All Forum Posts by: Aaron Porter

@Jamie Wheeler  All us insurance guys are going to tell you that if you want to have your investment protected (including the gains you make both in renovations and through appreciation and inflation) then you need to be insuring your properties for Replacement Cost.  

There are tons of REI that only insure for Actual Cash Value and have never had an issue. Thus in those Investors eyes they have been saving money on their balance sheets every year. I am both and have experienced a loss where I was only insured for ACV and a loss where I was insured for RCV.

The claim where I was covered with ACV was an absolute nightmare, I fought with the insurance company for almost every dime they paid out, and I still ended up coming out of pocket for over $15,000 to repair the property.  

The claim where I was covered with RCV, the day after I made the claim I had a check from the insurance company for the full amount of the estimate that the remediation company estimated.  Then when we got 2/3 done with the repair we realized we were going to need more money and the insurance company wrote us another check with no issues.  

Plus after the repair on the property with RCV we got a new appraisal and that came back way higher than what the property was worth before.  (disclaimer this is not always the case and cant be guaranteed you will have the same growth) But your property will be built back to at least the same as it was before

The question that you need to answer for yourself and don't let others persuade you as to what you should do because that is what they would do.  But the question that you need to answer is- WHAT IS YOUR TOLERANCE FOR RISK? 

How about finding some raw land, spend as little as possible clearing it and then set up some portable solar, some battery storage and turn it into a RV park.  you can add amenities as you build out. 

Hire a couple high school kids to go around 2-3 times a week (some kind of schedule) with a portable sewer dump tank to empty the sewers and water tanks to refill potable water.

In North Dakota in the early 2010s people were setting up rv subdivisions in every large parking lot (think Walmart and Home Depot) to provide housing for the oil field workers.  

Definitely stay away from putting up housing in a storage unit. Huge Liability, no insurance coverage, and more and more

you can go to your insurance claims agent (the claims person that you talked to on the phone and has probably sent you 10 emails)  you need to file an addendum to your claim as you need more money from your policy to repair the property.  Depending on how much more money is needed and x,y,z the insurance carrier may want to send out the adjuster to come and inspect the property.  

you may also want to get another quote from another contractor.

Be sure to talk with an insurance agent that is familiar with Real Estate Investors needs, who understands landlord policies, and can educate you in the different available coverages.  Insurance can be a huge asset to you investing portfolio instead of just a line item expense.  

Google is really awesome for looking at reviews. 

@Cody Wageman  Working with an Independent Insurance agent/agency who focuses on Real Estate Investors is the best way to go about getting insurance for your properties.  Plus they can usually handle your personal stuff so you only have to deal with 1 agent for all your insurance needs.  

From your insurance standpoint, a non permitted living space is an insurance and liability nightmare.  Not only will you not be able to get any coverage for the non permitted space but the carrier can deny a claim on the permitted space of the property because the carrier writes the policy on the whole property and where the property has 1 thing that isn't "legal" it gives the carrier an out.  

Can you  get the space permitted???   possibly/probably, call your city planning office/ permitting office and get a inspector to come and check out the space to see what needs to be done to get the space in compliance.  

Working with an Independent Agent who has access to multiple carriers is a great option for "shopping" your insurance rates.  

Be sure to let your agent know (whether they are independent or captive) that you travel for work and rent out a few rooms.  

Be wary of State Farm agents telling you that a standard owner occupied homeowners policy will work as a landlord policy.  If they tell you this and you want to go with their policy make sure to GET IN WRITING that the agent said that the owner occupied homeowners policy will cover you in the case of a landlord policy.  

Nevada has a few really great options for property coverage. 

Utility services are almost never covered under a standard home owners or landlord policy.  There are special "add-ons" that you can add to your policy that would offer some coverage for this.  Also most insurance policies don't cover sewer backup in to the home. 

If the home is a rental and your tenant has to move out for or you don't get rent for a couple of months you may be able to get some coverage under "loss of rents"  if your policy has that coverage. 

As far as cost... I would definitely get a few quotes.  Google is awesome, or ask around at your local hardware store for good contractors.  Sewer is something you may be able to do yourself and save some money but you always run the risk of messing it up and causing more problems.  

I have had to replace a few different utilities in properties I have owned.  The most expensive one was a new water main in a house in Southern UT. But that is because we had to trench the new line in almost 1/4 mile. 

 It is really hard to say what affect filing a claim will have.  

One of the reasons for this is if we as your licensed insurance agent tell you something and then we are wrong we (your agent or agency) can be held liable for for that wrong information. So in a way we are trying to cover our butts and in another way we only can give general information based off of what we have seen from past claims processes.  

Some agents have had very few claims so they don't have a lot of experience to base their response off of. 

In my experience a claim that pays out less than $5k has very little if any effect on a homeowners policy. But every case is different, and there is always the chance that your carrier will give you a major increase in annual premium, or a non renewal.  Weirder things have happened in Property/Liability insurance in the last few years. 

@Brian Babbage I know a lot of REI like to save money on their insurance by only insuring for purchase price. I am generally curious as to why you would choose to do this? I have on multiple occasions, once with one of my own properties and a few times for clients been able to not only get the money they paid for a property but also gave them extra money in a total loss (protected the equity that has accrued due to inflation in the industry).

The question that I ask my clients is why would you only want to protect your principal of you investment?  Why not protect the growth of your investments?  

I am all for saving as much money as possible in your bottom line.  

I don't have any experience with Obie but I am always looking for new providers to partner with. I am excited to look into it and see what they have as far as a product offering.