All Forum Posts by: Account Closed

I would look into having your grandparents put the property into a trust. I have very limited knowledge as to the mechanics of this but it's probably worth calling a tax attorney.

Insurance for rental properties is much tougher than in the past. Filing a claim will absolutely increase your premiums and will make it much harder to shop insurance later. Assuming the damage is small I would pay out of pocket and keep the damage deposit (assuming that's allowed in your lease).

I would try United States Liability Group. They do a lot of odd liability only stuff. 

@Patrick Britton You seem to be missing the fact that this law was passed solely to protect section 8 voucher holders from being discriminated against and will only effect slum lords. 

Verifiable Income: No one is arguing that establishing steady and verifiable income is not an important part of the screening process. In fact this law still allows landlords to require legal and verifiable income three times greater than rent to qualify and does not effect anyone with those standards. The average 1 bedroom rent in Seattle is around 1,300 a month meaning an applicant would need 3,900 in income per month. This knocks out all section 8ers and 99% of people relying on child support and everyone relying solely on social security. In a nut shell to meet the 3:1 requirement you have to have a real job and therefore most landlords will not be effected.

Market Rate: This law does not effect market rates or the free market in anyway. 

Discrimination: It is no secret that minorities hold a significant amount of section 8 vouchers. While it is illegal to discriminate based on race, prior to this law it was not illegal to discriminate based on type of job/source of income. This basically provided a round about way for slum lords to racially discriminate without breaking the law. 

First Come First Serve: This requirement ensures slum lords cant get around discrimination by simply skipping all the minority applications. This is part of the bill is far from ideal and does encroach on good landlords flexibility to run their business. However, a few landlords being forced to pick tenants that meet their requirements but may not be their first choice is a small price to pay when compared to the damage done by con artists who have taken advantage of the system and collect rent from the government while forcing section 8 voucher holders to live in disgusting non maintained apartments in decaying areas without access to jobs or opportunity. Instead of idling sitting by while government officials try to find a solution real estate professionals should start contributing their expertise to this issue.

@Andy N. Actual Cash Value "ACV" is almost never used in quality apartment complexes. The cost savings is minimal you are at the mercy of the adjuster and have substantially limits coverage for roof damage (roofs are depreciated around 7% a year meaning you are out of pocket for 45% of a 7 year old roof). 

With agreed value you and the insurance company agree to a value of the property before the policy is issued, In the event of a covered claim you will receive the cost to replace anything damaged up to the agreed value amount. @Dennis Tierney regarding old unique buildings many insurance companies will agree to a value that represents a replacement cost using current construction methods which can be more cost effective the using ACV.  

@Patricia Miller I recently bought a much larger condo than I could afford without any rental income and am renting out my second bed, bath and loft area for $700 a month. Mortgage + expenses is around $1,100. I think this and the duplex route are both great ways to start building up equity you wouldn't have just owning a place for yourself. If the property appreciates in value great but that is not something I am looking for. I am hoping to use the duplex/fourplex approach and live in one of the units next purchase. 

Directly from the Maryland Attorney General:

(5) An insurer may not cancel a policy midterm except: (i) when there exists: 1. a material misrepresentation or fraud in connection with the application, policy, or presentation of a claim; 2. a matter or issue related to the risk that constitutes a threat to public safety; or 3. a change in the condition of the risk that results in an increase in the hazard insured against; (ii) for nonpayment of premium; or (iii) in the case of homeowner’s insurance, conviction of arson.

Generally speaking a material misrepresentation means the application states there is no aluminium wiring in the property and there is in fact aluminum wiring or the application states the roof is 2 years old and its really 15 years old. This does not mean an insurance company can cancel the policy because the roof is a bit more warn than they would like or there is more non structural ware and tear than is preferred. If the application states a property is 50 year old and has had no major updates many insurance companies will reject the application immediately and the insurance companies that do not have these guidelines generally expects the property to be pretty rough and the premium will reflect that.  We generally include the inspection report and appraisal in our submission to an underwriter for the purposes of avoiding this type of unlikely scenario.

That being said I am not a legal expert and have no experience doing business in Maryland. So I would recommend contacting someone at the Maryland Department of Insurance before making any decisions. http://insurance.maryland.gov/Pages/default.aspx

Direct marketing insurance companies like State Farm and Farmers rely very heavily on personal insurance. This area of insurance is pretty simple making it hard to add value through knowledge and structuring of programs. For that reason it is being threatened by new start up companies that allow consumers to compare multiple quotes at one time. I would look for a position focused on commercial insurance. It takes longer to win larger commercial clients than it does personal but has a much larger payoff in the end. Realistically it takes 3-5 years to gain the trust of these type of clients so be ready for a few years of living frugally. 

Contrary to @David Dachtera comments commercial insurance clients produce annual residual income. Once you build a solid book you can live off commissions without the need to constantly produce new sales.  It is not uncommon for a good producer to make $1 million plus annually. Directors at my agency own their own book which they are able to sell upon retirement. Like @Brian Stone stated, it take years of rejection and you have to be able to look at this rejection as a learning experience and not a failure. 

Pricing varies by state so I can not really comment from that perspective.  Here are my quick comments on coverage:

• Property insurance provides special perils coverage which is the most broad coverage available and is a plus. 
• Property is replaced on a depreciated value basis which means they will deduct depreciation from replacement cost giving you less $ than if you have replacement cost coverage
• You have an 80% coinsurance requirement Refer Here for example This is not abnormal but agreed value is more ideal
• If damage to the property results in you not being able to rent the property you have $7,200 in coverage to make up for the lost rent
• USLI does not include earthquake which is a big deal in MO but maybe not in GA
• A $1,000 deductible is the lowest option available. You can increase the deductible for a lower premium but that is your decision. 
• Liability coverage looks pretty standard

In my area USLI is a good company for properties that are harder to place due to age, roof condition or other unique characteristic but not as great for newer well maintained properties with a roof less than 10 years old. That may or may not be the case in your area. Good luck!

@Taz Patel if it makes you feel any better mold is not covered by most liability policies so insurance would not have helped anyway. The lease should stipulate the the tenant is responsible for taking care of any accumulation of moisture and required to notify the landlord in writing if the problem persists. It does not sound like any of these steps were taken. Removing mold from these areas doesn't seem like it should be a huge ordeal unlike mold in the structure of the property from roof leaks. 

It may be worth a few hundred dollars to have a mold specialist inspect the property and take care of any mold that may or may not exist. This covers any liability you may have and will probably cost less than you would pay a lawyer to write a letter to the tenant. I have a number of clients that have been victims of frivolous suits like this which generally end up getting thrown out but are a waste of time and money. Remember you have no obligation to give a reason for non-renewal of the lease and putting any additional explanation in your non renewal notice only provides potential amunition in a suit. Good luck!