All Forum Posts by: Lilia Matlov

@Lilia Matlov

Insurance companies are trying to figure out a new business model because their profit margins have eroded. Sounds like a lawyer clause rather than a lobbyist issue. If they file for bankruptcy, would they even have the money to pay out claims?  There are multiple options out there and it's more important now than ever to shop around.  

I have not seen that other states.  Rather than congress, I'd blame the California government's insane insurance scheme. 

Anytime the government tries to control prices, like they do with insurance in California, the market will react.  From what I have read, insurance prices in CA should be much higher than they are now, and insurers are not allowed to raise prices without approval from the State.

In one story, a guy wanted to buy insurance and was willing to pay for it but nobody would insure his Pacific Palisades home.  He went to the state program but his house was above the maximum California would cover, so he was "naked" (no insurance) when his house burned down.

If you are an insurance company hoping to stay in business in CA, but losing money, and are not allowed to raise your premiums, what would you do?  I would probably slip a clause in that says if I go bust, I'm not covering you.

Hi @V.G Jason and Lilia,
I came across this thread while digging into discussions about real estate strategies, and I couldn’t agree more with the focus on long-term thinking. Lilia’s breakdown of what to consider before investing is something I wish I’d read when I started.

To add some color, I had a client a few years ago who purchased a duplex in Austin with a plan to hold for 12+ years. His focus was on location, tenant demand, and ensuring the property could handle at least a 1.25 DSCR even in a downturn. It wasn't teh flashiest deal, but it's been rock-solid through rising rates and market swings. By prioritizing fundamentals over chasing ROI benchmarks, he's now sitting on an asset that's appreciated 30% and maintained strong cash flow.

Personally, I once miscalculated reserves on a triplex I bought early in my career. It was a 1970s property, and when the plumbing needed an overhaul, I found myself scrambling to cover the costs. That experience taught me to always overestimate CapEx and vacancy buffers... it's much easier to sleep at night when you've got those cushions in place.

From what I’ve read in Bloomberg, these challenges aren’t unique, especially with rising rates. How are you all adapting your strategies with the current market changes, like higher interest rates or evolving tenant demand?

 Quality over quantity is a ridiculously underrated point on here, despite some of us stating this ad nauseum. 

If you're investing in real estate, ask yourself can you hold this a minimum of 8 years, ideally 12, optimally north of 20? This is the through the ups & downs. If so, invest.

Then, ask yourself does this property provide the characteristics you need for it to give you your return-- location, rental demand, buying demand, physical structure, etc. Not it needs to be X% CoC or ROI, no short-term metrics. Focus on the physical aspect of physical assets. If so, invest.

Then ask yourself if you're financially fit; can afford this property to make it 1.25 DSCR and have significant reserves for vacancy, capex, lead times, etc. If so, invest.

It's not let me find some deal for me-- the lowest hanging fruit. It's about making the right deal for you. Not sure the columbus folks will like to hear this, but it is what it is.