All Forum Posts by: Account Closed

When I started with my first rental, the person who counseled me suggested asking less than market rent to find the best tenants possible, even seeking a few competing applications. Does anybody think this is a good idea?

@John Tu NguyenThanks! It looks to me like the market is strong here. Houses are selling quickly.  It looks like this may be a good time to sell it before market conditions change. With the guessing game of the future of the economy, I am concerned about losing this opportunity with a price drop and really being stuck.

@Jerry W. Thanks! I see your long-term philosophy. For me, everything about this home is average. Average house in an average neighborhood. Home is almost 40 years old. It will rent easily given our location, just not quite enough that I need to cover maintenance, vacancy, missed rent, and property management.

@Brandon Barnic

I have been thinking through the possibility of a refinance. I am at less than 20% of home value, so I don't know how to do that. I'm probably at about 5-10% LTV.

@Stephen Chittenden  I call this home my "education" and it's been worth it, but I don't know I could swing it at the price you are paying! I hope you get that worked out soon.

@Jonna WeberThanks. Rentals are doing great in my area. Value of rent just can't get quite high enough to cover everything right now, but I'm getting close. It's a good home in a good area. Nothing is great, but it's good. Listening to #80 now. Thanks for the connection.

@Joe Villeneuve

 Thanks. The "pot in poker" is the issue I am probably most concerned about at this point. While we can "make things work" right now (we built losses into the budget when we moved), a softening of the economy would hurt pretty bad. Saving it for equity growth is a gamble. Even with tenant paying the 11+ years of a mortgage, the growth seems speculative and if the economy shrinks, we are stuck again. Plus, now that we have moved into seeking growth in cashflow, we realize how this holds us back from that goal. Our change in goals may lead to change in holdings. Thanks again.

Are there ever reasons to keep a negative cashflowing property? I have a decision to make.

Here is my situation...

Purchased: 2005 (We are 10 years into 30 year mortgage)

Reason Rented: Moved to new home.  This is our original home, we were upside down in our loan and knew we could carry the shortfall by buying a less expensive home. We originally wanted to get our original down payment back by renting it for a few years.

Current situation: 

Cashflow: Negative cashflow. I am able to cover mortgage, taxes and insurance through the rent. But not enough to cover maintenance, vacancy, missed rents or property management (which I do myself).

Tenant: Nearly 4 years with one tenant. Sadly, things have broken down and they will have to leave in June. 

Home Value: We could sell this summer and be done with it. No negative cashflow, but also no cash out. We might have to chip in a 1-2 thousand to close a deal.

Other rentals: Two positive cashflowing properties. Looking to purchase one more this year (regardless of what happens with this one)

I started at age 37 when we moved out of a home we were upside-down in our loan. I ended up learning a lot and purchasing our first investment SFH at age 40. I feel like a late-comer, and hope my kids learn it a little earlier. But it's never too late to learn!

I am looking for some help with setting some principles in securing insurance for rental properties. I am buying a third rental property through a turnkey operation and they recommended using National Real Estate Insurance Group (NREIG). 

I am looking at moving my other two rental units from State Farm to NREIG. I've always done all my insurance through State Farm so when I got into investing, I just decided to stay there. I didn't know about other options like NREIG until recently. My first two properties are local (Virginia) but my third is out of state. I'd have to get another agent anyway, so I have been investigating NREIG.

I am putting together  a pro/con list so I can understand the decision better. I am posting this to see if I am missing something in considering insurance coverage. 

I'm challenged by the fact that the cost is higher while some aspects of coverage is less than I receive with State Farm. It seems that one reason for the increased cost is that the coverage for liability is at $1 million while my State Farm policies stand at $300K. This makes me wonder if $1M is too much or if $300K is too little. 

I'm wondering if I am missing anything else in considering a decision like this.

Thanks for all the insightful things you have already written in these forums. They are amazing!

Pros and Cons of using NREIG over State Farm

Pros:

• It seems easier to scale to my investment goals: One single insurance group with one payment and a simplified plan. By contrast, my State Farm policies are local to the investment location (state) and each policy is handled independently. I can set similar coverage across all properties.
• It provides higher liability coverage. $1 million compared to $300,000 per incident (State Farm default). 
• Pollution Liability Coverage: The agent claims that they cover both the court costs and damages as a result of people getting sick due to pollutants like CO2.
• Focus of company is on real estate investors

Cons:

• Moderately more expensive across all three properties. Some are less, some are more. This is especially relevant to me as I have my “accidental landlord” home that still has a negative cashflow. Insurance on that one would be higher than I have now, which has been a big discouragement in making the switch.
• Higher deductibles.
• "Customizable" options opens chance for bigger mistakes if I don't evaluate things, like replacement costs, accurately. For example, replacement coverage amounts that I select (based on my knowledge of the area) are lower than what State Farm automatically plugs in. State Farm has much higher numbers, which makes me feel more comfortable. Additionally, they do this at a lower annual cost.
• Not as good of a name. I see NREIG in other BP forums here with some of the questions about how the claims process is actually working.