All Forum Posts by: Parker Cox

@Jennifer Ross you actually shouldn't need an elevation certificate.  How did you determine that this was a high risk flood zone? To give you an idea of how to go about acquiring flood insurance-- 

if you reached out to me saying you were going to purchase a house and you wanted flood insurance--i would enter the address in the system on floodinsights.com which is where all existing FEMA elevation certificates are housed/databased.

It would then give me a "flood determination guide" that would be used on the NFIP website to determine your rating and cost.  The higher the risk the higher the cost.  

Note as well, NFIP flood insurance only provides up to $250k in dwelling coverage which may or may not be enough to adequately cover your home--you can also pursue a private carrier which can get you excess coverage over the underlying NFIP 250k max.  

In terms of an estimate, to my knowledge, there is no way to get pricing without going through the actually quoting process (which annoyingly costs $10 to quote).  

But to give you an idea--minimum premium is $450/yr.  I have written policies because of severe flood risk that are north of $3000 annually.  

Chances are if you have been informed of a flood risk you are $1500/year or above.  

Also note that once you purchase flood insurance there is a 30day waiting period before the policy becomes active and in force to keep people from buying insurance the day before the storm of the century.  

I hope that helps.  If you have any further questions, feel free to pm me, email or we could set up a call.

best of luck 

@David Espana  I am glad your brother is happy.  Dave does a great job, but I have been there when a really awkward conversation ensues as an investor meets a buyer from a previous property (or their family) and there is a less than satisfied feeling.  

@Gustavo Munoz Castro there has been somewhere between 50-100million pledged for urban development moving east from Barrio Logan all the way to Lemon Grove.  

I have multiple investors, flipping, infill development and buy and hold(mostly 2-4units) in that area getting stellar returns.  

For most of those areas, it is a street by street thing in terms of safety, but I also feel safe walking around that area and I am spend most of my life in a suit.  

I live in Spring Valley/Rancho San Diego--basically the southeastern most point of suburban San Diego--where housing prices are nearly spot on the 440k.  

Where I live, you can find houses (mine being one of them) that should at minimum break even for rent upon leaving, and it is a nice area, very close to La Mesa and just 15-20 minutes from Downtown.  

I don't know enough about conversions to give you information, but that's what everyone else is here for.    

I have a young family as well and want to hold my property forever, so I was looking through the same things at the time.  At the very least it is worth taking a look.  

Best of Luck

FYI to ALL--

The website hasn't yet been updated to show this event and the sign up sheet.  Harass @Kevin Fox (with positive notes of encouragement of course :) ) and it should be up by tomorrow morning.  

@Jake Thompson it is from 9am to 11am roughly but often runs over.  Even if you show up 1030+ there will be people there and networking/learning opportunities.  

Hi Folks,  

We're BACK!!!

And we are starting 2017 Monthly REI event off right. This project has a fantastic story that shows how much building relationships with neighbors can really pay off.

Virtual Tour 

Our Host Dave Brager, Owner of Golden State Property Solutions is inviting us into his 4TH renovation on the same cul du sac--and all 4 properties have been model matches, meaning he has done the same flip 4 times.  

This one street has produced nearly 100k of profit in about a year, all by making nice with neighbors, building relationships and following up.  

Dave is going to walk us through the entire process, how he did it and give people actionable insights into how we all can implement his strategies.  

Property Details--

Purchase--$389,000

Financing--Private Money

Hold Time--5 months

Rehab Budget--$45,000 cosmetic work

Dave started out selling Fortune Builder's programs over the phone and then made the transition to full time "investor."  It took him over a year to get his first deal--talk about perseverance.  But, since his first deal, he has averaged one purchase/month since and is currently in the process of completing his 12th project.  

Please sign up at our website--That way you will be in our database and kept in the loop for all future monthly events.  

AND REMEMBER__THERE IS NO PITCHING, NO SALES, JUST FREE NETWORKING AND KNOWLEDGE!!!!

for any questions contact @Kevin Fox, @Justin R., @Tim Gordon or Myself and we will get you where you need to go.  

@John Powell

Absolutely, tenant negligence and vandalism can be found in a policy.  But, there are a few questions you should think about before buying--

do you only have a single property? 

are you wanting to grow your portfolio?  

if you do plan on growth, SFR or Multi-family?

where are your properties--single state or multiple?

...etc

The reason is, finding vandalism and tenant negligence is pretty easy to come by, the other questions are actually a lot more important in building an insurance plan that fits your longterm plans--saving headaches and dollars along the way.

Best of Luck.  

actual cash value = replacement cost - depreciation.

Things to consider:

• the older the house (usually) the greater depreciation
• In the event of a loss, ACV is typically a longer and less clear cut process to determine the insured value and therefore the amount received by the insured to rebuild/walkaway. 
• @Aaron Vergason gave a great description of the practical thinking behind purchasing RCV vs ACV -- comes down to value of land vs value of property.  
• @John Darr is also correct that pricing is usually striking similar despite far higher coverage amounts usually associated with RCV
• Finally, before you decide ACV, ask your agent/carrier how they determine the depreciation rate--I have see that vary depending on carriers and in older properties, that can create an immensely different amount of coverage very easily.  

Best of luck

@Carl Graff sorry for the delayed response--

comment 1.  Unfortunately, there is no industry standard for how rebuilding estimates are determined and companies are not regulated to a single style.  

Options I know of--1. claims adjuster plus insured appointed contractor--walk house together assessing damage and creating quote.

2. claims adjuster and insurance company relationship contractor--same process

I am sure there are a lot more ways it could be done, unfortunately, it is a process independent agents are not privy to.  But, I do know that appeals for pricing and quotes are possible (in most cases at least).  

comment 2. the higher coverage is not cheaper, but an admitted carrier typically uses a rating system more premium efficient for insureds.  

comment 3, no it is not paid to the insurance company but it is treated as a deductible ie you need to put it towards the payment of your rehab/reconstruction, just like an auto policy that requires you pay the body shop your deductible as a precursor or co-cursor of insurance funds dispersal

@Carl Graff  The article you posted sums up the general determination process for coverage amount used (as far as I know) by all admitted carriers in CA.  I am an independent agent so I can't speak for the direct writers of the world (StateFarm, Allstate, Farmers...etc), but that is the process I am familiar with.  

As an agent focused on REI, I understand your concerns, almost all investors have a certain sensitivity to these values.

The biggest thing you need to think about which you haven't yet mentioned is called "co-insurance" which is your obligation (and possible penalty if you fail) to insure your property within a reasonable realm of likely replacement cost.  

Co-insurances is between 80-100% requirement usually with a 10-20% penalty in the event of a failure to comply.  

In the example of a 90% co-insurance requirement with a 10% penalty (in my experience the most common), here is the math.  

You have a house insured for 355k.  It burns down, a claims adjuster comes out, brings a GC, examines the inspection reports...etc and then determines that your house will cost 400k to rebuild.  

You will have not met your co-insurance requirement 400k-355k= 45k > 10% of 400k.  Your insurance company will then not disperse funds until you have provided 40k (your 10% penalty as an added deductible) + your deductible.  Then, they will only provide the amount your insured for -- 355K to rebuild.  

In total you will have to pay 45k to get the 355k to rebuild your house--

(10% penalty) 40k + 1k (deductible) + 4k (remaining difference balance) to activate a 355k dispersal = 400k balance for construction.  

now, what is the cost difference between 355k and 400k of coverage from the off?  likely less than $10/mo.  

Does that mean any one should be grossly over covered out of a fear of co-insurance penalties? No.  

What happens if you are insured for 410k and the bid/value comes back as 400k. That is a determination that varies between carriers and adjusters. That is not (as far as I know) paid out as a bonus check at the end and here is why. The carrier is paying the actual cost to rebuild. As you know in the REI world, there is almost never a perfect estimation of costs associated with rebuilding a property.

So, your replacement cost coverage is an initial estimate, when the house burns you get a second estimate and as construction occurs, costs can change.  Unfortunately, it is impossible to make a perfect estimation for even the most gifted investor or contractor or carrier.  The goal is to air on the side of too much than too little.  

So what happens if you are underinsured, but within 10% of the replacement cost so you avoid the coinsurance penalty?  The insurance company will pay the full amount required to build your home.  

Ultimately, as a homeowner you view this as a "micro" event--your property destroyed or the 10k too much coverage on your policy.  The insurance company views your "micro" event from a "macro" perspective.  Meaning, for every homeowner who is under insured by 5% (remember, that valuation is subjectively determined and subject to change depending on a contractor's skill...etc) there will be one who is 5% over insured (again subjective and subject to non-robotic human craftsman, and variables).

But, that is why carriers use the 3rd party rating systems mentioned in your posted article.  It gives a standardized method.  As independent agents, we do not have the authority in most cases to write policies that do not comply with those valuations--carriers will simply refuse.  

It is not worth it to a carrier (or agent) to potentially open up a legal battle down the line where an insured says "Mr. Judge, if I had known that 400k was only $10/mo more than 355k, I would have been an idiot not to take it.  My agent and carrier were negligent, they let me under insure my house and didn't explain the consequences to me." 

Overall, I think you are right on on your personal property amounts.  I think your condo is underinsured--the less the square footage, typically the higher price per square ft in general because more of the house is bathroom kitchen walls...etc rather than open air.  

The house seems ok, but my guess is that depending on the quality of the finishes and property, you might have a carrier come back and want to bump it closer to between 600-650k in accordance to one of the rating systems in your article.  

You can look into using a "non-admitted carrier" to get around the rating systems--you will have a lot more freedom with coverage amounts, but the co-insurance requirements are still in play and typically much more stringent.  

But, I would bet a quote at 518k (or even 450k) would be basically equivalent in price if not possibly higher than your hypothetical 625k with an admitted carrier.  

So, I understand the frustration and lack of information available in regards to these factors.  But, it is better to air on the side of enough than not enough if you have the choice.  

Best,

Parker