All Forum Posts by: Eric Belgau

Donald Stevens is right. Talk to a couple of agents and figure out what the cost is going to be to insure yourself against the added liability of the pool.

That, along with the ongoing cost of maintenance, is what matters. There are advantages (marketability) and disadvantages (cost and, potentially, headache) to having the pool. Just be sure that you aren't exposed.

Pun intended.

One of my early places in LA (as a renter) was an up-down duplex with a pool. It was a big selling point. The benefit to the owner was that he paid for weekly maintenance on the pool, with the added bonus of having his pool guy report back on the condition of the property.

A whole life policy is an asset. You can borrow against any asset to invest in another asset. You just have to bear in mind that what you're doing is borrowing. Meaning - if you're going to pay that money back to your life policy, factor it into your calculations as a loan instead of cash. It might change your deal analysis.

One of the great values of real estate investment is that, for the vast majority of people on this forum, it is a "close-in" investment over which you can exercise a great deal of control. Even if I buy a rental in Kalamazoo, I can manage my property manager, be proactive about issues, and keep that property generating revenue with my own muscle.

To me, the value represented by whole and universal life insurance is less applicable to people who like close-in investments than it is to people who like to put money somewhere and let it work. For totally hands-off investors who have low risk tolerance, whole and universal life options are great.

But I look at my life in terms of what I'm going to build. At this point, building requires debt. I need to keep earning money to meet those obligations; if I die tomorrow there needs to be cash to meet my obligations and to send my kids to school; term life makes sense.

Beyond the present, I have a plan for retirement that involves building assets one by one, taking care of those assets, and generating income from them. (Asset value is, importantly, more responsive to inflation than cash value.) I believe that people who share that viewpoint or intent should think very carefully about how whole or universal life would fit into their portfolio.

I should probably mention, since I'm an insurance agent, that I looked at the commission these policies pay and the growth against historical inflation, and I couldn't bring myself to sell them...or even to maintain a life insurance license. So this is a personal, and not professional, point of view.

The answer really depends on how much damage has been done.

If you're fixing and flipping properties with any kind of regularity, the last thing you want to do is start racking up insurance claims on your policies for small amounts of money. Claims history is a critical driver of rates, and the claims will follow you, not the property. If you're talking about a couple thousand dollars in fence damage, you're probably smart to leave your insurer out of it.

With that said, tree damage is a tricky part of residential property insurance. As a general rule of thumb, if the tree on your neighbor's property is dangerous (it's dead or there's a documented risk of falling) and then it falls onto something on your property, the liability portion of their homeowner's policy pays. If it isn't dangerous, but it falls anyway (like in a bad windstorm) then the property portion of your policy pays.

For an incremental problem (I may be wrong but it sounds like that's what's happening) you're probably in a tough situation unless the previous owner notified the neighbor that the tree was causing damage and documented that notification. Technically, a property owner is responsible for upkeep of the property, so the assumption is that the property owner would recognize the damage and find a remedy. If that requires action on the part of the neighbor and the neighbor refuses, he would be liable for the damage his decision causes.

I expect most of that information is "for the record" only. Probably this issue is going to be handled better with a chainsaw and a hammer than with an insurance policy - yours or his.

You can't file a claim on an insurance policy unless you are insured by that policy. A renters' policy has no coverage for the premises. It covers only a tenant's property and personal liability. You aren't covered under it because you don't have an insurable interest in what it covers.

Depending on the policy (there are some stinkers out there) the renters insurance may cover damage under the personal liability portion. You might have to sue to trigger the policy.

To me, your next move would depend a lot on how your policy on the property is written, how much money is at stake, and what your lawyer suggests that you do.

Shawn is right. The issue of whether or not you have agreed to the amount isn't particularly relevant because the insurance contract doesn't require the adjuster to get your agreement before referring her valuation to claims settlement.

However, there is a process (set by the state insurance commissioner and therefore somewhat different from state to state) for resolving these issues. As Shawn said, they happen all the time.

First, don't cash the check. Second, let the carrier know that you're going to dispute the settlement. Third, contact independent adjusters (you will have to pay) and collect quotes.

But don't go it alone. Talk to your agent or broker and get them to work on your behalf. I do this frequently: my client has policies with the insurance company, but I have a book of business with them. Even though the sales side is separate from the claims side, there's a bit more motivation for the carrier to listen: they want me to keep writing business with them.

One piece of advice: even if you're angry, keep that out of the conversation. Make your points clear, be friendly toward the people on the other side of your conversations, and make it absolutely clear that you're not going to back down.

What are you going to use the condo for?

In a condo most of your property insurance comes through your HOA. You should review that policy to make sure you're comfortable with everything you're getting. You may need to supplement the building policy in some ways.

You'll also need liability coverage and, if you're occupying the condo, coverage for your personal property. I would strongly recommend taking the insurance portion of your HOA handbook with you to a face-to-face with an insurance agent.

This is especially true if you bought the condo to rent it out because then you get into additional liability issues for which you should get direct personal advice.

"Big data" has been around for a long time. It's just that the quantities of data have gotten bigger as computing power has increased.

My first tech startup attempt was a model that would run a huge number of feature films through a system that would capture things light and sound frequencies, cut rate, and loads of other data points, then correlate that to global sales figures, then allow independent filmmakers to run THEIR film through the same program and generate marketing insights. That was 2000. The technology to do it was there then. My checkbook just bled too soon.

Now you can set this sort of thing up on a cloud platform and scale it out as much as you need to, based on demand and how much space and tool power the revenue supports. I don't think there's much question that a quality big data tool for RE is doable. It's more Duncan's original question of...if this dude builds it will they come?

Duncan,

I think it would be hugely valuable. My wife is a big data person. She manages a database for Washington State and takes Coursera classes on business intelligence whenever she can. We've looked and looked for data resources that can help us with real estate investing, and we've come up sadly short.

Given our small ambitious, even when we reach our goals we'll generate insufficient data to mean much. If we could combine that data with that of a lot of other real estate investors and gather meaningful insights, it would be a considerable boon.

With that said, I think there would be significant hurdles to marketing that kind of solution. Real estate investment is a wealth generation tool for a large and very diverse population, and the output of the analysis would only be as good as the quantity of data going in. The solution would have to appeal to that diverse group. It would have to overcome privacy concerns. And it would have to produce reports that would be satisfying to techie people like my wife while also being meaningful to non-data types.

(It might also be worth mentioning, as your guy thinks about making this product, that any kind of data solution that generates predictive modeling to be used by a large number of clients has some significant liability exposures that he would want to mitigate, actively, and probably at the architecture level.)

"Landlord Insurance" can mean a lot of different things, from a simple property policy to a sophisticated business policy. The Nationwide offering seems to be missing loss of rents, which I think is important. (It covers lost rental income from a covered loss.) It is probably a basic Dwelling Policy, which would explain the lower cost.

You would probably benefit from sitting down and talking to a broker, so that you at least know the kind of coverage that is available and the rates for that coverage.

I'm not a mortgage underwriter, but as I understand it the problem with closing out a line of credit just before applying for a home loan is that you have to prove it was you (not the institution that issued the credit) who closed it.

In the grand scheme of getting a home loan, given the masses of documentation you have to provide, a letter of explanation and proof that you paid the loan off is kind of trifling. You're right - loan originators beg you not to do it, but I feel that's more an issue of paperwork than any real impact on the loan outcome.

If it were me, I'd pay the car off and write the letter.

UNLESS someone much smarter than me points out that paying the car off will change the math of the deal.