All Forum Posts by: Bennett Albertson

Hi Darsh,

Depending on the number of properties you own it may be best to purchase a business package policy which means you will want to find a commercial broker. 

The business package would include Property coverage and General Liability coverage. You could then include an umbrella policy for added liability limit. The property coverage part would include business interruption coverage which can provide for loss of rental income due to a covered loss. Be sure to request rental income included in the definition.

I hope this helps.

Best,

Bennett

@Sam Lewis This is helpful! Thank you!

@Patrick Liska  I am not an attorney but I am in commercial insurance. We place multiple LLCs on the same policy all the time for clients in all industries. I work with a lot of PE clients and they are always setting up LLCs for various reasons so I don't think you should have any problems.

The only stipulation to list multiple entities on the same policy is to have "common ownership" which is defined as more than 50% ownership in each LLC by the same party. It sounds like you are compliant here. Make sure you have all the LLCs listed as Additional Named Insureds.

As for saving money, there is always some level of scale and spread of risk when underwriting a property portfolio so yes you will likely achieve some cost savings. More importantly it will be a lot easier to keep up with one policy rather than many policies. Another option to look into is taking on a higher deductible to save some premium dollars. This depends on your risk appetite and financial situation.

Let me know if you have other questions.

Best,

Bennett

John,

Do you work with a commercial insurance broker or a personal lines broker? If you are with a commercial broker you should be able to get most if not all your coverage under a single portfolio program. The single family properties may be more difficult to lump in but it depends on the asset mix.

Why do you have 2 umbrella policies? Might be more efficient to have everything scheduled under 1 umbrella tower and purchase more limit if necessary.

I agree with the above statements about consultants. Usually you are just paying an extra fee for a service you should be getting from your broker. Contrary to popular belief, its in your insurance broker's best interest to provide you adequate coverage at the best rates because it is very easy to lose a client otherwise. If you feel like you are not getting good advice it might be time to find a better broker.

Best,

Bennett

If I were to use a security backed LOC to purchase a $75K property. Let's say I can get the LOC at 5% interest rate. Include $5K for closing costs and minor repairs. Annual cash flow is $2,940. What would the CoC return be?

Is this the correct calculation?

$2,940/($0 down + $5K costs) = 59% CoC ROI

How am I supposed to correctly evaluate this financing option?

Thanks!