All Forum Posts by: Jose Linares

Hi BP rockstars! Are there any recommendations for local Des Moines, IA commercial lenders? Recently closed on a multifamily (5+ units) investment property and looking for a lender that has a shorter seasoning period. In addition, I noticed that many lenders in the market are approaching the financing as the lessor of the appraisal or purchase price... As I am trying to recapture (BRRRR) the majority of my capital and scale, that is not an option.

Any input would be greatly appreciated!  

@Account Closed Look into Berkshire Hathaway Guard Insurance.  They were the most competitive for a 7-unit built in 1950.  I went with the RCV policy and made sure to increase the water-back up/sump limits.  Make sure your business interruption covers your gross rents.  I saw you mention $120K B.I. coverage, which may be driving the premium if you are not getting $120K in gross rents.

Feel free to reach out with any additional questions.

@Andy Ballew Sorry to hear about the loss at your property.  There is a lot involved in fire losses, especially with structural damage. Vetting the right restoration general contractor to handle the project would be the initial step.  The scope of work may vary between contractor when smoke is involved, so obtain multiple bids to see how large of a variance you receive.  A public adjuster would typically not be needed, if you have the right restoration company involved.  The contractor will be able to communicate with the insurance adjuster to ensure everything required to rebuild is included.

Your insurance adjuster will do their independent evaluation and issue a settlement based on their findings. You will be paid to bring the units back to pre-loss condition.  Any changes are at your discretion and you can work with your contractor to value engineer the updates you are looking to make based on the insurance settlement.

Where is the property located & how many units in total were affected?

@Andrew Tetrick Congrats on getting the house under contract.  @John Warren gave some good recommendations. 

We perform asbestos abatement on a daily basis. The risk lies in the condition of the acoustic ceiling and when the ceiling is disturbed. What I would consider with this house:

-Are there any areas of the ceiling that are in poor condition?

-Will any of the renovations lead to disturbing the asbestos containing material?

-Is there anything located above these ceilings that could affect the ceilings? Example: If there is a bathroom located directly above, a toilet back or burst pipe could cause the ceiling to collapse from the weight of the water.

-IF there was a leak or loss that disturbed the drywall, does your insurance policy cover asbestos? Some insurance policies cover asbestos, some exclude asbestos, and some require endorsements for an additional premium. Discuss your insurance policy in detail with your agent to understand the coverage & different scenarios. 

-IF you do have any claims that require asbestos abatement, be sure they are handled properly and keep all documents and clearance reports to provide to any sellers in the future.

Proper insurance coverage will help provide peace of mind that all necessary steps will be taken to protect you, your family, and ensure your out of pocket expenses are minimized.

Hope this information is helpful. Feel free to send me a message with any additional questions.

@Joshua D. You have full control over how the insurance settlement is used.  The main question would be, what area's of damage is your contractor pushing for repairs that you feel don't need to be repaired or replaced?  Are those area's cosmetic or has the life expectancy of the product been compromised by the hail?

You'll definitely want to take @Account Closed's suggestions into account when using the funds for different areas or not having the repairs completed.

@Jess White Will you be doing any additional renovations that would disturb the insulation that is positive?

If the asbestos-containing material will not be disturbed, there are no issues.  Double check with your insurance agent that you have coverage for asbestos, just in case there is a leak down that line that may require asbestos abatement.

@Peter Sik Since you reached out to the roofer directly, they should be providing a proposal independent of any insurance claim.  Once you choose your roofer or GC, have them present for the insurance inspection.  This will help address any scope and pricing discrepancies upfront. 

@Peter Sik If this claim is related to a weather event, your insurance premium should not be affected.  You will need to speak with your agent to confirm.  As for the roof replacement covered by insurance, it will depend on the severity of the damage on each slope (if pitched).  Often the wind and hail may only affect 1 or 2 slopes, so insurance may only say they will be replacing the affected slopes.  

As for the age of the roof, if you have a Replacement Cost Value (RCV) policy, the insurance carrier will withhold depreciation until the roof has been replaced.  You would then submit your final invoice and a certificate of completion to receive the depreciation withheld.  Unfortunately, if you have an Actual Cash Value (ACV) policy or ACV roof endorsement, you would only receive the depreciated payment.  Depreciation is based on age, condition, and useful life of the material.

Hope this helps with your decision.

@Sean Wilt It would be best to get an environmental testing company out and take samples of any areas you plan to remove for the renovations.  The testing cost may run anywhere from $500-$1000, depending on the number of samples you are requesting.  That will be needed by the abatement company to confirm which areas have Asbestos-Containing Materials (ACM).  This is an upfront cost, but will take the guess work out of the project.

@Andrew Asmus How many of the 12-units were affected?  Ask for the engineer report used to determine the insurance settlement.  That will save you some time and should provide you with the structural scope to ensure you are getting an "apples to apples" bid from restoration contractors.  Without a defined scope, you may have a wide range of scope & pricing.