All Forum Posts by: Account Closed

@Joshua Rose and @Nathan Murray . I am an insurance agent in the St. Louis area and work with a number of quality real estate agents, investors, etc.  I would be happy to share any insight I have from an insurance prospective or provide any referrals you may need. 

@Edwin Broce I am a local insurance agent specializing in construction and real estate investors and would be happy to assist in anyway I can in providing guidance on insurance cost estimates in the areaand eventually obtaining insurance once you are closer to a closing date. Best, Mike Flavin

In my role as an insurance agent for contractors I have had many discussions with general contractors and owners regarding this issue. Aside from quality work the number one quality I hear is establishing a reputation for consistency between your bid price and the actual cost of the job. The low bid change order strategy may win you a few jobs here or there but will piss people off in the long run. Any flexibility you have on when you get paid is also a plus as it allows the hiring firm to manage cash flow more efficiently. As @Manolo D. stated there are plenty of investors/rehabers that only care about price. However, those guys are much less likely to be around for the long hall. They are also much more likely to have costs overruns in other areas which could impact their ability to pay you. 

@Brad Thomas Without knowing the specifics it is impossible to know what was behind your increase. You should speak with your agent to find out more information.  Keep in mind that at the time of a loss the insurance company will determine the replacement cost value at the time and if your limit is lower than the value they determine they will not pay your full claim. For that reason it is important to either make sure you are insured at the proper limits or look into the agreed value endorsement which can eliminate the coinsurance penalty. 

The property insurance make up the majority of dwelling insurance premium so I assume that is the coverage you are most concerned with. Dodd Frank requires that mortgages lenders require and go through specific procedures in order to verify property insurance is maintained. If property insurance lapses the bank is required to purchase it themselves. That being said their are creative ways to partially self insure. 

With as many properties as you have you should be able to find an insurance company willing to write all your properties under one policy with a blanket limit and one per occurrence deductible. 

Increasing that deductible is a form of self insurance and could substantially lower your premiums. Coverage for loss of rents in the event of a loss is included in most policies and not something required by most lenders. If you are willing to risk losing the rental income from a damaged property this is also something you could eliminate for a reduced premium. The same thing goes for equipment breakdown and other additional coverage in your policy. Finally, insurance companies will allow you to select your limit or earthquake insurance. Your lender is only concerned with recouping the amount of your outstanding loan and should allow you to decrease the limit of earthquake insurance each year as you pay down the principal on your loans.

Insurance seems like an unnecessary expense until you need it. So while the potential for reducing premiums may be attractive discussing your alternatives with an expert and performing a cost benefits analysis should be done before reducing your coverage in any way. 

I used an FHA loan with 3.5% down which was my own cash. I am living in the property and someone is renting my guestroom starting in August. The mortgage - rent = around $100 a month so even with maintenance and taxes ill be paying less than if I were renting. I will be focused on growing my book of insurance business to generate the cash ill need for future purchases. There are a number of desirable areas in the area that have significant tear down infill construction. I will be focusing on finding homes in those areas that are not attractive to builders for tear down purposes and therefore significantly less expensive and renting them to quality family tenants.

@Graham Parham LLCs do not shield their members from their own tort liability even if that tort occurred while that person was acting in his role as a member of that LLC. A tenant suing because of being injured o the property must prove tort liability in order to win a lawsuit. Normally the suit would claim negligence in maintaining the property or something of that nature. That being said, that tenant theoretically can not go after assets in a separate LLC owned by that same person. Sp an investor with a large portfolio of properties can protect all of his properties but one from a lawsuit. A new investor really has no benefit from an LLC in that regard.

You are the lending expert but I assume you would agree that most lenders are going to require a personal guarantee to finance the property of an inexperienced investor. 

 Unless you lied about the condition of your roof it is illegal for an insurance company to cancel your insurance. The below quote comes directly from Conn Department of Insurance 

When can an insurance company cancel my homeowners coverage?

I am a native of St. Louis working as an insurance broker with a focus on construction and real estate. Prior to returning to St. Louis I worker for five years in investment banking financing the infrastructure for large scale subdivisions using non-rated municipal bonds (Dirt Bonds). I recently purchased my first property. I am very interesting in continuing to learn about the industry and increase my professional network. My career in banking made me a strong advocate of only investing in markets you are intimately familiar with. For that reason, I will be exclusively focused on the St. Louis region.

Insurance companies have gotten extremely sophisticated using in determining if damage was caused by a recent storm or is due to wear and tear. So you should be confident the wind storm is what actually caused the damage before spending time contesting the adjuster.  

The first thing I would do is call your agent and have him start advocating for you. Next, I would find a respected restoration company that specializes in working on insurance claims to come out and evaluate your roof as their opinion will carry more weight than Joe the one man roofing company and will provide free inspections. If you are still not satisfied your policy likely states disputes are settled by each of you hiring an arbitrator who then decided on a neutral arbitrator and debate until two of them agree.