All Forum Posts by: Mary Jay

When I lived in TX, no one ever inspected my homes.  I live in FL now, and it is the norm for a new insurance company to check/inspect.  Kin.com had me take my own photos and upload them to their app.  Other companies have come in person to do it.

Every year, I get new 4-point inspections on ALL of my properties and send to my agent to re-shop my insurance rates.  This has never NOT paid off for me.  (Most people do not know that FL 4-points are only good for one year, so get them every 12 months for sure.).  You do not just have to roll over and take it from the insurance companies.  They will ALL try to up your rates, but you can usually mitigate the amount of the increase with a new 4-point and a call to your agent.

If my carrier changes because my agent found a better deal, they typically want to come inspect.  Sometimes they want me to fix something (like cracks in a driveway that no other company had cared about previously).  Mostly they do not.

If you changed carriers, I would expect a new inspection.  Is it possible that you changed some carriers but not others?

I fill out a spreadsheet w/ the bigger ticket items - roof, siding, AC (this one has a mini split), hot water heater, flooring. Smaller items like fixtures, countertops, cabinets I don't worry about as much. This is a small property so the smaller items don't amount to too much. 

For this particular duplex - upstairs flooring will come up - looking around $1500 for LVP installed. Roof would be around $5000. Brand new mini split AC installed around $1000. Siding is the big ticket item here. Hot water heaters are tankless and new. Fixtures are new. Countertops are ok - would do a butcher block here - looking around $500 installed (can be sanded, refinished, sealed, epoxied over etc). Plumbing is all brand new. In $2024 I spent $56 on repairs/maintenance between both units. I have this in a spreadsheet and generally divide by how long I think that particular item will last to come up with a monthly cost. 

Insurance costs I think were predicted reasonably. No one (ask the people who had to move out of their home due to insurance costs) is predicting insurance costs doubling, tripling in 2-3 years. This duplex is still cashflowing after absorbing the increased insurance costs. In fact it still almost hits the 1% rule. Do you typically take your insurance estimate, then multiply it by 3, and use that as an expense? I doubt anyone does because that wouldn't make sense. 

I don't see how rent point has to do with absorbing high insurance costs. If your rent is $3000 and your expenses are $2900, you still can't absorb a high insurance increase. It really has to do with the spread between rent (income) and expenses. Insurance on a 1mm property will also go up a lot more than a 100k property. 

I'd actually like to hear your methodology on buying. I understand you have a lot more experience than me (and experience is often the best teacher) but I still think I have done some things right with this property and I think it works out long term. This was my first property, I've owned it for about 3.5 years, and "started" in RE about 4 years ago (all stock market investing prior). I can take a step back for a minute though. A lot of the social media "guru" stuff has gotten me to be an extremely quick skeptic here lately. So I can admit that and that I am very far from being an expert. 

I live solely off my rental income so it's definitely not a myth ;)

 1. Very likely no (how do you think this would benefit him?)

2. The insurance companies might require this.  Is it a problem?

3. Did Citizens send a letter to this effect?  I'm not an expert on Florida insurance but I know Citizens which is state-backed and grew too large is depopulating policies.  They wouldn't just "change" policies without written notification.

You mention a key point at the end.  You can't compare owner occupied to tenant occupied.  Totally different policies and procedures.

Sounds like you don't trust your agent though.  Why do you use him if that's the case?  Have you asked him these questions?  Have you asked your other agent?

As an aside, insurance companies are inspecting most properties one way or another in the current market.  They may have even inspected your primary home without you knowing.

I think you raise a great point Max, not the one your stating but the underlying that brings one to say or think such which is this "rainbows n fairy-farts" fantasy that there is some plethora of "ATM" investment real estate out there. 

All that garbage made to sell books or guru programs is just that, BS marketing slogans. 

There has never been a time where most properties were instant "ATM's". Not in 2010, not in 2020, not even in 2000, not ever. 

Looking back, sure, after the fact looking back on a 2010 buy one can say how "easy" it was and how it rapidly became a "cash-cow" but at the moment in time of the buy, no, it was NOT prevalent or known what they'd be the next year, 5, 10 etc.. 

And as a person who was actively FT investing then, I can say that the majority of talk was on more of a drop, W recovery, going too $0, decades of dystopian life etc etc.. It was anything BUT "guaranteed $". 

I was considered a contrarian, MOST of us active in REI at the time were considered contrarians. And just like today, for ever 1 doing, there were 99 talking about doing, someday, when it's "perfect" and how they'll time the market......

Most only see problems, ever so few see the opportunities and remove emotions to follow the math.  

I blame the BS programs. They pump false beliefs and false narratives because fact is they connect and sell. 

Not every/any property works as an investment vehicle. This stands true for any/every investment segment in existence; stocks, ETF's, business ventures. It's always been about digging through the coal to find the diamonds. 

@Mary Jay, the $800-$1k sounds like phantom cash flow or spreadsheet cash flow that gets eaten up by repairs/maintenance, turnover, vacancy, CapEx, etc.

I've owned rentals (with leverage) since 2019 and our REI bookkeeping firm has serve tons of landlords. From all of that data, it's abundantly clear to me that any rental that has debt doesn't really cash flow. It may cash flow for a year or 2 but once things start breaking or something goes south with a tenant or it sits vacant for a few months, all of that previous "cash flow" is wiped out.

The business model is a high CapEx / low cash flow business model relative to the value of the assets.

Rentals are a great long-term wealth-building vehicle (appreciation, loan pay down, tax benefits, etc).

Don’t rely on them to pay for your groceries.

@Mary Jay yes and that’s counting even big ticket item repairs averaged out so my monthly is actually higher. It’s kind of enough to live on (if lived really frugal) they all mortgaged. The 4 units cash flow best, I don’t think single families really cash flow much. Need a few units in same buildings and higher rents to cover expenses aka nice areas. 

If you can pay off the HELOC quickly, that is not bad way to go. BMO used to do them.

Properties cash flow heavily in year 5+ as rent growth compounds and your mortgage stays the same. You can get some cash flow year 1 but it’s very mild if you’re leveraged up. I have about $40,000 net a year after reserves and everything but have $500k+ of equity in them.

A big factor is also who you have do repairs. I have cheap guys who do it 1/2 to 1/3 what you pay if call someone off Yelp. This is essential to running these profitably.