All Forum Posts by: Luca Giani

You want to be careful with partnerships - you can run afoul of SEC regs.

Have you thought of soliciting your network for private lenders? Many will have IRA's they can convert to self-directed and lend you funds for investing at 100% LTV. You just have to offer a decent interest rate.

Hey Luca,

Congratulations on successfully leasing your rental property in Detroit. I would continue to implement the BRRRR Strategy to grow your portfolio.

BRRRR Strategy: Continue with the Buy, Rehab, Rent, Refinance, Repeat strategy to recycle capital and acquire more properties over time.

When adding an investor it is important to outline the level of involvement this person will have alongside contributing funds. Typically a property management company will take 8-12% of all property rent collected. If each of you are splitting the property 3 ways you could argue that you and your original partner keep 70% of the revenue while the investor keeps 30% due to the fact you will be running the property. 

Please feel free to reach out with more specific details about the property and we can work together to find a loan that best works for your team. 
Thanks

Thanks for sharing this Luca! Let's connect.

It is recommended that you secure the necessary coverages through a DP3 policy. To minimize the cost of insurance, it may be advisable to consider increasing the deductible levels. However, it is important to note that this strategy entails assuming a greater degree of financial responsibility in the event of a significant loss and may limit your ability to file claims for medium-sized losses. It is essential to carefully consider this trade-off before making a decision.

With regard to coverages, @Greg Kasmer is dead on. Deductibles are the most influential trade-off for cash flow and those other coverages are immensely important. 

@Luca Giani It really depends on the market value and cost of construction. We recently remodeled a single family 2/1, detached 2 car garage. Our coverage for the structure is $736, which covers $185K. The market value is something around $130K so worse case it should be covered. $1000 deductible. Insurance companies love roofs. If you replace a roof you can lower the premium. Our premium including commercial general liability is $1070 per year. 

Don't max out the coverages. You'll be wasting money on insurance. Some investors buy umbrella insurance once they own lots of units. This type of insurance blankets other policies. You can get like $1M coverage for $14 month. It's totally worth it. It's another layer of protect and another reason LLC's don't mean jack (when starting out). Good insurance and good leases are 2X more important than holding property under an LLC. You could add a lease clause stating tenants are required to hold renters insurance. If any personal items get damaged/destroyed due to ____ the landlord (you) can't be held responsible. 

Luca - When it comes to rental property insurance some key questions on coverage are:

Actual Cash Value / Replacement Cost - Replacement Cost is what is costs to rebuild the home and is generally more expensive and has better coverage (more $$). I typically use that as it's a "worst case scenario" coverage for me in case the house burns down because I know I have the money to rebuild. 

Deductible - I started out at $1,000 or 1% of value, but recently have increase that to something higher 2% to keep my premiums more reasonable lately as rates have gone up.

Rental Income Loss - I usually have this on my policy as if their is a major loss I know I can obtain coverage for income loss during the repair/renovation if I didn't collect rent.

Sewer Line Coverage - I don't have that on my policy, but more recently I wish I did. I've had two homes with sewer lines that needed to be replaced and wish I would have obtained that coverage.

Lastly, I'll state that obviously depending upon your area you may also need flood, wind, etc.. coverage. I don't have them because I don't need them, but I know those are big variables as it relates to the premium.

At the current moment, most of my home values are between $150-200k and I pay about $1,000-1,200 per property per year. That's my sweet spot that I've comfortable with. Hope this helps!

 @Drew Sygit would be the 1st guy I talked to in Detroit.