All Forum Posts by: Frank Real

Thanks for all the information provided from everyone.

@Kimberly. You are saying single story ranch style homes from the 1960s are not as big of a risk. Can I say single story houses built after 1960s are less of a risk then? I assume building codes are made more and more stringent over time?

You also said if my building survives, but all the surrounding ones collapse, demand to rent in my area will decrease and rents will drop. Why is that? Shouldn't rents in my area increase from supply/demand standpoint? Or are you talking about a scenario that all office buildings also collapse and everyone moves out of my area?

@Steven, thanks for the information provided. Checked Pacific Select's balance sheet. As of 2010, it has $93M asset and $52M liability. Not sure whether it has the financial strength to pay up all the claims if a major earthquake strikes California.

@Anish, you have a point that retrofitting is an alternative to purchasing EQ insurance. I want to point out that 15% deductible is to the replacement cost, not property value. Since most of the value is in land, a $1M house may only have a replacement cost of $300K so a 15% deductible is $45K

@Troy, thanks for pointing out previous conversation on this subject; I will search it up. I am not really too risk averse but earthquake has been a lingering concern to me and I want to have a plan in place (even if the plan is "self insured" as suggested by Elizabeth) so that I know what to do when it happens eventually.

Safety of hillside houses is always a concern to me, let alone those built on stilts. Surprised to learn that EQ insurance does not cover retaining walls. Thought it covered everything related to rebuilding the house; will check out. Thanks

Stephen, Can you elaborate your "real" earthquake insurance? How can I get one and what is the advantage over the CEA "junk" insurance? Thanks Frank

With condo, you will have to pay mandatory HOA fee every month and that is very often more expensive than earthquake insurance.

Thanks for your advice. Read your article "Crash and burned with an LLC"; it was very informative.

Thanks Elizabeth. I live in bay area of California and am interested in investment properties nearby for now. I know earthquake insurance is an option but firstly it is expensive and secondly it only covers the structure. In a very bad scenario, the structure is damaged, the land value is reduced (I heard that happened after one of the previous earthquakes here before) and there is still a mortgage payment every month with no rental income. Then I was thinking of creating a LLC to hold investment properties so that my personal life is shielded from any major problems with investment properties. But that is a lot of work and cost. Wondering how other people are handling potential problems from natural disasters.

Dear Sir/Madam,

I am interested in investing in rental properties in California but am concerned about earthquakes that were said to happen here soon. What do you do to prevent an earthquake from causing major financial problem to your rental property and even your own life?

Thanks

Frank