All Forum Posts by: Daniel Reeder

@Cindy Goulden Flood insurance sucks out your profits.  Lenders that I have encountered will generally require 100% coverage even if the flood certificate says the risk is low.  So being a cash buyer and making your own decision if it’s something that is needed is a better option.  Then you can choose the amount of the risk you want to insure verses a lender that has skin in the game requiring you to insure the full amount.  Flood insurance is not the best product and being government controlled  doesn’t seem to help.  

So to answer your question I have not came across a lender that would look the other way when flood risk is involved.  If you are confident in the performance of the property then if possible pay cash.

@Paul O'Connor Flood insurance is not a good product and sucks the cash flow out of what should be a profitable property as you are experiencing. A lender will always require 100% of the loan insured with flood insurance even if the flood certificate says the risk is minimal.

Best not to use a lender for flood zoned properties in my experience.

Thank you for the information Greg.  Would the 30-40% down be on the appraisal value or just the purchase price?

We are considering buying a 9800 square-foot two-story building in downtown Birmingham. The bottom level to house our business. It is the only building left available in this specific district. The building is structurally sound. The upper level to build out as apartments probably 4, absorb the expenses, and be income producing. Estimating the build out is going to be around $125 per square foot. I want to understand better how to leverage the upfront cost of doing this. Meaning the the loan for the down payment and I’m not really familiar with construction loans. The purchase price of the building is $670k.

The apartment rent is between $1500-1700. So looking for thoughts on how to best do this.

Spartan Invest located in Downtown Birmingham is a great option.  I write insurance for a most of their clients.  They seem to have great systems and processes in place.

Hi @Kevin Seiler. I insure several multi unit properties in Huntsville for many out of state investors.  If I can assist in the insurance arena for properties in Huntsville don't hesitate to reach out.   Daniel

Hi @Jason Kosowan I am an insurance agent as well as investing newbie in Birmingham. I primary work with out of state investors who purchase all over the state of Alabama in cities such as Birmingham, Huntsville, Tuscaloosa, Montgomery, and Talladega.  If I can answer any questions on areas and of course insurance related topics I am happy to serve you any way I can. Daniel

@Andrew Harrell & @Kenneth Hill my name is Daniel and I work with many investors in the Huntsville and surrounding areas.  If I can serve you in answering any questions in the insurance arena I am happy too. I wish you both the best of luck!

@Jack Smith I am an insurance agent in Birmingham, AL.  I have written polices for several thousand investment properties throughout the state of Alabama.  It is my primary focus.  I mainly work with investors who purchase single family homes as well as multifamily properties.  Insurance can definitely be a little foggy when it comes to what you need in your current situation so I will define what I feel are the most valuable points in my experience with working with newbie investors as well as seasoned ones. 

Have your policies written on a Full Replacement Cost.  Avoid actual cash value policies which are based on market value and incur depreciation.  What this means to you is in the event of a total loss you will have the option of fully rebuilding your property again or receiving a check and moving on to purchasing the next property. 

Check your policies for Loss of Rents.  I prefer having Loss of Rents for up to 12 months.  What this means for you is that in the event your property is not livable for your tenant your insurance provider will pay you your rental income.  They will pay the agreed upon amount in your lease for the monthly rent of your property for up to 12 months during the repair process.  

The Business Liability Coverage for each occurrence and annual aggregate is another very important benefit to be aware of. I prefer policies written at an minimum coverage of $500k per occurrence and $1 million aggregate annually.  This is generally an ample layer of coverage for your assets.  You also can increase this at any time for a minimum investment. 

This is generally the way I approach insurance for the majority of single family home investments.  This is a very simple description.  I feel if the option is available to have a local agent within the same state your properties are located if at all possible.  An agent with an entrepreneurial mindset that thinks like an investor.  Investment property insurance is there in the event of a major loss and is certainly not something to be used on minor issues.   Find an agent who strives to write policies that are customized to the specific property and that will not allow the insurance premium to hinder the performance of the property in any way.  

Daniel

Hi fellow Alabama natives! I am a insurance agent in Birmingham with a primary focus on working with investors in and out of state. I serve several hundred investors that seek Alabama for rental property opportunities. I am happy to assist anyone with needs in the insurance arena.  I am also a newbie investor breaking into the game myself so I'm up for connecting and making new friends.