All Forum Posts by: Aaron Porter

@Ronald Mayorga Is there a reason that you need a public adjuster?  Is your appointed carrier adjuster not doing what needs to be done, or are you just being proactive?

Get with your insurance agent, they should be able to find one local to you, or google is a great resource.  

@Jeff S.  I appreciate your response, both here and in other threads where I have read what you have to say.  I love getting to discuss the merits and downfalls of ideas, options, strategies, and tangibles.  

I apologize if your thread now gets bombarded with ins talk.  

Is it wisdom if you don't have a clear knowledge or understanding of what is going to happen?  Personally the deferred taxation portion of my portfolio is extremely small.  There can be some benefits to deferring some of your tax liability, but from my lowly upbringing it has always been better for me to use after tax $$ to fund any investing I have been able to do.  I have utilized both 1031 and 1035 to good outcomes. 

I think that "my comfort level" is something that everyone should take seriously for themselves.  Some peoples comfort levels are playing the lottery, trade multipliers, penny stocks, drugs-both legal and illegal, restaurants, etc.  I have found my comfort zone is in tangibles, investing in business and people that create, build and distribute useable products and services.  Some of these are less lucrative than more risky investments, but they are things that are in my comfort zone.  

You will definitely need to get with your insurance agent.  I can't see what your policy provisions are so I can't give any real specific recommendations.  

Vandalism is covered usually but there are exemptions for vacancy.  If there is damage from weather caused by a broken window, that may be covered, but there will be exemptions for vacancy.  

Get with your agent, This is why it is extremely important for REI's to have a good relationship with and work with a good insurance agent/agency.

In most cases Insurance will not cover what it is that is broken, only the resulting damage.  

In one house that I insure, recently the water softener blew apart due to a bad water pressure regulator, the insurance company decided that even though the regulator should have been the cause, almost all the damage came from the water softener coming apart and flooding the basement.  

The insurance company paid for all the flooding damage but did not pay for the replacement water softener.  

So there is the possibility that the insurance company will not pay for the replacement of the broken pipes.  

a public adjuster is usually used when the home owner disagrees with the carrier provided adjuster.  So calling in a public adjuster before you make start the claims process with your insurance company could be pointless.  

Talk with your insurance agent as they are going to have access to your policy documents and should have contacts at Citizen who they can talk to regarding possible claims.  If you agent is unable or unwilling to do this, I would say it is time to find a new agent.  

@V.G Jason  Yes you can.  My agency sets them up almost on a daily.  

There are a few things at work here. A LLC does not indemnify you from a tenant or someone who gets hurt on your property. It can help to isolate your other properties or investments from being brought into the suit; but, that is only if you follow all the strict "arms length rules, IRS rules, state, and local rules, and on and on.

2nd a standard LLC does not provide anonymity. So I can see that john smith owns 123 LLC. that is pretty easy. and at the end of the day you are still liable for what happens on your property.

If you are wanting better anonymity, personal and asset protection, with a built in estate plan you would be better served by creating series LLC and utilizing land trusts. There is tons of info on it here on BP. https://www.biggerpockets.com/...  and some RE attorneys such as @Jason Marino or @Olia Fogel who could answer question or help you with that.   

So your insurance is kind of your 1st line of defense.  Well your 1st line is to not be a crappy landlord.  But Insurance.  Insurance is anonymous.  Insurance contracts (a policy is a contract) are privately held contracts that are not on the public record.  and they aren't searchable (to my knowledge)  there isn't a database where you type in a persons name and you see all the insurance policies that they have.  

As the homeowner/landlord when you have to refer to yourself in relation to the property and your insurance of that property you refer to yourself as "THE INSURED"  This gives you what is needed to be the authority without saying that you are the owner. 

Make sure that your insurance policies are good policies, from good companies, that have good claims payout ratings.  Work with a good Insurance agent, they can help you if you have claims, and if you get sued call your insurance company, they have lawyers to handle the situations.  

If you set up the policy in the name of the LLC it is 80-90% of the time more expensive for the same coverage, and you still have to put your name on the policy.

There are times that it makes sense to have the policies in the name of the LLC, it is probably less than 10% of the time though.

Feel free to DM me.   

I do want to answer my view of your original question.  

I am invested in a plethora of ways, some qualified funds, some non qualified.  I have real estate, both a traditional and roth, an annuity, an IUL MEC, I also dabble in Forex, and options.  (very very little). 

I don't actually ever plan on "retiring" in the traditional sense.  More like just moving into other career types, maybe things that take less time, and are a lower stress level that what I am doing or have done in the past.  

@Jeff S.  

I would love to have a conversation around what is available for insurance...  One of the big reasons that Insurance companies win is because they talk so many people into buying term insurance.  Term insurance is like paying for a rental.  I am not knocking term life because it totally has its place in the market and has does great things for many many many people.  there are some cool things that can be done with term insurance such as "return of premium"  which is if you keep your contract in good standing (pay your premium) during the term of the policy you can receive up to 100% of the premium you have paid back.  so that would be a net 0 expense.  

One side note on Life Insurance.  99% of all term life insurance never pays out the death benefit Conversely just over 85% of permanent life policies pay the death benefit.  That 15% includes all the policies that get canceled due to non payment, or people that decide they want to shut down their policies, policies that implode because they were set up improperly, etc.

When you look at whole life insurance.  Maybe the Cash Value policies aren't worthwhile for you.  They do cost something, meaning they aren't free, and they require time, lots of time to build any amount of significant cash value in comparison to the premium invested, 20+ years.  They are basically a high interest savings account that have some other added benefits. (taxes, divorce, bankruptcy, etc.)  

Maybe you should be looking into something like a GUL guaranteed universal life.  These policies have $0 cash value but are permanent life products, which means that as long as they are paid for no matter when you die your estate will receive the life insurance payout.  Because these policies do not have any cash value the "cost" of the policy is much cheaper than the "cost" of Cash value policies.  

MEC- Modified endowment contracts-  Lots of people are scared of these because they loose some of their tax advantages, and there are lots of agents that set these up wrong and screw them up. But they can "pay back the costs" of the policy much faster than a regular cash value policy, and these can be purchased by a single payment.  The "cash value" is available day 1 of the policy, and they offer all the stat protections of a standard life insurance policy.

Annuity-  buy now and they provide income at an elevated level.  set it and forget it. 

Depending on your net worth and your annual income you may qualify for "Premium Finance"  where you pay the interest only on a loan and a 3rd party bank pays the premium.   after 5-10 years and the policy is completely paid for, you take some of the "cash value of the policy" to pay the loan back and then have substantial more cash value that you can leverage.  

Life Insurance creates leverage.  Life insurance can solve problems now in terms of protections and leverage, while at the same time providing more for our heirs.  

 Do I get paid for selling policies?  Yes I do.  I can't force anyone to sign on the line, and then continue to pay for their policy 10-20-30 years down the road?  If the policy doesn't solve a problem the client isn't going to keep the policy.  and if they don't keep the policy I have to pay back the commission that I got paid for selling the policy. 

Life insurance is not an investment, it can be used to leverage your investments, and it is a very very very safe place to put your money.

Get with me anytime, I won't even charge you a flat rate to answer any questions that you have. 

Your insurance agent is misinformed... you can still write the policy in your personal name (unless the LLC is a partnership of some kind) and then list the LLC as an additional insured. The LLC must be listed as an additional insured as the LLC is the "legal, titled owner" of the property.

By having your insurance policy written in the LLC makes the policy a commercial policy which in most cases makes the policy more expensive.

As for due on sale clause, those are usually bank specific.  However, most people that I have encountered have not had issues with mortgages remaining in their personal names as long as the payments are always made on time and the loan remains in good standing. 

having the most efficient structure would be something to discuss with an attorney, tax attorney, and cpa.  There are definitely people here on BP that will have good direction for you to look.  

From my perspective you will probably have to keep separate books for each of your partnerships.  

Make sure to have good written and recorded partnership agreements with your partners.  

and I agree with William Harvey, make sure your insurance is sufficient, comprehensive and current for each of your flips.

@Santosh Prabakar  there are so many threads here on BP about this exact question.  One of the really great resourses here is https://www.biggerpockets.com/...

There are also a few attorneys here on BP like @Olia Fogel and @Jason Marino who are great sources of information.