All Forum Posts by: Kristine Hodges

Agree that no insurance will cover future increases in cost of monthly or yearly HOA assessments (dues). If you're referring to a special assessment, the ones for major expenses not covered by the regular dues, then maybe. Some carriers offer loss assessment insurance, which can come into play when the HOA experiences a large covered insurance loss, such as a hail storm requiring roof replacement or a fire requiring building replacement. In those cases, if the HOA assessment is a direct result of the insured loss, it can kick in a specified amount towards the individual HOA members portion of the assessment. This is something you do on your own units policy. And not available everywhere or to everyone. You need to work with an experienced insurance broker who knows HOAs. Don't call the random agent down the street with the company that advertises on TV. Those carriers don't usually have this option. It can also be very expensive and the limits are usually low. So may not be worthwhile even if it is available. Lots of variables involved and depends on your personal situation of course. This is another example of why it's so important to have a good team of experts around you to offer options and discuss the consequences before making any decisions.

I've had this discussion with multiple lenders recently. I am an insurance broker in Colorado and can confirm that most insurance companies are increasing to minimum 8% deductibles on most condos. Although it does reduce the premium slightly for that particular rating factor, it is not optional on the part of the HOA as an intentional cost saving measure. It also doesn't typically mean the overall premium goes down, as the other rating factors are increasing more and this tiny decrease is lost in the overall total. This is a new underwriting guideline of the insurance companies because they haven't been profitable and must raise the rates and lower the risk factors in order to comply with state regulations on adequate reserves and future solvency. In Colorado specifically, we're also losing a lot of options due to an increase in our wildfire risk scores in many zones.
Bottom line, be thankful that you’re able to find coverage at all, because some properties can’t.  And if you’re lucky enough to be with the few carriers who haven’t yet increased the deductibles, pay the higher (than last year) premiums  for now (because you won’t find anything cheaper elsewhere and certainly not with the lower deductibles) and keep that option for one last year, because it will likely switch next year for you.  Your company is just slow to file their updates, which in this case is in your favor. Maybe by next year the lenders will catch up and update their guidelines to allow for what is available in the marketplace right now.   

I’m a Colorado commercial insurance broker and have a lot of carriers available in my agency.  You’ll need to use a broker who can get to the specialty insurance companies.  The traditional carriers you mentioned are not good options in this space.  Prices are high and coverage can be hard to fine, especially in the mountain counties and for habitational buildings.  I’d be happy to talk in more detail and see if I can find you a better option.  

I have multiple STRs in Estes Park.  Our local regulations are strict, as are most mountain towns in Colorado. City limits have different rules than county.  Permits required unless zoned for accommodations.  Local contact must live in the area and be able to respond within 20 minutes. I’m happy to share more detail about my experience as an investor and an agent.  

I’d leave one unit open.  Then it can be purchased by an owner-occupant for a house hack.  Or an investor who would probably prefer to choose their own tenant.  You can show the current lease as proof of market rent, so I wouldn’t worry about filling it for an investor buyer.  But you’ll lose a large portion of your potential buyers if they can’t occupy the empty side.  

There’s a meetup on Friday mornings at 7:00am at Smokey Row in Des Moines.  Hosted by @Darson Grantham.  You’ll meet lots of local investors that can give you great tips.  I’ll be there this week.  

In Colorado, you can sign documents anywhere you want with a mobile notary or via remote online notarization.   You can do it at the title company office, your real estate agent’s office, the property, your house, your workplace, a coffee shop, on the tailgate of a pickup truck, or whatever works best.  Check with your lender and your title company to see what they allow, as not all options are legal or available in all states, and not all companies have the technology to support the options even if they are allowed.   When you live in one state and invest in another, you’ll need to check both sets of state rules to make sure whatever you do is valid in the state where you are signing and acceptable for recording in the state where the property is located.  I do a lot of mobile signings for investors purchasing properties in other states.  No need to travel.  

Are you familiar with Estes Park?  There are several key factors that may be influencing those numbers. Estes is a very seasonal location.  ADR and occupancy rates will fluctuate wildly depending on the month and can be hard to compare.  

Many properties, especially cabins, ranch style, and some “design” style properties may not be rentable during winter months if they are not fully insulated and heated properly.  

Also, almost every property in Estes is marketed as “amazing views” since it is right in the valley of Rocky Mountain National Park.  It’s hard to find a house without a view of some kind.  So that word is not a very strong differentiator.  

How do you decide what criteria to use for your analysis in each market?

I own several rentals in Estes Park. I recently spoke with Larimer County for one of my clients, and they advised that the permit process is more like 3 years. It requirest multiples steps of paperwork, inspections, public hearings, and certification. Estes Park within city limits requires a permit, or to be zoned as Accommodations land. The permits are at capacity and the waiting list is so long that they stopped accepting applications. I completely agree with Nathan's comments above, regarding the laws being brutal. Every county and city and neighborhood and HOA has its own rules. Be sure that you know exactly what the rules are before purchasing any property.

Rule of thumb is not a good idea here.  Talk to your local independent insurance broker for a recommendation on what to expect.  Then once you have a property picked out, get several quotes to review.   If you are in a high risk area for hail, hurricanes, tornado, or flood, you could have much higher than expected premiums that could make the deal unprofitable.  Take the time to get an actual quote instead of a guess.