All Forum Posts by: Kevin Hart

great post! thanks for all the detail

glad you brought this question up @Ryan Weddle. appreciate the response @Jake Gross. i am looking to close on a rehabbed single family 1 mile from churchill and was considering the same thing. hold off on renting out until after derby and try to make some extra money with airbnb. Didnt realize I would need a permit

@Snehann Kapnadak i would say there isnt really a "back of the napkin" calculation for insurance cost. there are so many different variables that can make one rental vary in cost from another. zip code, construction type, square footage, age of house, SFH vs multi-fam. I would just make friends with a local insurance agent who doesn't mind running a quick quote for you every time you offer on a house

Mackenzie Cissell at republic bank is great!  

@James Free i agree with what others have said about liability coverage. its not that expensive to get 500k or more on your properties. Your biggest risk is getting sued. 

in regards to the appropriate dwelling coverage amount, its partially up to you. If you dont trust your insurance agent, find one you can trust. They can be a valuable partner in your REI business. I try to meet with my investor clients once a year or at least every other year to make sure the coverages are still correct on their properties. I go through all the details of the property with my clients, and my system will give me replacement cost amount based on the details i input regarding the building. I personally would want full replacement cost coverage for the full value of the property, so if there is a total loss i would be able to rebuild. Some investors i work with, only want enough coverage to protect the money they have invested.

For example, a house has a replacement cost of $150k, but you only purchased and rehabbed it for a total of 80k cash. Some investors would only want 80k dwelling coverage so that their cash investment is protected, others would want the full 150k so they could fully rebuild in the event of a loss. With State Farm, if you choose to lower the coverage to less than 80% of the determined replacement cost, your policy will switch over to ACV (actual cash value - aka depreciated value)

in summary, just go find an insurance agent you can trust and make sure you give them very detailed info about the property so that you have an accurate replacement value. then you can make your decision on how much coverage you want from there. 

hey BP'ers, 

I found a deal for a 6plex, motivated seller ready to retire and not deal with tenants anymore. They are interested in owner financing (they like the idea of using this basically as an annuity for 3-5 years). All the numbers look good, but myself and the seller have realtors involved, so how does the realtor typically get paid on this? will myself or the seller have to come out of pocket for their commission?

obviously ideally, i would have found this property on my own and wouldn't have had realtors involved, but I didn't know owner financing was a possibility until i happen to meet the owner while my realtor was showing me the property. 

any clarity would be much appreciated. thanks!

@Chris Taylor i agree with what has been said above. mortgage companies just care about protecting their investment not the full property value. Now I do advise my customers to insure the full replacement value so that if a fire or anything else does wipe out the house you can actually rebuild it, but its up to you whether you want coverage to rebuild or just enough coverage to protect what you bought it for. 

@Scott Kimber I'd be happy to help. ill DM you

@Jacob Hollen what part of town are you finding these properties? there might be a reason that a 4-plex is still for sale if its only 150k. good properties are bought up fairly quickly

@Miles Robinson - Paul Slavik is a great State Farm Agent in Atlanta that works well with rental properties