All Forum Posts by: Michael Norris

New build for under $150 per square foot would not include land - maybe you could get close if you are doing your own GC and hire sketchy trades and/or undocumented laborers. Why? Pre-covid you could get a tear off roof replacement for about $150 per square post covid they want $450 per square and they are booked out. You can find guys to do it for less than 450 but you'll wait for when they are available and you better hope no one falls off the roof. Roll that out across all the various trades and you'll understand why it's so expensive to build. The only things that seem comparable to pre-covid pricing is windows and the wood floor refinishing guys. All the suppliers have lost their dang minds. In the last 14 months the cost of Kerdi raw materials for waterproofing showers went up like 60% and that is after all the increases during covid.

Why not foreclose and either rent it out or sell it?

If the contractor is doing the repairs to the adjacent units the cost to scale doing your repair will be less than anyone else you can talk to as well as the contractor can use approved repair costs by the other carriers if any one of them wants to offer less than is needed to do the job.

Also if the contractor's estimate is already approved to repair the other units than I don't see a reason to hire an independent adjuster and give that person a share of your claim proceeds unless your carrier digs in and won't pay what is nedded to make the repairs. 

Hopefully the claim goes well but if it does not - before you fire off any cancellations make sure you have a new carrier locked up who is aware of your claim because it is getting very difficult to find coverage for someone with a claim in the previous 3 years. 

Join the Greater Cleveland REIA - you will make tons of connections to find off market deals, private money, hard money, attorneys to make it stick, etc.

Check out Greater Cleveland REIA - there are regularly monthly meetings and some off schedule ones. The REIA also runs a 6 week education course that may give you some extra knowledge and contacts specific to the CLE area. The classes are free if you join and membership is ridiculously cheap.

It's a great group and I have made tons of connections there - any issues you have someone in that room has already dealt with it and has the answer. 

There are some other groups around town but the names don't come to mind at the moment. 

This is a hot topic right now because of the exploding cost of repairs post covid and there probably isn't a profitable home/auto insurance company in the US at the moment. 

Very simply - if your house burnt down tomorrow how much would it cost to rebuild? You being in San Francisco I think $170 per squarefoot is ridiculously low unless you live in a kit house or log cabin. $300 per square foot may not even be enough at the moment.

New build semi custom homes in Ohio cost about $300 per square foot to build at Ohio prices - I can't guess what it is in Cali but I know it will be more.

The insurance marketplace is a dumpster fire and agents are trying to survive at the moment. A lot of Agents are chasing new business and many have given up "selling the value" of proper coverage and instead chase the least expensive policy they can pitch you. Many consumers don't pause (like you are doing) and ask how much coverage do I actually need they just want the cheapest coverage.

It's all fun and games until the claim happens. 

Agents all use similar software to come up with their reconstruction estimates - there are maybe 3 or 4 software programs for this. If I was you I would start by asking for a copy of that report and see what they input versus what is accurate for your house.

Do they have the correct square footage? Does the construction style, materials, age, etc all match with with you really have. Interior - how many rooms, bathrooms, types of finishes, etc do you have vs the reports.

Agents do not get a lot of education on how to calculate these estimates - some wing it, some work the angles to try and pitch you a lesser expensive policy and some actually know what they are doing and try to give you proper coverage without over doing it and blowing the sale. 

Unfortunately there are some who will outright misrepresent your home as being smaller and newer than it actually is to chase the lowest rate.

If/when a major claim happens and you don't have enough to rebuild your house it gets ugly fast and all parties point fingers at each other. 

Some would say the agent is responsible and I would agree to a point... but that whole policy application you sign when you buy the policy... that thing says the information is true to the best of YOUR knowledge and that you are ultimately responsible for what is on that paper.

That becomes even more locked in place against you once the policy renews a couple times. If you say the agent did it - The claims adjusters will look at the agent who wrote the policy to see if they can stick them with some of the claim obligation on the agent's E&O but that effort is more about improving the company profitability versus the justice of "right & wrong".

Whether they stick that back on the agent or not your claim will have been delayed by months going thru that process and it very likely would not go your way unless you can prove you told the agent X, Y, Z on the application is wrong and you can prove the agent said "don't worry about it".

At the end of the day the adjuster will look you in the eye and say if the application was not correct why didn't you say something?

On the other end of that conversation the agent is telling the adjuster "I dunno that's what they told me or the person who wrote that policy isn't with the agency anymore" etc etc etc. Either way the client never said anything about the application being incorrect - and you live there the agent doesn't.

Asking questions of the agents and looking at the RCV report will tell you most of what you need to know to make this decision. 

An umbrella policy is for liability coverage and is a secondary coverage meaning you have to have an underlying policy with liability that would pay first in a liability claim situation. 

Once the underlying (primary) policy pays to it's limit THEN the umbrella policy can kick in to cover the excess liability from a given liability claim. 

I'm not sure how this happens but I see this on BP all the time where people recommend Umbrella for covering multiple properties without discussing the need for an underlying policy that covers both property & liability. 

Definitely seek out an independent agent who can walk you thru the proper coverage needed and how these things apply.

The worst time to find out how your coverage works is after you have a claim!

Just one little example - prior to covid a tear off roof shingle replacement was about $150 per square (10' x 10' area) investor rates and getting a little more from insurance companies. 

Post covid roofers are getting $450 per square from roofing companies and the guys who used to do roofs for us won't even quote a job because all they want is insurance work.

I'm in NE Ohio where we are relatively disaster free.

In the last 90 days we have had two tornado events with more than 10 touch downs per event plus two big hail storms and also massive rains where streets were flooded out like Noah's Ark.

I don't believe there is a profitable insurance carrier in the US at the moment so the pain will continue.

Cleveland can be great as are many of the other cities you mentioned in your comment - Cleveland as a city and Cuyahoga as a county has dozens of tax districts and localized rules to be aware of. I don't know the exact number but it's probably like 40+ different school districts which also means 40+ different property taxes and police jurisdictions. 

Finding one or two areas within "Cleveland" and doing deeper research on those areas will make your learning curve here less painful. 

Some cities within "Cleveland" require lead certification some do not, some have point of sale inspections and others do not - and what keeps it fun is those two issues/rules have been enforced, rescinded, and now being re-enforced in some areas.

Being Aussie our regulations are probably a joke compared to yours but it can still be a hassle - such as not having a lead certification in Cleveland proper can prevent you from being able to evict someone in housing court. 

If you have specific questions I am happy to try and share help where possible if you want to connect.

Your experience is common in many areas but as a local I hate seeing Cleveland painted this way - it's real, it happens, thankfully it hasn't been my experience... yet.

You landed the plane and didn't lose money so that's a win - I am seeing a lot of failed flips popping up on/off market and the sellers (at this time) are not willing to take the pain needed to get off their failed projects. The cost of materials and labor is exploding I don't care what the headlines show - every supplier and trade are increasing what they charge quarterly. On shower water proofing materials alone we've seen a 60% jump in 12 months it's getting ridiculous. 

The only way out is to finish the job so pat on the back for you.

Based on my experience the people that stole your furnace/HWT are either the guys who installed it, someone on the work crew in other parts of the house or one of the neighbors. They make security systems for construction sites that are cell based and you'd have some cameras and an idea who is working not working that day.

The local security co from my REIA is Preferred Security LLC in Parma.

Also you may be able to head off some of the sketch contractors by using Service Sold (also from my REIA). Service Sold is basically a Cleveland thing but if they get some wall street money you will see them everywhere and I just want in on the IPO lol.

Service Sold is a reverse auction for contractors to bid on your job - you post the work and as much info and photos as possible and the MAX you are willing to pay and then people will bid the job down from there. Don't start your max price too low or the good one's won't bid!! You don't have to take the lowest bidder and the good ones will show previous jobs on the site and you can see what they have done on those jobs. 

It's hard as an out of town rehabber to do this but being local we try to figure out who the helpful neighbors are and kiss their behind to keep an eye on the house - we will cut their grass once in a while, shovel their sidewalk or whatever to keep them looking out. Sometime they aren't willing to involve the police so if it's one of those situations we make sure they have our numbers and will tell us if they see something funky going on. 

Good luck on any future Cleveland projects