Owner Newsletter – MARCH 2014
Hello SMART Owners!
We hope that this newsletter finds you well. There is a lot to update you on. The Las Vegas rental market has slowed somewhat. MLS now has approximately 5700 rentals that include single family homes, condos, and townhomes.The market is still a renter’s paradise. In an effort for you as Owner connected with SMART we, are constantly trying to bring our properties to the forefront of the renters so that your property will be rented before another company’s listing. Please have an open mind when suggestions come your way.
Attached is some good information on lowering insurance costs. Hopefully, you will find this informative.
Another item that needs to be discussed is the foreclosed homes that have been purchased. We understand that the deals are great and a lot of homes the appearances seem to be ” rent ready”, nobody really knows the condition of the property until someone moves in and starts using everything. Home inspections are good, but they are not completely thorough. We have had many properties that after a tenant moves in- they are finding items wrong. This is the “hidden” danger of foreclose properties. As owners, you need to be prepared financially to make necessary repairs. Even if a home inspector did an inspection – that does NOT guarantee that everything is OK. When a situation arises with the property – your property manager needs to have a positive communication with you. Tenants get angry when they are expecting items to be done and the Owners are unwilling to pay for these items. This is the risk you have in purchasing a foreclosed property. We are managing and are pleased to manage, but SMART does not own the property, the owners do and we need full co-operation in making EVERYONE happy.
If you are still unclear who your manager is – please email me at: Cindi@managevegas.com. PLEASE KEEP THIS NEWSLETTER HANDY!
Jason Teglia
jason@managevegas.com
702.750.9725×226
702.582.9003 cell
Mike Lamberts
Michael@managevegas.com
702.750.9725×230
702.502.8097 cell
Irish Blessing
May the roads rise to meet you,
May the winds be always at your back,
May the sun shine warm upon your face,
The rains fall soft upon your fields,
And until we meet again
May God hold you
In the hollow of His hand.
CORE INSURANCE GROUP
Top 10 Ways to Reduce Your Rental Property Insurance Costs
- SHOP for the BEST RATES: You should look for an independent broker that specializes in insuring residential rental properties (apartments, single family rentals, duplexes, triplexes…etc.) Be sure that the broker represents multiple insurance companies that specifically want to insure rental property and if they were you would likely be paying a higher premium. Using multiple insurance carriers helps the broker to offer you the broadest coverage and most competitive price for your specific rental properties. Such a specialist also knows how to best protect your assets because they are working with properties similar to yours each day.
- RAISE YOUR DEDUCTIBLE: Deductibles are the amount of money you have to pay towards a loss before your insurance company starts to pay a claim on your policy. The higher that your deductible is, the more you can save on your premiums. Insurance companies typically recommend a deductible of at least $1000. If you can afford to raise your deductible to $5,000, your portfolio, such as wind/hail. It may be a wise choice to have an increased deductibles on wind/hail if you have had prior losses. Another example would be :water damage deductible”. If you have sustained a water damage claim of a significant size, it may be best to take a larger deductibles in that area to “offset” the risk for the insurance carrier.
- COMBINE POLICIES/LOCATIONS ONTO ONE POLICY: In most cases insurance companies have a “minimum premium” threshold for an individual policy. In most cases, it is more cost effective to contribute your portfolio onto one policy. A rental property insurance specialist can, in most cases combine occupied, vacant, and rehab properties onto one policy. often companies offer multiple location/building discounts. Such discounts often increase with the number of locations on a policy. Discounts of 5-30% are common.
- DON’T CONFUSE MARKET VALUE/ASSESSMENT VALUE WITH REBUILDING COSTS: When you are insuring a new building, the market value typically equals the replacement cost of the building (plus the site preparation plus initial land value). When it comes to insurance amount, the company is only concerned with the replacement cost of the buildings. Typically older building construction techniques are much more expensive to duplicate than modern construction technique and this can make the replacement cost of an older building up to 100% more than modern construction. This issue is often compounded by building owners that purchase a building (at market value) for far less than what it would cost to rebuild even with modern day construction techniques. BEWARE, most insurance companies use policy stipulation called COINSURANCE when insuring older buildings. In short, it requires that the policy holder insure to the proper coverage limit and if you don’t the company may penalize you when there is a loss. I have seen situations where an apartment building owner was severely under insured and that he would have only been paid $20,000 from the insurance company). This is the #1 reason why rental property owners don’t get paid the amount needed after major loss.
- IMPROVE SECURITY/FIRE SAFETY: Hardwired smoke detectors, central station Reporting, fire & burglar alarms, sprinkler systems, Etc. These may generate discounts of up to 25% depending on the insurance company.
- CHANGE COINSURANCE PERCENTAGE TO MATCH YOUR NEEDS: If you are insuring your building to their full replacement cost then increase your coinsurance percentage to 100% (increasing the coinsurance from 80% to 100% will reduce the rate that you pay). The opposite may be true for older buildings, if you could fully rebuild your building using modern construction techniques for less than it would cost to replace with like kind and quality you may reduce the building’s replacement cost to a limit that equals the modern construction replacement cost. So, if that limit is 20% lower than the full replacement cost you insure at the lower limit and reduce the coinsurance requirement to 80%.
- RISK MANAGEMENT PROCEDURES: Having the ability to prove GOOD risk management procedures to an insurance company underwriter is a powerful “RATE DECREASING” tool. We have 42 point hazard checklist that is provided to our insureds. This helps greatly with “loss reduction” and decrease “claim frequency”. Risk management procedures, when properly implemented, will help propel you to being a profitable insured. This will naturally decrease your insurance costs.
- IMPROVE THE EXTERIOR APPEARANCE OF YOUR PROPERTY: Most insurance companies want to see photos of the property before giving the cost of the insurance. I have seen many companies offer higher pricing or refuse to insure the property due to how the property presents itself on the exterior. Big negatives include: peeling paint, damage/deteriorating siding, roof in bad shape, garbage in hallways or outside the building, lack of handrails,Etc.
- ASK ABOUT OTHER DISCOUNTS: A number of discounts may be offer by companies as we mentioned, but they may not offer the same discount or the same amount of discount in all states. You must ask your broker or company representative about any discounts available. Nothing is automatic. Shop, compare and ask. Insurance knowledge can be powerful. Be informed.
- REQUIRE ALL TENANTS TO CARRY RENTERS INSURANCE: Many rental property owners have a clause in their lease requiring the tenant to carry renters insurance. While this is a plus for them it also helps you save money in the long run. tenants do dumb things and often those dumb things end up getting covered by your insurance policy because the tenant didn’t carry renters insurance. If they do carry renters insurance then their policy will pay for many liability and property losses on you premise. The less claims that you have the lower your cost of insurance.
