All Forum Posts by: Gabriel Mendez

I would say this loss would justify filing a claim. Looks like you already started that process though so best of luck. 

Thank you for the feedback everyone, much appreciated.

So if i understand correctly, As long as probate does not drag along and there is appreciation, she should be receiving her portion with no tax liability. Since in this case it is from a death then no 1031 exchange will be needed.

A friend of mine helps his dad run a few rentals and this is the process his dad does with his tenants (all self managed btw). He will pay for the materials and tenant pays for the install. 

I would not think it would be a a bad idea if you could vet the plumber that is being used. In your case the tenant is offering to pay for all costs so why not. Make sure he chooses a verified plumber and gets a good quality toilet. I myself dont own any properties so my experience is limited but sounds like a good deal to me.

My mom recently inherited a house from her dad after he passed. Once the house sells it will be split between her and 3 other siblings. It had been rented for the past 20 years by the same tenant who is now giving them issues and they are needing to go through the eviction process now. That is a whole other story... 

My question is that once the house sells is she able to take her split of the proceeds and do a 1031 exchange to another property to avoid taxes? Its going to be a pretty sizable figure and she is looking into possibly purchasing a duplex or triplex. I just want to make sure that she goes about this the best way and minimizes her tax liability. 

Any advise or thoughts on the situation is appreciated.

Give a local agent a call and have them run the numbers for you. Its hard to give any estimate as there are different rating factors for each company and for each state.

Even though it is not built you can still get some quotes worked up. Since its new it actually would be fairly easy since you have all the specs. You know the SQFT, year built, and everything is going to be new (kitchen bath roof plumbing etc).  I would think you should be able to get a pretty good rate also since it will be new.

Yeah Age of dwelling can be a factor but its still under 100 years old. Carriers have their sweet spots. I have a carrier that their sweet spot for rentals is 1970s and newer. Anything over 50 years old they require documented proof of renovations for things like roof, hvac, wiring, and plumbing. They are the only carrier that requires this that i write with. So different carriers can cater towards different risks. 

I doubt it would be due to you being an out of state investor. It could be due to location perhaps? For example if you buy properties in certain areas of SoCal you may be charged a premium to due Fire Risk if you are too close to brush areas. I would also compare those two quotes to check for any coverages that you can cut on or that seem out of norm from the others. Company A rating you at $100k coverage compared to Company B at $175k.

Those are just some thoughts on the situation, Call a few more agents and maybe even show them one of the quotes you received. See if they are able to get a policy that is closer to your price range 

Rates for insurance can vary due to quite a few factors. Typically the agent will input a few pieces of information into a cost estimator to determine what it would cost to replace the dwelling in the event of a total loss. Some of the info they take into consideration is the SQFT, roof type, bed/bath count, etc. They are not insuring the property for market value (purchase price) or including land value in the coverage.

Also, as a rental you are not purchasing homeowners insurance. It will be a Dwelling Fire Policy that is Tenant Occupied (landlord policy). Homeowner policies are specific for owner occupied properties.

Its hard to give ball park figures since each company will have different rating factors. Best bet would be to start calling and speaking to different agents and comparing quotes. Some Agents will be able to quote with different carriers themselves which will save you some calling around.Post back here with some details on the quotes you get and It will be easier to give more solid advice. 

So I think this can vary depending on the company. I know for one carrier we could write you up a multi-family homeowner policy. As long as you own the whole building and reside in one residence. The premium for the policy goes based on the dwelling coverage of the structure. Meaning they are going to combine both units as 1. So they would use figures like TOTAL Sqft, 2 kitchens, total rooms, bathrooms, etc. That way in the event of say a fire, the whole building gets replaced.

I have had another carrier that i write with tell me it needed to be set up as an Owner Occupied Dwelling Fire policy. Again this could just be specific to this one carrier.

I would suggest B for the following reasons:

Dwelling Coverage is Replacement cost and not ACV. In  the even of a serious loss or fire ACV would end up causing you more of a headache and OOP cost, an in my opinion not worth the $300 savings annually.

Other Structures: If you have a barn as a separate structure, would $2000 Cover its replacement? With policy B you can probably lower the coverage slightly if that limit is too high. Typically coverage B (Other structures) can be adjusted.

Personal Property: Only important if you provide things such as appliances or washer/dryer, etc

Loss of Rents: If Rent is at $1050 per month. Policy A would give you just under 2 years of lossed rent in the even of say a fire where the house cannot be lived in. So A might be sufficient. Some policies have certain restrictions on how long they will pay loss rents though i.e. 12 month cap.

Liability: I think you should always opt for higher liability limits as a landlord. I would say minimum $300k. 

Medical payments: Another important coverage to have just in case. Typically does not cost much to make the jump from $500 to $5000

Deductible: $1000 is recommended due to the fact if you have a loss that is less that $1000 it should almost always be out of pocket anyways. I think that claims should only be submitted if they are large enough to justify submitting it. Even a $1500 claim may not be  worth claiming because the payout to you would be $500 but that may lead to a rate increase the following year. Not only that but if you were to have another thing go wrong that you needed to claim and now you have multiple claims in one year you be be non-renewed. I have had customers with 2-3 claims on a property and now they are struggling to find a carrier that will accept them and their only options are typically to go to a non-admitted surplus lines carrier which has very high premiums.

Speaking as an agent i say its better to have the coverage and not need than to need it and not have it (or not enough of it). But you can look at making adjustments to Other structures, Loss of Rents, and Liability coverage on policy B to see if you can get the premium slightly lower.