All Forum Posts by: Corey Conklin

 Handling insurance during the buying process is easy. I've struggled with the assets that I'm holding. 

I've gotten great rates from the start only to have carrier after carrier want to either drop me or raise rates by 50% or more per year. This is with not one claim ever filed. 

There's always an excuse for their gouging and it's getting out of control.

It's also "epic silliness" to allow insurance companies to get away with fraud and throwing money into lining their pockets with almost no benefit for doing so.

Insurance and insurance companies have been a huge pain for me and I'm sure for most people in real estate or business in general. Insurer fraud is my #1 growing concern as I continue to invest and build businesses. I've had numerous issues with insurer fraud and almost everyone I know has them too. 

It's caused me to rethink my business strategies and make some drastic changes.

1. I've considered going full Dave Ramsey in the sense of not using debt to grow or expand and to pay off all existing debt to eliminate the lender's requirements on insurance. 

2. I've started to invest in assets that are less affected by insurance. i.e. raw land

3. I'm more hesitant to use the cash I have to deploy on new deals because I know the insurance/insurer fraud risk exposure attached to the deal. Paying premiums seem to be just as risky as being uninsured as it's always a fight to get paid on claims and very common that they deny the claim.

What changes have you made to your businesses with this issue? Have you found any viable solutions to this growing problem that you've used with success?

Investing in rural America has it's challenges, that's for sure. 

Sticking to local lenders has worked for me but there are still challenges even with doing that. 

I've had lenders that were awesome on one deal and then total duds on others. A bad LO can cost you as well. I've had lenders that were hot to lend on certain deals and then they get cold feet over night and don't want to lend on them anymore.

I can't stress this enough, I don't care if you invest in small town SF houses or 100 story skyscrapers in downtown NYC, you need to have good working relationships with multiple LO's and multiple lenders. If you put all of your eggs into 1 relationship, you will lose out on good deals.

I just closed on a great deal a few months back which my original lender absolutely crapped the bed. Thankfully I have a few other relationships and was able to pull another lender in the deal and get it closed. 

It's your own fault if you don't have the right relationships or aren't working on the right relationships to grown your business.

@Carli Brunner

What is the net between current rents and the premium rent after the improvements? Is it $100/mo.? $1000/mo.? It's easy to justify investments made if you can see the ROI so I'd start there.

Are you going to hire out the work? Or can you do it yourself? This will affect your ROI so it's something to consider.

My opinion. Keep the kitchen as it is and rent it out. I don't see the kitchen in it's current state deterring renters. Unless you are 100% confident that the upgrades will be paid off within 6-12 months I wouldn't do any upgrades to a perfectly functional kitchen. Renter's are hard on properties (you'll learn this quickly) so be wise on not just your upgrade selection but the timing of those upgrades.

Also don't just factor in the cost of the repairs on your ROI. Factor in the increased vacancy loss for improvements. If it takes an extra month to do the improvements that should be factored in to your costs.

I only invest in small towns. I've got properties in (2) towns currently that are around 10k people in each town. They are both 45 minutes - 1 hour outside of the closest city. They also both have declining population over the past 10 years. Huge red flags, right? What I've learned is that population, job growth, and proximity to large cities are surface level indicators but don't always tell the whole story. 

These small towns are a niche market like investing in STR or trailer parks. I've learned a lot over my time investing in small towns and have found some great opportunities but just like any other niche market you better learn what you're dealing with or you'll get burnt.

@Tyler Garza

The biggest "hole" in your strategy is thinking that starting in real estate will retire your wife. You've been sold by podcasts/books/vlogs that real estate can make you rich over night and it's passive. It's just not the reality.

I don't know your wife's income so it's hard to know what you need to replace in order to let her retire but if you think you'll get her retired in the next year or 2....you will have a 99% chance of being let down.

Becoming financially free, or not needing a 2 income household comes down to 2 simple factors. Income and expenses, money in and money out. Say you both make $5,000/month for a total income of $10,000/month. You also have expenses that are $10,000/month, you have $0 left to invest, donate, enjoy (not good). You can find ways to make more money, or find expenses to cut if you want to make your goal come to fruition.

If you make $5,000 more per month, you can retire your wife. If you cut expenses down by $5,000/month, you can retire your wife. Or you can meet in the middle and increase income by $2,500 and decrease spending by $2,500.

Investing in real estate will not increase your income in the short term. Think 10+ years before you really see the fruits of your labor. Anyone telling you different is probably trying to sell you something.

If you don't have your expenses as low as possible and don't have much cash on hand that's what you need to focus on. 

@Casey Graham I have used traditional lending for my properties. My wife and I have good W2 jobs currently so we get better terms with traditional lending in comparison to DSCR lending.

This is almost an exact match to how I'm investing.

This strategy isn't talked about on BP forums as it goes against what many investors believe when it comes to good markets. I am convinced that these markets are the hidden gold mine in RE investing today. 

I had the same question when it came to my exit strategy. Will someone buy the entire portfolio when I want to exit? Who knows, but what I do know is that they will be cash flow cows when I decide to exit so that helps mitigate that risk. Another thing I'm doing which is against the grain is only investing in SFH. It gives me another exit strategy by having the option to sell off individual properties to retail buyers if needed. I am also a huge believer that with massive affordability issues in cities people will start to migrate to smaller towns that they can afford. (I'm already seeing this in the towns I am currently invested)

I know this hasn't really answered your question but I've been doing this for almost 5 years and it's working out well for me. (I've also seen some older investors in my area do really well with a similar strategy). 

My advice would be to keep leaning in on this strategy and let the other investors battle over investing in Cleveland and Detroit.

@V.G Jason

 Stress can also come from something out of your control. Many times I've made decisions or came up with plans that need other people to pull through in order to get the tasks accomplished. I've tried to get better at not getting stressed out about things that aren't in my control but when my tasks don't just affect me and my family but others and their families, I tend to get stressed out. Going from the mindset that you are self made and can do everything yourself without the help of anyone and realizing that no one is self made and it took the help of many others to get where you are is a crucial step to growing as a person. 

As far as 'why' goes I couldn't disagree more with your statement. 'why' helps define the purpose and to understand what you're doing. Whether you are going through tough times and need the 'validation' to stay on track or if you aren't getting the results that you desire it's important to go back to 'why'. 'why' provides clarity in a world full of distractions. 

Now do I believe that many people don't have a 'why' and just go around doing things without intent or purpose just because they saw someone else do it or that's what they were told to do? 100%, but that's a different discussion.