Investor · Orange County, CA · Member since 2019 · 11 posts · 1 vote
Hello Everyone
i am looking to invest in oklahoma city, but what concerns me is that it looks like properties take a lot of damage from the weather such as hail storms, tornados, etc
as a result of the weather, do you guys budget more towards repairs than you typically would as compared to investing in other parts of the country?
for example a hail storm could damage the roof, or bust a window, also what is the average roof life for a house in oklahoma city? do you see yourself replacing the roof every 10 years?
Rental Property Investor · Valley View, TX · Member since 2018 · 174 posts · 87 votes
7y
I don't invest in OKC itself but I do invest just south and southwest of there and can tell you that hail and wind damage are indeed a real threat at all times of year. That affects our insurance. You need a good policy that is from a reputable company. We have four properties and carry about a $3K deductible on each, so we never ever keep less than about $12K-$15K in reserves just for the potential property damage that could occur.
But don't let that deter you. It's normal in this part of the country. You live in CA so earthquakes are a risk there. You just get insurance and live with it. Then have the reserves necessary to cover your deductible at a minimum.
Rental Property Investor · Valley View, TX · Member since 2018 · 174 posts · 87 votes
7y
I don't invest in OKC itself but I do invest just south and southwest of there and can tell you that hail and wind damage are indeed a real threat at all times of year. That affects our insurance. You need a good policy that is from a reputable company. We have four properties and carry about a $3K deductible on each, so we never ever keep less than about $12K-$15K in reserves just for the potential property damage that could occur.
But don't let that deter you. It's normal in this part of the country. You live in CA so earthquakes are a risk there. You just get insurance and live with it. Then have the reserves necessary to cover your deductible at a minimum.
Rental Property Investor · Valley View, TX · Member since 2018 · 174 posts · 87 votes
7y
On the roof replacement cycle, there are people here with roofs that have been on for 20+ years as long as they don't get hit with a hail storm. Just luck one way or the other. Reroofing one of my houses (1200sf under roof) would run about $6500 in this part of the country, so it's not a huge expense.
Rental Property Investor · Oklahoma City, OK · Member since 2013 · 1k+ posts · 412 votes
7y
In general we pay higher than average insurance premiums due to the wind/hail issues, however, the overall economics work. Get some Oklahoma estimates for the insurance and use those in your calculations. Average roof life is a very difficult question to answer due to the vagaries of weather. Probably half of our roofs are under 10 years old but a few are 20 or more.
To kind of piggyback on what Deborah said, it all works out in the end. For weather related issues, I have insurance that will cover hail/wind/tornado, etc. If anything happens, I have at least the deductibles per property held in reserves. My "worst case" scenario is basically that I'm filing an insurance claim and replacing an AC unit in the same month. So ideally, I try to keep enough in reserves that I could pay all insurance deductibles and replace AC units on every property at any given time.
Rental Property Investor · San Diego, CA · Member since 2017 · 82 posts · 50 votes
7y
@Aasim T Bickiya make sure you are also getting quoted for Replacement Cost Value on the roof. Some insurance companies have Actual Cash Value policies/endorsements to save you on the premium. You don't want to get stuck out of pocket for the difference if you have a 10yr old roof, with a 20yr life expectancy, that requires replacement due to hail or wind damage.
I believe Oklahoma also has separate deductibles strictly for wind/hail, but it's been a while since I handled claims out there.
As others noted, our insurance is a bit higher than other areas. I factor 1% of the purchase price annually. Replacements typically look like you paying your deductible.
On the other side of that, our taxes are more reasonable than many midwest markets at also only around about 1% of the purchase price!
I like to keep 5k of reserves per property. However, if you purchase a home warranty (~$500/year) you could keep less in reserves.
As others noted, our insurance is a bit higher than other areas. I factor 1% of the purchase price annually. Replacements typically look like you paying your deductible.
On the other side of that, our taxes are more reasonable than many midwest markets at also only around about 1% of the purchase price!
I like to keep 5k of reserves per property. However, if you purchase a home warranty (~$500/year) you could keep less in reserves.
What comes with a home warranty? How long do roofs typically last? If you replace your roof using insurance then how much would that increase the premium by ?
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
7y
A typical home warranty covers major mechanicals like HVAC, hot water tank and all minor repairs including plumbing (but excluding your main plumbing line). There are several policies to choose from though. You can also get warranties that cover your appliances or electronics! In Oklahoma roofs typically last 10 years. I'm not sure how much roof replacement increases insurance, but I've reached out to one of my preferred insurance providers and I'll follow up.