All Forum Posts by: Jose Linares

@Viral Patel Are you saying that Liberty Mutual is paying for a repair to the roof, which equates to 45% of the roof?  Or are you saying they are paying for a full replacement but after the depreciation & your deductible?  Not sure the total of the check, but for ease of explanation:

-Roof Repair Estimate: $5,000

-Less Depreciation: $1,600 (40%)

-Less Deductible: $3,000

-Settlement check = $400.00

You would use the $400 to pay for the repairs.  If you have a Replacement Cost Value (RCV) policy, you can recover the $1,600 depreciation if you spent $5,000 on the repairs by submitting your receipts to the adjuster.  If you only spend $200 on the repairs, you would not recover any depreciation since it cost you less than the settlement check.

Make sure you keep the receipts for as long as you own the property.  If you have a future claim for the roof, the adjuster for the next claim will most likely request proof of work completed.

If it is a claim related to wind, it is reviewed differently by the carriers compared to a water loss from inside the building.

@Amy A. Option #3 works the best for us. We currently rent as well. Focused on small, multifamily out of state to BRRRR and grow the portfolio to reach FIRE as quickly as possible. We are still considering a duplex in San Diego to house-hack but it has to be a phenomenal deal.

Everyone has their own path. It seems all the options you listed are focused on purchasing a primary residence.  If option #2 is the best fit for your goal, definitely look for a duplex.  There are currently a few grants available to cover the 3.5% down and then you are only responsible for closing costs.

@Andrew Kougl Yessir, I am investing in Des Moines. Working through the BRRRR process on my first deal to put the initial capital towards the second property.

Hi @Andrew Kougl Iowa is a great market with lots of opportunity.  Most lenders are very hesitant when it comes to out-of-state investors.  You will typically be looking at 25% down and they often offer only Loan-to-Cost... The lessor of the purchase price + cost or appraisal.  If the 25% down is too much, consider a private money lender to get you into that first deal.  

Make sure you keep making those calls to lenders to build that rapport as it will take some time to find the right lender.

Feel free to PM me if you have any other questions. 

@Tariq B. Was there a recent storm that went through your neighborhood and that is why your neighbors are getting their roofs replaced?  Your insurance policy typically will only cover the cost to repair or replace the roof from "direct physical damage".  That means if there was hail or wind damage to the roof, there is potential to get coverage for the roof repairs or replacement.

Full roof replacement is still not guaranteed because it will depend on how much of the roof was impacted by the storm.  Also, ensure you have Replacement Cost Value (RCV) on your roof and not Actual Cash Value (ACV).  Depreciation is withheld based upon the age, condition, and useful life of the roof.  You can recover the depreciation once the repairs are completed with an RCV policy, but not with an ACV policy.

If a claim is related to a storm or catastrophic event, it will typically not affect your premiums but you will want to discuss that with your agent.  Discuss the pros and cons with your agent of filing a $7K claim.  Be sure to also ask how much replacing the roof will save you in premium.

Feel free to reach out if you have any other questions.

@Dennis Tierney That's something I never thought about either.  Sorry to hear about the unexpected surprise.  I just went off the Trulia crime maps previously.  As @Rick Mapes mentioned, was it difficult to get that information and what information did they request you submit to obtain the data?

@Taylor L. would it make more sense to apply that effective levy rate into the expense & NOI calculations? Huge hit to the valuation by adding that directly to the cap rate.

Has anyone ever seen a levy rate applied to a cap rate or a loaded capitalization rate?? I could understand an adjustment for property taxes being applied to the income/NOI. Just received this in an appraisal and I am confused how/why it would be applied to the cap rate. Any input would be greatly appreciated!

@Thomas Fawcett How long have you owned the property? I've spoken with about 12 different lenders and the majority will only do the lessor of the purchase price plus cost or appraisal. Which doesn't work for a BRRRR, but if you have held it for 12-months, they may be more open to the idea.

How many flips were involved with the 7 break-ins and how much is your deductible do you have on these policies?  With the amount of losses you are experiencing, I think @JD Martin has the best suggestion in hiring security.  

How many flips are you taking on at any given time & what is the typical holding period?  Put those figures together and bring that information to multiple security companies for quotes.

Filing a lot of claims in such a short period would definitely impact your premiums and finding coverage. If it does result in a non-renewal from your current carrier, all future carriers will still be able to see your loss run and quote the higher premium required to take on the risk.

Best of luck!