All Forum Posts by: Eric Belgau

For what it's worth, in working with business owners I notice that there are two kinds of conversation about insurance.

One is "what's the least I can get and still be compliant with the law?" In this conversation, even very intelligent and capable owners argue themselves away from the concept of risk. They aren't buying insurance to protect against risk; they're buying it because some entity requires them to have it.

The other kind is "what do I need to do to set my business up right?" This conversation is more about understanding the risks involved in running X, Y, Z business and making sure that each of the exposures are explored, understood, and covered.

When I do business with people, I want to work with guys who have the attitude of setting their business up right. It's definitely not one-to-one, but I believe that on the whole those guys tend to be more diligent about the work they do as well. If a guy isn't willing to protect his business or the people who work for him (even if it's only one guy), how certain can you be that he's going to take care of you?

Because you're running an REI business, you also have to think about the long-term implications of having a claim against your insurance by a worker on the job who isn't covered with WC. That claim will follow you from project to project, increasing your rates for years.

Bravo. So true.

Hi Anibal,

Obviously there are a lot of ways that you could make these properties more productive. As we all know, though, it ain't easy to get one's parents to see the errors of their ways and to come around to the wise and enlightened path that we, their children, see so clearly.

For that reason, I would advise you to consider the shortest distance between two points. If you were to hire a property management company to handle both the properties and turn the whole thing over to them, they would get the rents up to par as quickly as possible without you first having to sort through two states' worth of regulations and second having to convince mom and dad to take your sage advice.

The issue with the Florida tenant's rent payments might be your angle in pushing property management. Once you get over that hurdle and get the properties performing better, you can learn the ropes, take over if you want to, and really fix the problem.

I'm not aware of any, but I have a feeling that if you go golfing out at Tsawwassen you'll find some folks to club up with. I don't think I've been in that clubhouse without the topic of real estate coming up.

The best thing to do is to talk to a broker rather than a captive agent. There are markets, and you might easily end up with a better rate with them than you would with Allstate. You might look at American Modern. You can find a broker on their site. (Sadly, Illinois is one of the few states we're not licensed in, or I'd hep you myself!)

Did your Allstate agent give you the option of writing a businessowner's policy for the LLC? This is often a little more expensive (depending on the coverage details and your history) but it can be a good option.

The difference between a captive agent and a broker is that a captive is only able to sell the lines of their insurance company (Allstate, Farmers, State Farm, etc.), whereas a broker has access to a variety of markets. Whenever you face something quirky, it's a good idea to talk to a broker. Having more markets available makes them more able to find a solution that will work with your specific situation.

In general, your tenants are responsible for their actions, which should include the actions of their pets. Your dwelling policy insures the premises, and in most cases you wouldn't have an exposure for your tenant's dog.

However, no two companies have exactly the same policy, and the answer could be different depending on how the policy is written and what restrictions come along with it. Therefore this is really a question for your agent.

If your tenants have a dog that's restricted by your insurance company, they should also have renters' insurance with personal liability limits high enough to cover the bite risk. If they don't have renters' insurance currently, you'll have to figure out how to have that conversation with them.

But talk to your agent and make sure that you have the coverage in place to protect yourself.

@Account Closed is right on.

In your case, you might have a slim chance because the whole CFD process is on the fringe and poorly regulated. That has been creating issues that municipal governments are starting to look into. As the CFD process receives more scrutiny, there might be a shift in the rules, and you might find some recourse in that. You could also check with the city to make sure that the person who sold you the property followed all the rules that are in place now. If the seller didn't adhere to the contract process, you might have a keyhole-sized opportunity.

With all the issues surrounding CFDs there might be a firm around you that specializes in analyzing them.

It's generally better to leave professional work to professionals, so I would hire a lawyer even if the property were in your own back yard. Given that it's a long drive away, you're probably much better off going that route.

However, your property manager should have a system in place to handle this. They may have a staff member with the experience to appear, or they may retain a lawyer. If they have counsel, that will probably be your cheapest option, since you will only have to pay for time.

If that isn't an option, different firms charge differently, and firms with a heavy real estate emphasis may streamline the process and reduce the payment. (For example, some firms have single-cost "products" for actions in which they specialize, rather than charging hourly.) Absent a referral from someone on the ground in Lansing, check Avvo.com (pretty good listings) or go directly to the local Bar Association.

Good luck!

That's an interesting calculation!

Success is always a result of effort, which is a combination of time and intensity. If you can do something well and efficiently, then the resulting intensity can make up for a lack of time. (Like with exercise. On days when you have less time, you probably increase the intensity.)

I balance a full-time job, a home life (also with two kids), a second career as a writer doing 2-3 professional projects per year, and other personal responsibilities (charity board work, political activism, etc.).

As a result, I don't get into time-intensive real estate deals. I'll look for a property that I know can be improved to add value (an intense effort over a short period of time) and that can generate rental income in the long-term. I won't look at complex financial deals, major rehabs, or anything else that is going to take me a lot of time to master and execute.

I recently found out about a company here in Olympia that sells a ceiling-mounted radiant heating system. The units cost a little more than electrical resistance heating units, but they're longer lasting and far more efficient. You can check them out at www.ducoterra.com

Your handyman is right about the lower-end units.