All Forum Posts by: Matthew Cope

Quote from @Justin Young:

@Matthew Cope this is something I’m dealing with currently. 11 properties (Oklahoma) and last year my total premium was roughly $700/month. My new policy that starts this month is now $1,365/month! Basically doubled!

I’m going to have to increase rents but my main concern, is this going to be ongoing every year?

Is anyone else worried that the price of insurance and taxes are going to increase so fast that renters won’t be able to keep up due to wages not increasing fast enough?

I'm being told there will be an increase the next couple of years. I'd like to raise rents, but I have my properties at market value due to recent remodels. Unless there is a collective increase across my local market, I'm afraid I can't increase mine much more without increasing my vacancy rates or having to look at concessions.  

I really appreciate everyone's insight on this topic. Something I did years ago was switch to an independent broker who is able to shop around with multiple companies and it seems to pay off. I am going to research the higher deductible idea. That's something we could plan for and handle if an accident occurred. 

Along with the insurance increase, another issue we've seen is insurance companies not wanting to take on the policy which limits our options with who we go with. It's frustrating because this particular property (12 unit residential), was stabilized in a class B area and we still only had a few companies want to offer insurance policies for it. 

I recently read a local business journal article that predicted insurance was going to go up by approximately 20%. The main reason was under insured properties due to property values continuing to climb along with an increase in repair/replacement costs. I talked to my broker about it and he had a similar message. Is this happening across the country? For context, I invest in 12-30 unit apartments in the Midwest.

Insurance is not my strong suit. Is there a good book or reference out there to better educate myself on the topic?

I've used property managers since the beginning of my investing journey and it's been well worth the 9-10%. Most of my properties are where I live, but I do have a 4-plex over 2 hours away. I wouldn't be able to manage that property properly if I was doing it myself. 

I went through my first eviction a few months ago. The property managers handled everything. They handled the paperwork IAW the local and state laws, took the tenant to court, and eventually retook possession of the unit. The only thing I had to do was agree to start the process. We paid for the court fees, which equalled around $300, but the PM filed all of the appropriate paperwork so the tenant (that was evicted) will have to pay us for those legal fees in order for them to rent again. Our eviction was seamless because of the PM. I'm a big fan. 

With that being said, definitely spend time finding the right fit for a PM. I've had a really bad one, and it made owning a property painful and took a lot of my time. 

Thank you for the feedback! This is helpful. I'm going to talk to my PM about some of these options. 

I'm having issues with my apartment dumpster. It's turned into the community dumpster and people keep leaving furniture beside it, which the trash company won't take. Mines a 6 yard dumpster. My property manager said they make locks for the dumpsters and the tenants receive a key for it. 

My wife and I bought our first apartment in Springfield, MO last winter and the biggest headache we've had with the property is the dumpster. It's turned into the community dumpster and people (non-residents) keep leaving furniture and trash around it. Every other month it seems I'm paying the property manager to send someone out to retrieve the furniture because the trash company won't take it. Unfortunately, the only place I can keep the dumpster is close to the road. There's not a fence around it so it's pretty visible when driving by. 

Any ideas on what I can do? I've considered having a private fence built around it, but I'm afraid people will just put their garbage around the fence.

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Thank you for all of the replies. This confirms what I was thinking. When we began targeting this property, it was because I believed there was a value add opportunity and that was confirmed when we received the T-12 and rent roll. It surprised me that an appraisal company, that focuses on commercial properties, would use pro-form instead of current values. 

I spoke with a couple local commercial lenders and they expressed everything that is being said here. Their appraisal will look at current values not pro-forma. This gives me some ammo, backed by numbers, to take to the owner. 

Currently in negotiations to purchase an off market 5+ unit apartment. The owner provided the T-12 and rent roll, but wanted to hire a local commercial appraisal company to get an idea of what he should sell the property for. The appraisal company calculated the appraisal based off of their own pro-forma instead of the actual T-12, which increased the value of the property and his asking price. 

Is this common in the current market?

@Matias Torres I definitely will. With the system in place, it was not bad to navigate through. Hopefully it doesn’t happens again!

@Colleen F. Cat lady did leave. She only had a month left on her lease and had already been notified that it wasn’t being renewed so she vacated the unit. Thankfully there are no cats now at the property, just the smell that we’re currently addressing during the remodel.