All Forum Posts by: Kenton C.

Here is the replacement cost value policy I was quoted for a rental property that I bought for $71,500. The quote insures the property for 171,000$, and 500,000$ in liability. I am not operating under an LLC, and have no assets (no car, no house) to lose, but I have the income from my job. Total premium is 1027, and seems to be the cheapest from the 10+ insurance brokers and companies I called, for this amount of coverage under a replacement cost policy.

What do you think? Is it missing anything? Is this enough coverage? Questions I should ask/clarify with the broker? I'd like to hear some thoughts as this is my first property, and first policy.

So what would be a better value to insure at? I want to make sure that if there is a total loss, I am able to garner what I put into the property (71,500$), even if I do not rebuild (which under the RCV policy, If I do not rebuild, they will pay out ACV).

I insure the property for 171,000$ and there is a total loss 20 years down the line, and lets say the property is 50% depreciated, I would still be written out a check for 85,500 (minus my deductible), meaning that I would still get more than what I put into the property. Therefore, I think the 171,000 is a pretty safe amount to insure. If there were a total loss on Day 1 of the property, I would essentially be cut out a check for 171,000 (minus my deductible), even if I did not plan to rebuild, because there would be no depreciation. Am i right? What are your thoughts BP?

I am looking for replacement cost value DP3 insurance policies on my first rental property. I paid 71,500$ for the property, and it has brand new roof, plumbing, electrical, and floors. 

I am being quoted for 171,000$ in dwelling insurance on DP3 policies. My question is

1) Am I over-insuring? Why are they insuring me at 171,000$ to rebuild the property when I can buy a new one for $71,500?

What am I missing here? Would it simply be enough to insure it at what I paid for it, because I don't see how the cost to rebuild can be higher than the cost of buying a new property?

Hi All,

I am closing on my first investment SFR in Philly in 1.5 months, and have decided not to operate with an LLC for this first property. The property is worth 71,500$. Companies wont write me an umbrella policy because I don't have a primary home, and am under my parents auto insurance (not economically feasible for me to go on my own auto due to my young age - 22). I own no other assets (no homes, cars, etc, and only have my stream of income).

Instead of an LLC or umbrella policy, would increasing the general liability on the DP3 policy to 500k or 1 MM be enough? Pros/cons? Is 1 MM overkill? Will this be comparable to having an umbrella insurance policy? Is this enough coverage to provide peace of mind? Thanks!

It has 500K coverage for each occurrence, 500K for personal injury and advertising injury, and 1MM general aggregate.

Right now, I am planning on staying away from opening an LLC, rather operating with proper insurance, and personal umbrella insurance as well. The reasons for this is that I heard the lender may not really allow me to transfer into an LLC, and may trigger some "due at sale" clauses like mentioned above.

Therefore, I don't think I can really apply for a business bank account. Will I be able to apply for a business credit card, and is this really necessary, and preferred over a personal credit card? Because I don't plan on keeping my finances separate, I plan to open a sub-savings account in my own name at ALly bank, and transfer the $$ set aside for repairs/vacancy into that account, and the rest goes into my main ally savings account. Does anyone have experience operating under this model?

Thanks for the suggestions about Quicken. I will look into it.

How do you guys track rental income from your properties? More specifically, do you put it into a bank account (savings or checking) that is specifically for your rentals? What are the disadvantages/ advantages. I only have 1 property so far, and am not operating under an LLC.

I am also setting aside a % of my rental income for vacancies, and repairs. Do you group save this into the same account where all your rental income goes and just track the amount thats supposed to be for vacancies and repairs via a spreadsheet or something? Is it suggested that I open a credit card for my real estate matters only?

I'm looking over the standard agreement for the sale of real estate for a turnkey property I am buying in Philly. Its the form used by the Pennsylvania Association of Realtors, and seems pretty straight forward. Should I hire an attorney to look this over?

This is my first property as well, so I wouldn't mind hiring one, but I am not sure if its entirely necessary. Thanks!

Hi,

I am looking to get into investing in a Duplex for my first investment property. I know that a duplex is more likely to have more frequent turnovers, and the subsequent leasing fee of 1 months rent (I have decided to use a PM that charges these fees), and the associated repair fees before a new tenant moves in. How should I account for these in my deal analysis?

I am currently using a 8% vacancy rate (my market has a overall 5% vacancy rate), and a 5% repairs and maintenance rate (I have been using 5% to analyze SFH homes, should this 5% be higher since its a duplex?)

Thanks!

Hi guys,

I am new to investing in real estate, and plan on buying a duplex or SFH for buy and hold, taking out a 30 year loan (also paying it over 30 years), and putting down 20% downpayment to start.

If for some reason, I want to exit the market I am investing in, or are forced to sell, what happens to the loan, and money I owe the bank? Am I paid upfront by a buyer, then repay the loan back to the bank with that money? What if the buyer also takes out a loan? 

Please help clear up some confusion I have about this process. Thanks!

sorry, the down payment would be 20% down