All Forum Posts by: Konrad L.

@Derek Lacy  I can appreciate you defending the insurer, being an insurance agent yourself, regardless, I don't particularly appreciate them letting me know in the last second.  Had they said, 'sure, we can quote you after we look at it', a month ago, and told me they can't, I would have had no problem with it.  Also, I offered to fix the issues, but was still declined. 

As I stated, this is my first, so I'm learning as I go and had no idea they would reassess the property.  For you, this might have been a foreseen situation, but not for me.   As far as the appraisers 'approving' the roof, I'm pretty sure the mortgage company does have 'skin in the game' since they are the ones making this happen.  With that said, I think I'll stick to my new opinion of them.  

Hello,

I just received a call from Liberty Mutual saying that they are cancelling my homeowner's insurance policy.  Apparently, someone from the company went to look at the house and determined that the roof has some green mesh in some spots, some tiles are curled up and had some patches.  

The policy was started almost a month ago, and honestly, it was the best quote I received.  Needless to say, I was pretty happy since I thought LM is a reputable company.  However, this really changed my perspective on the company since we are supposed to close on this 3-family next week.  Keep in mind, neither the mortgage appraiser, nor the inspector saw anything out of the ordinary with the roof.  The inspector did see the green mesh in a few areas, but determined that the roof still has 5-8 years left to it at the least.  I offered to make necessary repairs and clean up, but LM said that they wouldn't reinsure me, so I cancelled my auto policy with them as well.

I was definitely blind sided by this and I hope I can find another company in time.  Now, I'm a bit worried that with which ever insurance company I'll go with next may also cancel on me.  Is this pretty common, or is LM just really tempermental in this regard?  Someone recommended to try Homesite through Geico.  This is my first home/investment purchase so majority of this is new to me.  

Any other recommendations or suggestions would be greatly appreciated.

Konrad

@Paul Caudell Thanks a bunch for going over my questions and addressing them.  I decided to go with the RCV policy and asked the agent to reduce the replacement value as much as he could while still keeping the benefits of this policy, which dropped down to $628K.  I have lost the Home Protector Plus benefit and the Extended Replacement, but I think I have enough to be covered in case of any losses - damage repairs or total.

This has reduced my premium slightly, but I am at the point where the benefits justify it and allow me to be more comfortable, while not overpaying.  It's amazing how much premiums differ from company, to company.  It pays to shop around, do your research and ask for the not-so-obvious options. 

Again, I appreciate all your help and time you've put into explaining everything.

Konrad

@Paul Caudell Thank you very much for your effort in explaining the differences between the two.  It definitely helps me understand it better, although some things are still a bit confusing ( I will be re-reading your post a few times).  

Sounds like going the RCV route would limit my risk a bit more than the ACV.  I would sleep better at night knowing that any major repairs would be fully covered at night (less the deductible).  

You mention how you have your 2-family house insured with a RCV policy, but you have it insured at $80k, rather than the RCV.  In case of a total loss, would you be reimbursed at $80k and have the option to either rebuild or take the money to pay off the loan or buy another property?  One of the agents I talked to, I specifically asked that question and was told I that I can't lower the RCV to less than 95% and I would have to rebuild, with no other option.  After that, I haven't asked the other agents about insuring it at market value - should I go back and do so? 

Also, how would I know whether I choose the 'open perils less exclusions' or 'named perils' policy? 

The Liberty Mutual RCV policy, which I most likely will be choosing, has the following included:
-Standard Coverage with Home Protector Plus;
-Dwelling with Extended Replacement Cost;
-Other Structure on Insured Location;
-Personal Property with Replacement Cost;
-Loss of Use;
-Personal Liability;
-Medical Payments;

However, it doesn't specify as to which perils I am covered, but it does say under 'additional coverages' - Ordinance or Law 10% and Water Backup.

Thanks for your input,

Konrad

Hello Everyone,

I will be closing on my first MF investment property in about two weeks.  One of the things left is to pick out homeowner's insurance.  I've been shopping around and have gotten different quotes for Replacement Value policies.  However, yesterday, an agent brought up an option of an Actual Value policy. 

The house is a 3-family built in 1890 in central CT and has almost 3,800 sq.ft. Purchase price is $163k.  Because of the size and age of the house, the RV quotes I've received were pretty high:

USAA - Replacement Value @ $938k; $2,950 annually, but agent said they will send out an inspector to do an on-site RV appraisal and there's a chance it might be lowered.

Travelers - RV @ $923k; $2,933 annually

Liberty Mutual - RV @ $718k; $2,128 annually

The agent I talked to yesterday told me about the AV policy through Foremost and told me if they will value it at $200k, my annual premium should be around $1,400, which is a big difference.  

The house is not in the best neighborhood and I think the highest priced house on the street is about $180k, so if something was ever to happen and I had the RV policy, having this house rebuilt for 700k or 900k doesn't make sense to me.  It would only be work maybe 250k in that neighborhood, at the most.  In this situation, would it make sense to take the AV policy?  

What if I just need repairs due to a branch falling on the roof or water damage due to burst pipe?  Do both cover the same way, aside from a total loss instance? 

Are liabilities brought by my tenants covered the same way, given that the coverage is the same?

Looking for opinions and expertise.

Thanks in advance - Konrad

@Andrew Cordle Great job! Did you paint the siding or re-side? Hard to tell on my smartphone. It's amazing how playing with some colors and a little yardage improves curb appeal and the value.

Thank you all for chiming in. Lots of great points made and I'm taking in as much as I can. Best teacher is experience, so I'll just have to wait and see, but take in what I can in the meantime. Sounds like I'm sticking to the MLS and the REO sites for now while building a relationship with a good realtor.

@Dev Horn That is exactly what I had in mind with my initial post. Everyone gets to see these properties and keep the price from being where it should be, or where it would benefit a rehabber. However, because I lack experience as a novice, I think that my best bet for the first 1 or 2 would be to seek the help of a realtor. Then as I gain some experience, I can try to deal directly with sellers and advertise. Networking is also key.

@Bryan L. Thanks Bryan. I have actually taken the course about three years ago, just for my own knowledge, but have never become affiliated with a broker. That was before I realized how lucrative and possible REI is.

@Karin Crompton Thanks for the advice and for the explanations. It all makes sense after I read it, but since I'm a novice, some of the things I wouldn't know until I try myself. I have been comparing properties myself in the surrounding neighborhoods for properties that interest me, so you can say that I'm doing some analysis. Some things will just come with experience and trial and error.

You make very valid points about keeping track of the properties that interest you, but you didn't buy, just to see how your analysis is doing. I'll have to utilize that as well.