lent to us by my father in-law. By doing this we were then able to go to the bank and take out HELOC to pay for the renovations which I did solely by myself. (with the exception of installing the new carpet). After the renovations were finished we got a new appraisal, and refinanced the house with a local credit union and paid off the hard money loan from my father in law with 9% interest.

How did you add value to the deal?

I found the home to purchase, after the purchase I did all of the required work for the renovations. This home was a complete gut out to the studs, replace all the windows, new exterior siding, major electrical upgrades, plumbing upgrades, all new bathrooms, added a bedroom in the basement.
after we finished the home we decided to leave the country and placed the home on Airbnb. It was a short term rental for 1.5 years where it provided enough income to help us travel through Mexico

What was the outcome?

After my wife and I separated we decided it would be best to sell the property. We listed the home and although we didn't get as much as we would have liked it was still a very worthwhile business deal

Lessons learned? Challenges?

It is very draining to run a business and renovate a home by yourself. There were many challenges including spending too much time away from my children. I found that having a good partner is invaluable. whether that partner is a spouse or a business partner. Those relationships will make or break any opportunity that you have in your life.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Mike Walker with Lethbridge real estate .com handled the sale of the property and did a great job.

Investment Info:

Industrial other investment.

Purchase price: $350,000
Sale price: $405,000

Operational automotive repair facility that worked on all makes, models, and types of vehicles. I did not learn my lesson the 1st or the 50th time as I purchased this from my father he stayed on and we worked together. The business was started by my father. When I moved back to the USA I stepped in. My fathers health didn't allow him to properly run the business. I bought him out and ran the business for a year before we decided to sell and move into new projects

What made you interested in investing in this type of deal?

I have worked in the automotive field most of my life. From the time I was in diapers I was greasy. When I moved back to the USA it made sense for me to step in and take over from my father who is a full time school teacher and no longer capable of doing the required work to run the business. It also gave me something to focus on as I was going through a divorce.

How did you find this deal and how did you negotiate it?

It was a family business that I have worked in all of my growing up years. I negotiated directly with my father for him to exit the business, and to let me take over the operations of the business and managing the property.

How did you finance this deal?

100% vendor financing. $0 down. $1500 a month in interest. I operated the business and took home a salary the whole time.

How did you add value to the deal?

I came in with a new face and the ability to bring life back into a failing business through management changes, and physical labor of actually being the guy in the shop doing the work that was requested by the customers.
about 1 year into the business I was facing a decision, either go full scale and rebuild the business to increase revenue or sell. I decided the best move forward was to sell. It was difficult to let go emotionally as it was a family business but it was the correct choice.

What was the outcome?

I walked away from the business getting my time back as I was focusing 80-100 hours per week on operating the business to make sure that all the bill were getting paid. I also got just shy of $40k for my time and energy investment. The outcome was extremely beneficial overall. for my family they were all able to mentally start moving on and for my father he is still emotionally tied to the business but it was the best thing for him as it was a huge drain on him and his resources.

Lessons learned? Challenges?

I reinforced my belief that you shouldn't mix business and family. I learned that I was ready to move into a new level of business and career. Instead of working solely with my body just pushing my physical limits. I decided to work with my mind and be smarter and build something that I can do remotely.
Some of the Challenges were finding a good balance of time in making sure that the business ran properly, all the work was getting done in an orderly manner and I had a personal life.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

When I sold the property we used Tim Lebaron a commercial real estate agent in St. George, UT.

Investment Info:

Industrial other investment.

Purchase price: $350,000
Sale price: $405,000

Operational automotive repair facility that worked on all makes, models, and types of vehicles. I did not learn my lesson the 1st or the 50th time as I purchased this from my father and he stayed on and we worked together. The business was started by my father when I was a very young child. after moving back to the USA, I stepped in as my fathers health was not allowing him to properly run the business. I bought him out and ran the business for a year before we decided it was in our best interest to sell and move into new projects.

What made you interested in investing in this type of deal?

I have worked in the automotive field most of my life. From the time I was in diapers I was greasy. When I moved back to the USA it made sense for me to step in and take over from my father who is a full time school teacher and no longer capable of doing the required work to run the business. It also gave me something to focus on as I was going through a divorce.

How did you find this deal and how did you negotiate it?

It was a family business that I have worked in all of my growing up years. I negotiated directly with my father for him to exit the business, and to let me take over the operations of the business and managing the property.

How did you finance this deal?

100% vendor financing. $0 down. $1500 a month in interest. I operated the business and took home a salary the whole time.

How did you add value to the deal?

I came in with a new face and the ability to bring life back into a failing business through management changes, and physical labor of actually being the guy in the shop doing the work that was requested by the customers.
about 1 year into the business I was facing a decision, either go full scale and rebuild the business to increase revenue or sell. I decided the best move forward was to sell. It was difficult to let go emotionally as it was a family business but it was the correct choice.

What was the outcome?

I walked away from the business getting my time back as I was focusing 80-100 hours per week on operating the business to make sure that all the bill were getting paid. I also got just shy of $40k for my time and energy investment. The outcome was extremely beneficial overall. for my family they were all able to mentally start moving on and for my father he is still emotionally tied to the business but it was the best thing for him as it was a huge drain on him and his resources.

Lessons learned? Challenges?

I reinforced my belief that you shouldn't mix business and family. I learned that I was ready to move into a new level of business and career. Instead of working solely with my body just pushing my physical limits. I decided to work with my mind and be smarter and build something that I can do remotely.
Some of the Challenges were finding a good balance of time in making sure that the business ran properly, all the work was getting done in an orderly manner and I had a personal life.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

When I sold the property we used Tim Lebaron a commercial real estate agent in St. George, UT.