All Forum Posts by: Parker Cox

So I am currently looking into purchasing my first home from Auction and I have no idea about how the process works other than you buy "as is" and must have cash for your bid. 

 But, this property seems like its the famous "too good to be true" scenario--worth nearly a million dollars but on auction for 450,000.  Then looking at the documents, it has two mortgage liens against the house 1 for 350,000 and one for 500,000 and I need to understand if I was to purchase the house for the auction price, would I be liable for one or both of these separate liens? as in, if I bought it, does that wipe out all existing debt against the mortgages?  There is also delinquent tax to the tune of about 10,000 that I would assume the next owner is responsible for?

But, another caveat, there was a first auction, and no one bid, obviously huge red flag, then they lowered the cost and are doing another auction.  So, it really feels like somebody knows something I don't.  But how do I find out if there is a major problem that I am missing through ignorance?

Anyone with a little insight into auction purchases, especially in Ca or San Diego CA would be greatly appreciated.  

"Quitting smoking is easy...I have done it 1000s of times" --Mark Twain

in other words, no they will not quit for the home.

You should work to use an independent commercial agent.  There are quite a few companies that have an appetite for flips depending on what your specific properties and goals are.  

Atain has been my go to with my flipper clients in the past, and it is always highly competitive with price, as well as acting as a master policy with sub policies for the properties, and a pro-rated premium for the amount of time that you own each individual properties.  But, there are quite a few companies that provide this sort of policy.   

best of luck 

Hi Dawn,

I am an independent insurance agent out of La Mesa in San Diego. Our company has a few packages specializing in coverages for that sweet spot between 4-10 units.

You will want a master policy that is gonna have your property coverage and liability shared amongst the units. You will also want a policy that has business income protection, which means if the entire building were to burn down your loss of income would be replaced during the rebuilding and re-renting process. You will also want to make sure there is equipment breakdown coverage for thinks like Heat and AC. And depending on the age of your property, you will want Ordinance and Law coverage so if your building needs something replaced, you have the extra coverage to bring it up to code.

I hope that helps.

Also location and internal operations.  So if your multi-plex is mixed use, the types of businesses will be highly influential in cost, and even if it is only a residence, an on site office can also effect coverage quite a bit because of owner's property onsite.  And, they look at Zip Code to help determine the risks associate with the property.

So the other agents who have posted are absolutely right, but there are flipper-specific packages from quite a few companies.  The company I use for my flipper clients has a commercial policy that works like a very short term homeowners policy, but allows for full scale renovation.  Best of all, it has a master policy that allows you to add and drop sub policies per property as you buy and sell.  It has property coverage and liability and the liability is fully paid, but the property coverage is pro-rated, so though it may be a year long policy, if you keep the property only 3 months they will refund you the other 75% of the premium.  

To give an idea, at least out here, if your dwelling replacement cost is $400,000 it would be roughly $150-200/month of ownership on a single home and less as you add more.  

Jay, 

I am an independent insurance agent, but I work in the Southwest and mostly California. But, my advice is certainly inline with David and Jeremy. I work with multiple investors and there are quite a few companies who have appetites focused on certain aspects of the investing world: ie flippers, buy and hold, multi-family or SFR rentals...etc.

If you are thinking flipping, for my clients, I use Atain, a company with an excellent product that allows for a master policy with sub policies that can be added and changed per property bought and sold.  It will provide Property coverage and Liability coverage (which should be in any policy you buy: if not you are definitely holding unnecessary risk).  But, using an independent agent will give you the flexibility to examine more than one carrier, so if you are a multi-disciplined investor a different company may have a better product for the various avenues of your investing.

When it comes to contractors, unless they are under your employment directly, you should have no need to insure them.  You will want proof of 2 things: their bond and their insurance.  (The bond protects you if they disappear with your money, up to the amount of their bond, the limits are different in every state).

And your tools...etc if you are just a guy doing some regular handy man style work on your property, that property should be easily covered by your commercial investing property.  But, once you get into more expensive tools, over $1-5,000s, you will want those specifically endorsed to ensure better protection than the baseline property.  

I apologize for the length of the post, and again, I have no experience in your state, but generally insurance is pretty similar nationwide and this should at least get you moving in the right direction with a little background.  

Good luck and feel free to reach out if you have any questions.

Parker

My family has a background in buy and hold investing, and I am in the process of beginning my investing career as well.  But, I am also building an independent insurance agency, and we have a strong niche in helping both flippers, and buy and hold investors in risk management and protecting their assets.  

I am hoping to work on the site as a resource for all members who might have insurance questions.  Hopefully if I can add value and prove my worth it will expand into a mutually beneficial business relationship.  

Feel free to reach out to me here or on the forums, I am happy to answer any questions you have.  I work in California so the law maybe slightly different in your state, but I am happy to at least try and point you in the right direction.