All Forum Posts by: Cliff H.

Could you share your sources (as I have mine)? I'm happy to consider alternative perspectives, but prefer perspective backed by analysis (and preferably not by someone with an agenda to advance). 

Grays post man. I never knew I had enemies until I read this post! So maybe the PM-managed properties are “frenemies?”
Very succinctly summarizes many of the techniques I use myself when evaluating properties, the most critical of which is filtering out those listings of $1k/night from the owner that just rents out their unit 3-5x/year and blocks it off as unavailable the other 300 days/year. Not an enemy!

@John Perrings So you’re saying the high surrender rates on WLI are not true? That data appears to be tracked and are pretty terrible. Why would I choose to invest in (and strategically have to overfund at the start) a policy that, if lapsed negates the strategy of using it in the first place? What could I do with that money if I bought term at 1/10 the cost and still got 7-10% return in other markets?

WLI as a strategy seems more aligned to high net worth individuals who already have $ to burn, already overfunded their Backdoor Roth IRAs, HSAs, and R/E investments versus the average investor that’s still working to reach $18k/year on matching 401k dollers.

“How many people are still holding their policies after 5, 10, 15, or 20 years?

Luckily, this data is tracked by the Society of Actuaries and is demonstrated in the chart below.

Whole Life Lapse Rates If we use an 11% lapse rate in year 1, 9% in year two, 7% in year three, 6% in year four, and 6% in year 5, that means that 1/3 of folks have surrendered their policies within just 5 years, long before breaking even. If we continue on to 10 years (using a 5% lapse rate for years 6-10) then we’re down to an overall lapse rate of 50%. Using an annual 4% lapse rate for years 11-20, the overall lapse rate is 60% at year 15 and 70% at year 20. By year 30 (using a 3% lapse rate for years 21+), about the time of retirement for someone buying one of these upon residency graduation in their early 30s, 77% of those who purchased their policies no longer own them.”

Source: https://www.whitecoatinvestor.com/the-statistic-whole-life-salesmen-dont-want-you-to-know/

@Tom Jensen terrible idea. There is a reason WLI can be popular in insurance circles, but it has nothing to do with the performance of the policy, but the commission on the plan. Take a look over what smarter people that I have to share:

80%+ failure rates? Lower returns than market? Lack of fee transparency? No guarantee on funds invested?

https://www.whitecoatinvestor....

Hi BPrs, does anyone have recommendations on where to find non-qualifying mortgage lenders? I found this list of Non-Prime Lenders from BankRate.com, but have otherwise not seen a lot of catalogs of reviews of these companies out there, possibly due to the poor reputation the industry had from a few years back. 

Appreciate any tips/recommendations/leads the community is willing to share in this space. 

PS: started with the list of lenders here on BP itself, but it's a short one and many of the companies listed appear to have closed up due to website/links that don't work or low participation in the community. 

@Morgan Granger used appliance stores are one of the 7 wonders of the real estate world. It amazes me that investors of B/C class properties would see weekend sales and outlet stores as affordable options next to the amazing deals that a good used appliance store can offer. For years I thought $200 for a fridge was highway robbery because the local used appliance store would sell them all day long for $150 looking brand new after new parts and a paint job.

That fact that you mention putting granite in the unit tells me you’re probably more in the A/B class tenant market where a premium $300 stainless fridge might be more in line with the market.

Hi @Mario Russo I used them years ago on C class properties where I knew the major systems would fail in the time covered, then just called around to all the different companies and haggled on price until I got $1500 coverage for $300/year where I knew I’d be net positive if a major system failed within 4 years. As others have said, they can be useful tools if you use them strategically versus a blanket, fix-all for capital improvements you should be planning for anyway.

It’s a few years old now and quite outdated on specific price/features, but I put together the following matrix of home warranty companies that might be useful as a starting point to comparing names and features out there. The key things to track at minimum are the deductible for each visit and what the maximum coverage limit is per system and per policy: 

Comparison of Home Warranty Companies

@Alex Ferraro I love https://ufile.io for secure document upload. Alternatively lots of online fax systems and tenants can often just photograph with their phone and use a free fax service like FaxZero.com to send them over. Almost easier than email. Ultimately it’s the data retention policy (or lack thereof) that’s most concerning. Just make sure you’re digitally tossing the data after you collect or make a decision on a tenant and you’ll be ahead of 80% of your peers.

Just did this. Alongside FSBO'ing a different property. Here's my $.02:

Selling can be far better without an agent, but only if you have a system for handling the huge influx of calls/inquiries you will get on a reasonably-priced, well presented property. I have one and have zero regrets. House went under contract in 5 days and the lack of paying the full 6% commission allowed me to offer buyer’s agent an increased 4% fee, which understandable was quite attractive from the buyer side and unlocked 12 showings in 5 days in a historically slow area.

On the buyer’s side I put an offer in using standard state real estate forms only to find out that seller’s agent takes the full 6% anyway. Best of both worlds for the agent: don’t have to agree to be dual agent, still represent the seller’s interest, and get to keep the full double commission for simply opening the door for me.

My suggestion is that if you know your house/market, have a system for fielding calls/showings, and hire a professional photographer skip the Realtor and on sale and FSBO all day long. Especially in our current COVID climate, a lot more can be done with virtual tours and technology than most Realtors (unfortunately) have the willingness to learn.

As a buyer, unless you have a way of getting into properties or are buying sight unseen (which may still trigger the 6% commission?) then get yourself a local agent, someone willing to hustle or bring a perspective to bear that’s worth paying 3% of your purchase price to fund. 

@Brian G. I looked into Guesty, but saw nothing in their feature list that was not covered by other solutions. 

As is the case with most of us, my time is limited. I prefer to focus on solutions that are willing to be open and direct about their pricing versus an outdated contact us / join our webinar / get up-sold on our value prop approach. This is often just another way of stating that a product is more focusing more on enterprise-level custom integrations with significant upfront integration costs. That's totally fine that they are focused on that market, it is just not a niche I am going to worry much about in a comparison centered on the needs of smaller, independently operated/managed STR owners.