All Forum Posts by: Jonas Mai

Colby, KS, it is a town of about 7k.  I would classify the whole town as class b with some class A.  

Everyone, thank you for your replies, much appreciated! I did include 5% for capex. It was built in 1948 and remodeled 7 years ago, stucco exterior is in great shape. I am located in western Ks, there is no "bad" side of town.  Rents are a little low for the area but as for location....it is downtown across from the police station and courthouse and about 2 miles away from the college.  I think my initial down payment will be 58k and yes  I do think the loan I will be able to get will be around 7%.  There are 2 heater units and 2 hot water heaters located in a utility closet.  One gas meter, one electric it would cost .  The building is a single story and The roof is 51 squares scarified and recoated would be roughly 20k (I do not think there is a compliance officer for code so it is not enforced, making it a recommendation, not code).....it hails in ks it also has pretty vast temp swings both bad for a foam roof.  One of the heaters is old and will likely need replaced soon probably about $6250 for that.  I waited to invest until I had double the down payment saved up just in case I need it.  The area has been appreciating at a steady 2.6% a year for the last 10years. 

 If I buy I will definitely be getting rid of phone and cable and maybe figure out a way to share gas and electric.  So worst cast scenario it needs a new roof and heater $25-28k which in my mind could kill this as a money maker short term.  I have an appointment to go check it out asap which is the end of next week.  The numbers as they are now....even with rounding everything up have a cap rate of around %11.75 I am a commercial insurance adjuster so I know what to look for and where.  Thank you all again!

I found a 7 plex for $185k.   It has 4 1br and 3 2br apts.  Exterior is stucco, roof is flat and clad in an elastomeric foam membrane (one of my biggest issues).   The 2 bedrooms rent for $550, $550 and $575.  The 1br are $475, $475, $300 and $425 rents now equal $3350 a month, $40,200 a year.  All units are rented and there is a waiting list.  The landlord pays ele, sewer, water, phone and cable (I would like to make these more hands off), property mgmt. is in place and would like to stay for $3k a year about 7.1%.  Total expenses last year were $19,902.   I would change the 4 1br to $475 a month and the 3 2br to $575 these rents would equal $3625 a month and $43,500 a year.  A 15yr loan w 5.2% and 50k down monthly payments would be $13,341a year plus operating exp (which are rounded up for each category incl 5% vacancy) of $17433 (took the phone out) equaling $30,744.   So that gives me $12,756 a year in profit.    Elastomeric roof coatings last 5yrs and then need to be scarified and reapplied. 

The expenses seem high to me....I would have to change that somehow.  I am a new investor and I'm trying to get some encouragement....I have been looking for 3yrs!!  Help me grow a pair (if u think it is a good idea)!   What do you guys think?  Should I try to get it????????

So Ken above is right....if you have washers or dryers in your units they would be covered under contents. Kat, As you state no contents at the risk you might ask to take that off of your policy so you wont pay for something you can never need.

Additional living expenses  ALE cover the same thing as rental income loss reimbursement.  Look in your policy under the ALE  section and it will clarify how many months lost rents, $$ limit and coverage.....

The number of renters might be a baseline you agent used,  just make sure again with your agent that they know you might have more people there.  Out of 1000s of claims I have worked I was never prompted to state number of occupants in a risk in any report.

I have never worked in Wisconsin..... state boards of insurance adopt different language for their policies. Under the Occupancy section of your policy it says rented which should equal tenant occupied.... again strange wording to me but same tenant could mean 52 weeks rented by one tenant.....maybe it is worded like this to exclude month to month or air b&b.  Ask your agent to clarify. 

@cat rathell    I am an insurance adjuster...Ask your agent to show you where in your policy it stated it is rented 52 weeks a year....sounds strange, I'm  doubtful it is on there.  Idk where your property is but some States might have something like that they allow to be in their policies....it would be new to me.

This is a tenant occupied dwelling....your policy should state that. Occupancy/vacancy is something you want to be correct on your policy could end up in a denial. Ask your agent why you would be listed as the occupant when that is clearly not the case. If a claim ever happens your coverage will be dictated by your policy only so you are correct to want it right. Do you have any personal property (contents) at the risk? If you don't why would you pay a premium to cover non existent items?? Make sure your agent knows what they are talking about ( if push comes to shove they are liable for their own mouth which their E&O insurance will cover)

 My advise is get a few more quotes.    

Taylar,  

    I'm an Insurance adjuster.   Yes you can, I do claims that are filed for this reason all the time.  A warranty would only take hold with a defect in the shingle or in some cases a bad install.  

Just work it into the deal ask them to file the claim, maybe even offer to cover the deductible for a lower price.  Sometimes a claim has already been filed and paid and the seller is trying to take ins money without repair.

Is the roof hail damaged?  If so what about window wraps gutters a/c etc...?

I am an independent insurance adjuster and have handled claims for 100+ insurers.  I am not affiliated with selling insurance in any way my experience comes from how the insured party was treated and guidelines per my client the insurance company. 

 All homeowners policies are basically the same across company lines.  The difference lies in how those policies are  ultimately defined in the eyes of your company.  Companies in my opinion can have a customer or risk favorable view of policy or the opposite and only want to save a buck...on everything they can.    For homeowners insurance ask if the company utilizes any kind of managed repair program which sounds great but takes a percentage off of material on your estimate,  in my experience this is a red flag and equals a insurance company that will not have your best interests in mind.... Liberty Mutual/Safeco has a program like this.   

Other companies can have endorsements at no extra cost that extent your polity like a better shingle program...where a company actually pays you to put better shingles on your roof upon damage this is a great program and shows a company that wants the risk (your house) to be as good as possible and basically pays you more for it in the event of a loss....Nationwide has a better shingle program in some areas of the United States.  

more points to add... once you get in the middle of a claim for yourself you will gain experience that IS very valuable for anyone with property (experience probably worth more than the10-20% your PA will take along with your chance to learn) .   An insurance policy should in concept never need a public adjuster ... you can read it, its black and white a Public adjuster cant change it (if the ins company is acting in a way obviously contrary to policy and you call them on it and they don't change then yes get a PA) .   I'm not saying you per say but many people I come across don't understand their policy, self involvement in the claims process will help you know what you want in the future.

  I cant tell if your roof is flat or low slope...if it is code (depending on area and what code they enforce) could require additional insulation above deck or below.... this can be very expensive if it is required above deck...Take at look at your code upgrade coverage and ask your contractor about the codes in the area.

What if she used an FHA loan? Would this situation cause issues with the loan?

Alex,

   I am an active Independent Insurance adjuster.  I agree wholeheartedly with Jose above.   The cost of your public attorney will likely supersede the amount he gets you.  I am assuming as there was a fire with  more than 3 dedicated trades  warranting a general contractor in the eyes of your insurance company.  Any worthwhile  general contractor knows how to work this situation and should by proxy act as a PA with only his fees which you will incur anyway.  A new car salesman will always tell you buy my new car same with a PA.

  You can do this yourself and not pay a PA.  Contact your desk adjuster and make sure the claim will remain open until repairs are complete.  Keep all receipts from all contractor and subs.  Have your general contractor request and go over the initial estimate and any revised ones from your ins company once he does this and makes a few calls to your adjuster he will have done the job of a PA.  Once the work is complete make sure the final estimate from the insurance company has everything.  In claims the squeaky wheel gets the grease......you can squeak for yourself don't hire a PA.