All Forum Posts by: Nicholas Nicastro

We manage a portfolio of rentals across 6 states and are looking for the best way to track accounting, run investment return reports, replace quickbooks. Looking at Stessa, Buildium and Appfolio.

Any advice from anyone?

@Nicholas Nicastro great comments by everyone.  I'd add the following;

1)  Due to rates increasing as @Cameron Moore references, most insurance carriers are inundated with underwriting their own renewals as well as receiving tons of requests for quotes.  In the last part of 2022 we are not getting client renewals more than 4 weeks ahead of time...many times 10 days before renewal.

2)  It is possible you are working with a smaller broker who doesn't have access to the carriers currently looking to write SF portfolios.  If this is the case, then they are trying to stick you with underwriters who are not really interested in writing your business.  

3)  Most insurance carriers will have minimum sq/ft values in order to insure the building.  Right now we are seeing $70 per sq/ft  for ACV and $100 per sq/ft for RC.  So regardless of the market value, if you have a 2,000 sq/ft home, the lowest value most insurance carriers will insure for is $140k for ACV and $200k for RC.

Hopefully, you are working with an Insurance broker that understands cash flow. With my own clients, in a perfect scenario where the insurance company is actually sending renewals 45-60 days out, I will touch base with my clients ahead of time to go over renewal as well as shop for a better deal as companies are ALWAYS going up in rate. That is what you get when working with an Independent broker over a captive agent. If you are with a captive agent, they and you are working with both arms tied behind your back because they only have 1 option when brokers have 30 plus. (even if only 4-5 are competetive at any given time)

Hi all  IMHO you are thinking right, about the businesses details but are do in the weeds.   Higher bottom line is via working on learning better screening and requirements uip front!!  IMHO and experience. 

The goal is zero turn over (forever). IE a family with young children and a dog move in and literally never moves out untill every kid has gone thorugh the local college. IE 12+4 yrs. :) I'm on this path in a few doors. First tenants and never moved out (yet). Also when you screen for families with young children (I'll get to how to be FAIR housing HUD compliant while screening) you also get "doers" who rarely call re maintenance needs. Several doors I only get asked in to fix something every 2-4 yrs. Years not months. IE a kitchen faucet has worn out or a dishwasher.

Focusing on how to attract longer term (permanent) tenants will net 200% more (incrementally) vs any other tactic IMHO.

tips:   buy the book  Landlording on autopilot.  Best screening chapter found.

- add to your requiremetns at the bottom of your zillow rental add;   Must be long term renter, multi years.  Preference given to longer term stays.

- Take 1 or 2 dogs.  Put in a fence for the back yard.  Charge $300 per pet fee, $25/mo per pet rent.  Apartments are up to $50/mo pet rent.  Use petscreening.com to help filter fake emotional animals.

- I get 3 mo bank statements during formal screening.  During initial sms screening I ask send bank screen shot showing bank balance to continue.  I look for 2.5x rent as min.  This is practical; takes 2x min to move in.  Many (many)  apps have $500 to 1k in the bank.  These are undesirable tenants!!! Not savers.   

- If I see >>$10k in the bank I ask are you planning on buying a house?   "Oh thats great thats good idea.  I'm sorrry though we don't take tenants who are planning on buyin a house."  FAIR housing allows you to deny based on financial situations.  I literrally say we won't take you.  You shouldnt either if your goal is "they will never move out", permanent renters do not have the FICO or savings to buy.  We filter for those with savers mentality (via conversations, and bank balance) who are permanent renters.  IE camee from a house and wanting to rent my bigger nicer house.  NOT from selling a home and wanting to rent a year to buy another house.

- I ask; how many people will be rentiing?   Why are you moving?  How long do you plan on staying?

Piece together a complete picture of this family.  Why moving, why your place vs another etc.  It must add up to "makes sense" no holes in their story and sounds to YOU they will be permanent renters and take good care of your home.

Good luck to all, curt

@Nicholas Nicastro Speaking plainly you have a couple different ways to insure your rentals.

1. Replacement Cost (RCV) - this is the best type of coverage to have but of course will cost more (usually). To get RCV you’ll need to insure the property to at least 80% to 100% of the calculated cost to rebuild.

*your mortgage company may require you to have RCV fyi

2. Market Value - I’m using this term loosely for the concept.

This is going to be Actual Cash Value coverage which means the payout on a loss will have depreciation applied depending on what is damaged.

*lots of mortgage companies that work with investors will accept ACV some will not.

Here is a basic hypothetical example of how ACV works.

Say the kitchen in your rental is 20 years old and has a fire that causes $30k in damage.

The adjuster may apply something like 50% depreciation for the age of the kitchen so $30k - 50% = $15,000 payout. Then subtract your deductible say $5000 and the payout is $10,000.

Now… real world you own a maintenance company and can probably put in a kitchen for a lot less than $30k so take the ins money and do your thing.

I’ve had some clients who buy the $50k houses in Cle and Toledo that are ok with this type of coverage and if they have a fire they just sell the house As-Is to another investor for whatever they will pay and then combine that with the insurance money and just go buy another house.

*You mentioned student rentals - do you have students in any of your properties? It matters some carriers will not touch college rentals some will they charge a little more.

If you need any help I’m happy to talk

I keep a $2500-$5,000 deductible because I’m not making a claim for less than $10l as I get a discount on all my policies for not having any claims for the last 10 years. 

I insure for full replacement value. Insuring for just what the bank is owed means you’re willing to lose the house and any equity you have and then come out of pocket to demolish the house. (The city won’t let you leave a partially burned down property.) if you wouldn’t sell for what the bank is owed than insuring for that amount is a bad plan  

I don’t know why you have to deal with running around for new policies every year, I use allstate and it just renews every year for 3-8% more than the year before. That barely covers inflation and property appreciation. 

With $350-$600k properties and with 300/300k coverage, insurance runs between $500 and $650/year, it’s just a non-factor.