All Forum Posts by: Rob C.

I have been researching some virtual mailbox options, and physicaladdress.com seems to the best option I’ve come across so far. Curious to hear if anyone has any experience with it.

Hi @Esteban Cardenas, did you ever figure out the best path forward? My understanding is that most banks refuse to accept P.O. Box or CMRAs (commercial mail receiving agency) as a business address, and many refuse to accept Registered Agent addresses as well. I’m trying to figure out the best solution myself in light of that. 

@Klemens N., thanks very much for sharing your structure. I’ve been recently studying asset protection strategies and this is very helpful! And I’m interested in learning more about this approach. I’m surprised this thread hasn’t gotten more attention or responses, as it seems to me to be a big deal to discover a legitimate way to protect California real estate assets without being subject to the $800 franchise tax fee (which tends to be discussed so much in BP forum threads). Even the potential catch mentioned above about receiving rents seems like it could be worked around if it is in fact an issue. Now that you have had the structure in place for some time, have you learned anything since set up- good or bad? were there any surprises when you filed your tax return this year, or did it all go according to plan?

I’m curious to hear from any others who may have taken this kind of approach as well. @Nat C., did you end up pursuing something similar?

@Darrell Brown, I’m also a bit surprised this new form of liability for landlords with covid-19 hasn’t been discussed much on BP. Unless I’m missing it in my search of the forums...

@Joel Bullock, thanks for planning to share what you find out. looking forward to hearing it. 

@Matt M., I just posted a bit about covid-19 liability over in this house-hacking-liability-in-time-of-covid thread. Regarding your question of whether people sue for that, evidently a lot of Republicans in Congress think enough people are (or will) to emphasize removing businesses from such liability in the recently discussed legislation. As to whether people can prove it, I'd think that'd be pretty difficult. Even if they can't I still wouldn't want to deal with the headaches and attorney fees that go into fighting an unreasonable lawsuit. I'd hope insurance could take care of it for me. I did some research and it's not clear whether homeowner's insurance covers it. And it's not clear whether workman’s comp does. 

I'm beginning to think that's par for the course in the world of insurance- You don't know what you're going to get without digging into the details of the policy document, and even then it can still be a bit ambiguous. At least I'm familiar enough with my insurance policy document to have somewhat of a sense of what is covered. Am I going to scan through every General Liability and/or Workman's Comp insurance policy for each contractor I hire to get a sense of the coverage? No thanks. It's enough of a hassle hounding a contractor just for a certificate of insurance. I'm not surprised that @Matt M. hasn't been asked for it in 10 years. I personally don't know any other investor that regularly asks and verifies. And it seems like every time I do, it catches the contractor by surprise and can even put off some to go dig through their files to find it. Yet it seems like such verification is standard protocol according to the BP forum. It's surprising to me that my personal experience seems to suggest otherwise. It makes me wonder if most people know it's the right thing to do but don't for whatever reason - a sort of "do as I say, not as I do" scenario. No idea.

I'm starting to lean toward taking more chances on the uninsured contractors rather than pay more for insured contractors as it's hard to get a good idea of the benefit you're getting from their insurance. Again though, it all depends on the kind of question @Paul Winka just posted. Is the homeowner's/landlord insurance going to provide sufficient coverage in the absence of contractor's insurance? I've shared my thoughts on that matter, but hope some insurance brokers or experts might weigh in with their wisdom since I'm admittedly no expert - just a guy that likes to research in order to try and get to the bottom of things.

@Darrell Brown & @Brenden Mitchum, I'm curious if either of you guys reached any conclusions on this matter. I am also considering house hack possibilities and am wondering the same thing. More broadly, I’ve been wondering how this new form of liability exposure may extrapolate across all rental property businesses. For example, what if a contractor we hire to fix an issue transmits covid-19 to our tenant? or vice versa? I did some googling and came across this article which seems to offer the most insights regarding whether homeowners insurance will cover a lawsuit of this nature:https://www.bizjournals.com/memphis/news/2020/04/14/breaking-down-homeowners-liability-insurance.html
TL;DR: If your policy excludes communicable diseases, then you can bet you're not covered. If it does not, there's a better chance it will be covered but still far from a sure bet.

I looked into my policy which seems to pull from this standard form: https://www.iii.org/sites/default/files/docs/pdf/HO3_sample.pdf . Interestingly, the Communicable Disease exclusion only corresponds to "transmission of a communicable disease by an 'insured'." Since I'm the only insured on my policy, the way I interpret this all is that as long as any transmissions in my rental properties don't originate from me, then any related lawsuits are *probably* covered so long as no one was intentionally infecting anyone. But I'm no attorney or insurance broker- just a dude with a propensity to get to the bottom of things. Personally I think it'd be a smart idea to bake some sort of clause into a house hacking lease that removes Landlord of such liability and asserts Tenants are aware of and assume the risk of covid-19 transmission in such a co-living arrangement. Who knows if that'd hold up in court though? I'm interested to hear how that compares at all to any advice that you all may have received, and if there's anything that you're able to share on the topic these days.

Personally, I don’t see this being a no brainer as @Matt M. describes it to be. We as investors typically have to expect some tradeoffs between speed, quality and cost when hiring contractors. The way I look at it this just introduces another tradeoff variable - risk. If an uninsured contractor is able to do a quality job at the best price I may be willing to accept the higher risk due to their lack of insurance. I think the biggest key in weighing the risk variable is whether your homeowner’s/landlord insurance policy will cover any resulting damage and liability for injuries. I feel confident that the typical policy will provide such coverage based on what I shared in earlier posts, but I'd be glad to be told why I’m misinformed. Also, to those that say you can't be sure your insurance will payout, why should I be confident that a contractor's insurance policy will? Please help me understand what I'm missing.

Secondly, I really appreciated the back and forth between @Matt M. and @Paul Winka about the workman's comp insurance. I'm really surprised to hear that solo contractors can't get workman's comp. @Matt M., Is that unique to your state? That seems like it could put you at a disadvantage. It adds risk for homeowners/landlords hiring solo contractors versus staffed contractors with workman's comp. In fact, that may be a bigger priority than the liability insurance since the "slip and fall" type lawsuits are the ones folks here on biggerpockets seem to focus on. And I wonder if it takes on greater importance now in a world of covid-19 (e.g. what happens if a contractor gets coronavirus from a tenant?). I really respect that you're the type, Matt, that won't bring unreasonable lawsuits against others. Nevertheless, the liability risk is still there for landlords in that general situation since people are unfortunately sue happy as you said. And that risk ought to be weighed against all the other variables.

Thanks for the reply @Paul Winka. In regards to your follow-up question- it’s my understanding that homeowner’s / landlord insurance will offer protection to an extent. This is actually being discussed in a thread I started this past week on a similar topic : https://www.biggerpockets.com/forums/48/topics/857384-is-it-really-that-important-to-hire-contractors-that-are-insured 

Thanks for the continued feedback everyone. @John Mocker, I’m particularly glad you weighed in as it’s good to have the perspective of a good insurance agent on this topic. Thanks for bringing up the worker’s comp topic. In the situation you described where a contractor doesn’t have worker’s comp and the landlord is sued would those medical bills and lost wages typically be covered by the liability insurance of the landlord’s policy? I’d also be grateful to hear what you think the chances are of the typical landlord insurance policy covering the $11k worth of damages @Matt M. described in his personal example above. I’m curious if that would be considered “resulting damage” and therefore be covered. Thanks for sharing that Matt. It’s helpful to hear real life examples that one typically wouldn’t think of.

@Pamela Sandberg, thanks for the reply. When you say the article discusses important exclusions, are you referring to the checkmarked items (accident coverage, poor workmanship, resulting damage, coverage limits)? As far as I can tell those checkmark items aren’t intended as a list of exclusions. I do agree with you that poor workmanship is an exclusion. To what extent though? For example, if a plumber does a sloppy job repairing a pipe and it bursts because of poor workmanship, it seems clear that my homeowner’s insurance won’t cover the cost to re-repair the pipe, but that’s a risk I’m willing to take as long as it covers the ensuing water damage more importantly. The relevant language in the sample policy linked in the article is hard for me to wrap my head around (and it happens to be the same language in my policy). However, the article sums it up that the resulting damage (e.g. water damage) ought to be covered. I do tend to work with handymen that warrant their work so I would likely ask them to repair the pipe at no cost, but even if I have to come out of pocket to have it fixed again the right way that seems a risk worth taking (especially if we’re talking about smaller jobs). All told, I’m not seeing why it’s a risky bet to rely on homeowner’s insurance to cover contractor damages. I’d be glad to be informed on what I may be missing though. thanks again for sharing your perspective.