All Forum Posts by: Aaron Porter

From the way that you are describing your PM it sounds like they are not in line with what you are expecting from them.  

To me it sounds like you may need to start looking for a new PM or adjusting your contract with your current PM to let them better know your expectations.

If you decide to go find someone new, make a list of the things that you are expecting from them that way you can find out before hand if they are going to be inline with what you are looking for.  and you can also make sure to get in writing what you want/need from the management company.  

Like everyone else said, Chain of command, owners getting involved can create excess issues for the managers that they wouldn't have had to mitigate if the owner would have not been involved.  But from the owners side if the managers are not managing to the owners expectations it is time to reorganize the managers, or replace them.

The cost of insurance would be quite substancial.  boating is not a small risk then you add in that the renter probably doesn't own their own boat so they are a "new captain"  which adds risk.  

if you move forward part of your partnership agreement should include who will hold the liability.  you or your neighbor.  Where the boat is stored on your property that could raise your stake in the "who is liable game"  

liability waivers are a joke and do not hold up in court. 

Auto accidents where someone dies cost in excess of $2,000,000 so if you have less coverage than this it would come out of pocket, boating accidents are much more likely to result in death.  The #1 cause of deaths in a boating accident are not wearing a life jacket.  

people love to drink alcohol on boats.

I am just compiling this list as a way to give you some material to think on not trying to persuade you one way or another.  

I am currently renting out 2 boats. It is a side business that I have partnered with a friend on.  We rent the boats with a captain, and meet the renters at the lake, take them out, teach the participants to wake surf, wakeboard, kneeboard, or go tubing.  It has been a really good business but we maintain control while renters are on the boats and can shut down anything that add too much excessive liability.  plus where we are providing the captain we are in total control of the boat. 
  

Don't look at it as increasing your insurance as much as getting the proper coverage should you need to put in a claim. because you are turning your property into a 2 unit and 1 of those units you are going to be using as an STR, your "traditional homeowners policy" is not going to be the proper coverage any longer, even for the part of the house that you are living in. Your insurance carrier can look at you not disclosing the additional unit as a breach of contract and deny any coverage even though you are paying for coverage.

Most insurance carriers offer policies that will properly cover your property each carrier will probably have some differences in how they want to structure the policy.  Some will want 2 policies, some will combine both things into 1 policy with multiple lines of coverage.  

Make sure that you are covered, your home is covered, your investment is covered, and get it in writing if your agent tells you that their traditional homeowners policy will cover your STR.

@Jon Kay Almost all of the "big name" insurance carriers now have policies designed for STR's. Proper, Foremost, and Farmers are all great. Proper like everyone has said is quite expensive. They have a great product and are mostly underwritten by Lloyds which is a great company.

If you have an agent that tells you that their companies traditional homeowners or traditional landlord policy will cover any losses in your STR make sure to get that in writing. That way if there is an issue when you have to put in a claim, you can go back on the agent/agency that told you that you would be covered.

The Cheapest option is not always the best option, also the most expensive option is not always the best option.  Make sure that you are comparing apple to apples in the policies, that you are working with an agent that knows the real estate investor space and has options for multiple carriers.  Also don't base everything on cost.  insurance carriers have different ratings as far as financial stability, claim payout rates, claims customer service, regular customer service, etc.  These things all matter, as well as not having to shop your insurance every year because that is a huge time expense.  

The biggest issue that you are going to run into here is that the home was vacant.  Once a home has been vacant for between 30-60 days (# of days depends on insurance carrier) the insurance on the property is gets reduced drastically.  This is why there are policies that are created with vacancy clauses or policies like builders risk policy which cover a house that is under construction.  

Hopefully your property hasn't been vacant for very long or you were proactive and set up insurance coverage to cover the property during the renovation process.

There is another thread here on BP where a gentleman has a roof claim on one of his properties.  He has an ACV policy on the property and they are only paying out $2700 for a full roof replacement.  This is drastically short of what the replacement of the roof is going to be.  

If the owner decides to fix the roof and not replace it that triggers a couple of things. He can no longer make a claim on his roof, or any damage that could be caused from an issue due to the roof, his carrier has the option to non renew his policy at renewal (this happens annually) and should he go looking for another insurance provider the new provider will have the data about the claim and know that the roof was not replaced which lets the new insurance company know a few things.  All of the inferences that the insurance carrier makes about the roof not being replaced will directly impact the annual premium that the insurance carrier will charge if they will accept the risk at all.  This particular property is in Florida which already has a drastically reduced number of carriers even willing to insure properties.  So if the homeowner decides not to replace the entire roof and to just repair it there is a chance they wont be able to find new insurance until they replace the roof. 

All of the previous responses were pretty spot on.  You, the property owner have a choice of what type, deductible amounts, liability coverage amounts, and you even have some control over the value that the insurance company puts on for the property value.  

The question that you need to answer for yourself is what is your investment worth, is it worth saving the extra money on your monthly expense sheet to only do ACV, or is it worth the extra money for the better coverage of your investment?

Under most circumstances your landlord insurance will not pay for a tenants hotel stay.  That is what renters insurance is for.  Your landlord insurance will pay for loss of rent for the property being unrentable due to a disaster of some kind.  Landlord insurance should also pay out for fixing the property if needed.  

Hopefully a frozen pipe wont have caused too much water damage, your insurance carrier could look at a frozen pipe and deem it as neglect or lack of maintenance as water lines shouldn't freeze if properly  taken care of and thus not pay anything as far as remediation goes

I mean only you can decide what is going to be the right move for you.  

I went through a similar situation with a couple of properties.  We ended our relationship and tried working together to keep the properties active, but over the course of the next year one of the properties needed some minor fixes which I put up the expense for, and the whole time our ability to communicate, and make good decisions about the properties continued to degrade.  I ended up having to get a lawyer involved to force her to sell as we were "50/50".  She still to this day thinks she got less than she deserved and I have had to come to terms with having that be a negative relationship.  

These situations are extremely hard financially, emotionally, mentally, and spiritually.  But it taught me a super valuable lesson, and as callous as it sounds any relationship that I get into now I treat more like a business partnership where we not only verbally communicate our needs, but also have everything written down in a type of contract.  Something that we agree to terms on before hand so that we don't have to fight after the fact.  

This is on of the many reasons why I advocate for clients to get Replacement Cost Value insurance for their properties.  Yes it is not as cheap on your monthly expense sheet but it will save you thousands if not 10s of thousands of dollars in the long run by properly insuring your investments.  Insurance companies get to depreciate everything in your home over time just like you do on your taxes and the cost to fix things is always more expensive in the future inflation, appreciation, supply/demand, labor, etc.  all those things are going to be more expensive in a year from now, in 10 years from now.  saving $500 a year on ACV is in my opinion a serious disservice to you.  

@Jim G. I am sorry you get to go through replacing the roof on your property mostly out of pocket.  

@Nick Bruckner

Depending on the carrier you will need to add the MIL suite as a rider to either your homeowners policy, or you will need a separate policy (landlord/dwelling fire) that covers just the MIL suite.  If you have a claim due to anything happening in the MIL Suite your insurance carrier will likely deny the claim as you are using it as a rental. 

The policy does not need to be set up in the LLC as the LLC does not own the property you are only using it as an operating company. you can however add the LLC as an additional insured to the policy thereby creating some coverage for the LLC if wanted.

The rider or separate policy for the MIL Suite does not cover any personal property owned by the tenant.  In your lease agreement you should stipulate that the tenant must get and maintain a renter insurance policy that will cover their property and some liability coverage.