All Forum Posts by: Kevin Hoag

Take out the equity and then I would buy residential rentals in Cleveland, Ohio! Once you have acquired your loan limit of 10 loans I would begin upgrading to apartments and multis and you grow out your portfolio. You can buy C class area homes for 55-65k and B area homes for 70-100k. They will all cash flow nicely and you can have a PM company handle all the leg work. Its my favorite strategy just write checks and collect bigger checks!

Hey @Eric H. I would tell you that it completely depends on the rental property itself and the location you are renting in. I have had this conversation with 100's of landlords and it is never unanimous. While I was a leasing agent covering all of the west side of Cleveland I found that a lot of tenants do in fact own their own appliances. They do not want to get nasty appliance from 6 prior tenants that never cleaned it or took care of it. Most landlords are not profitable enough to offer new appliances after each vacancy. If you happen to have an eviction the tenants will most likely be stealing them and scraping them. If you own a multi unit an only provide one set of washer and dryer tenants will fight over it. Tenants will also let family and friends over to wash their clothes. This has been my experience in Cleveland over the last 5 years. If you are buying B area or nicer then I may supply them but I would try to rent it out without them first.

@Michael Sheibar Lets first start with the type of policy you are purchasing. While it is being rented out for a week at a time you will be able to use a short term rental policy which is a "residential" type policy. Depending on who your personal carrier is you could potentially get this policy through them and then a 3-5mil "residential" umbrella would cover your autos, home, camper, boat, atv and your "residential" rental properties up to a certain number. For rentals most carriers will still extend umbrella coverage even if you have them titled in an LLC.

When it comes to umbrella pricing the carrier wants to see that you first maxed out the liability on the individual asset policy. This will help with the umbrellas pricings as the chance of using it is now much lower.  

Now one item I cannot speak on is the student housing policy my carriers do now offer it and I almost never run into it so I have little to no experience with that coverage. I can tell you all my carriers will say no, unless the student is in a graduate program.

Now back to normal long term or short term non student rentals. If you own several properties and decide to buy a "commercial" insurance package you have now changed the game and the type of umbrella you will need to buy. The houses can be titled in either you personal name or your LLC but because you went to a "commercial" policy your umbrella coverage will also have to be a "commercial" policy.

You will be able to buy a supporting umbrella policy no matter what policy you have and no matter how you have it titled. Insurance carriers love to sell umbrellas and will never not offer it no matter the industry, the policy, the risk, the asset, I mean hell insurance companies take out policies on each other now to mitigate major storm losses.

Hey @Michael Sheibar is it just me or is your exposure pretty much the same 600k whether your own it in an LLC or as an individual? The big thing to keep in mind is the type of policy you are going to need to buy to be properly covered. How you title the ownership will effect the price of the policy and maybe your annual expenses with LLC filing fees but in the end the asset doesn't change nor the exposure you have.

Since you are renting this out to students and then as a short term rental you will probably need to purchase a commercial policy to be properly covered or even change your policy throughout the year as you change the type of risk living in the property. Since you ae most likely getting a commercial policy I would set up the LLC and the discount for being an LLC will be a wash with your state filing fees. You can get an umbrella policy no matter how you title the property.

Hey @Stan C. The differences are going to be the same as they are when you are speaking about insurance companies for any type of coverage. The coverages are primarily industry standard. There are some insurance carriers that are know to be a bit more stingy and hard on paying claims but I think that also has a lot to do with the individual claim and the adjuster working that claim.

I can tell you that in my system a LLC VS SP the LLC gets a larger discount when I'm quoting something.

Hey @Zev Dobuler It really will depend on how you are purchasing your properties. If you are buying the property with a loan then you will be required by the bank to purchase a replacement cost policy. If you are buying the property cash then there are no rules and you can insure how ever you would like. If you are buying all cash then I would consider how many homes do you have and what kind of a hit can you sustain. I would suggest buying replacement policies in the beginning and simply increasing the deductible to 2500, 5k and then 10k as you grow and can take on more risk. This will give you the best coverage for Catastrophic losses but also mitigate the cost of insurance as much as possible.

Hey @Ray Loveless Ohio is a great state in invest in. Lots of different opportunities and a lot of buzz around Cleveland, Akron, Columbus and Cincinnati make it easy to get a great understanding of these areas. These areas have heavy rental markets so there is always some inventory and it is easy to sell and exit if you wish to. I know of several 10-20unit in the Cleveland area that offer great cash flow and a good tenant base. One thing Ohio is well known for is lots of cash flow. PM me if you want to talk more.

Hey @Account Closed Since you live out of the country you will most likely be buying the property cash. When you buy a property with cash you can do whatever you would like with insurance. There are no laws that make you have insurance on your rental property. When you buy with loan the bank requires insurance. No bank, No Rules.

I do not suggest going this route.  To answer your question, Yes you can buy an umbrella policy that offers you only General Liability coverage on your properties and will be blanket coverage for all of your properties. Yes this is much cheaper than having a landlord policy that covers the dwelling structure and loss of rents.

Ex. I have a client with 10 homes and his umbrella is 5million in extra General Liability for all of them is around $1500 annually. His actual landlord policy with 100-150k in dwelling coverage and 1mil in liability averages about $600 per home. Liability is way cheaper than dwelling structure coverage.

Hey @Andrew M. I would definitely try to save any hair you have left by finding another agent. Your agent has fiduciary responsibilities and should not be speaking about your insure needs with another client. Even worse they should never make a change to your policy with out your authorization in writing. If you were to have a claim and be denied because of the change they made that you did not approve you would be going after their E&O coverage and be bald by the time is was over.

That being said lets break some of this down for you. I would put each policy on a separate plan. The SFR can each be placed on your normal landlord policy. @Michaela G. AirBnB is considered a short term rental property just like any vacation home and easy to insure with a policy very similar to a landlord policy. 

Student housing is a major issue with insurance carriers and is an exclusion on most landlord policies. Renting out a property room to room is going to fall under that same exclusion. This exclusion include foster homes, assisted living, nursing, sororities and fraternities as well as housing or boarding. The insurance provider definitely should have not cancelled all of your policies unless it was one package policy and not 7 separate policies.

I suggest looking into a commercial package for the room to room homes and keep the other properties separate.

Best of luck

Hey @Neel Shah the cause of loss with either fall under accidental discharge or overflow of water or freezing pipe. The claims adjuster will have the ultimate say as to what it falls under. Most landlord policies cover a home for at least 60days but you will have to prove that it has not been empty for longer than that. If you had a signed lease ready to execute and the tenants cannot move in because of this claim then you may also trigger your loss of use coverage and be able to collect rent for the time it takes to fix the damage.

Good luck