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Finding the Right Insurance Agent: A Key Strategy for Real Estate Investors

Title: “Finding the Right Insurance Agent: A Key Strategy for Real Estate Investors”

Episode: 232

In this Profit First for REI podcast episode, we have Aaron Letzeiser. He is the co-founder and Chief Operating Officer of Obie, an insurance brokerage designed for the unique risks of homeowners and investors.

Aaron gives you practical steps and things to do to lower your insurance rates and more about insurance in this episode, but he will surely make this boring topic more exciting. Enjoy the show!

Key Takeaways:

[01:04] Introducing Aaron Letzeiser [06:13] Insurance black holes [08:15] How Obie helps people [12:30] Maintaining competitive insurance rates [16:17] The claims process [23:48] Actual cash value vs replacement cost [30:01] Aaron’s advice for real estate investors [31:10] Connect with Aaron Letzeiser

Quotes:

[10:30] “Speed and transparency, and more of a consultative approach to what you are buying or paying for, that’s the difference with Obie.” [15:27] “Find an agent that knows and understands the real estate investment space.” [24:36] “Go check out how much property coverage you have.”

Connect with Aaron:

Website: https://www.obieinsurance.com/ 

Tired of living deal to deal? 

If you are a real estate investor or business owner who is tired of living deal to deal and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David

Transcript:

Speaker 1 (00:00):

If there’s nothing else that people do find an agent that knows this space, that is the biggest thing that you can do. So many insurance agents that actually work in this space are small real estate investors themselves. You’re going to know that instantly based on the conversation that you start having. And those are the people that are going to have access to the right markets, the most competitive rates, the best coverage. Find those people, partner with them. It’s nothing against your agent. You can keep your home and auto and your life insurance and your boat and your RV with them. Find somebody that knows and understands your business and make them your partner going forward.

Speaker 2 (00:36):

If you’re a real estate investor who’s sick and tired of living deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a profit First approach. This is the profit first for REI podcast, where we believe revenue is vanity. Profit is sanity. It’s time to start making profit a habit in your business. So here’s your host, David Richter.

Speaker 3 (01:04):

Okay, don’t throw stones at me today. We have an insurance carrier on, so I really like them though. It’s OB Insurance Hero. Not only a lot of great things, people that I know use them, people that I’m connected to, we actually get to talk to the co-founder and he puts stuff on the bottom shelf. Thank God this is an episode where if you’re like, oh my gosh, my rates are going nuts, he gives you practical steps of things that you could do to make those go down, or just thinking about what can I do in order to not think about insurance as much as possible. So if that’s you right now, we talk about the state of Florida, all the things going on and crazy. So hopefully this is very helpful for you and thank you for being a listener of the Profit First REI podcast.

(01:45):

Hey everyone, it’s David Richter of the Profit First, REI podcast. Have Aaron lut Sizer here. Super excited because he’s going to talk about insurance, usually not an exciting topic. Usually people throw stones my way. I talk about financial stuff and he’s in the insurance world, so you’re getting the double whammy here. But he said one thing beforehand, which I’m really excited, he said he can make it interesting, and I like when people can take usually boring topics and make them exciting. So I know this is something that a lot of people are probably struggling with right now in the insurance world. I live in Florida, a lot of people are struggling down here in the state of Florida. Insurance is going nuts. So really excited to have Aaron on to demystify some of this stuff, but also just talk about what the heck is going on in the insurance world. So Aaron, thanks for being on.

Speaker 1 (02:30):

Thanks, David. Hopefully I’m not getting a lot of stones thrown my way, but yeah, insurance is not something that people had paid a lot of attention to, but certainly, and especially if you’re in Florida, the insurance market’s gotten a little wild over the last couple of years, so I’m happy to chat through it.

Speaker 3 (02:46):

And you work with Obi in church. You’re actually a co-founder, correct?

Speaker 1 (02:50):

Yeah, that’s correct. Started a while ago now, but we’re an insurance technology company that’s solely focused on the residential real estate investing class. So whether you are the accidental landlord, you bought your condo unit and you didn’t want to sell it, you turned it into a rental property when you bought your first home or a similar type of setup all the way now through kind of your substitutional owners two, three, 5,000 units under management. We wanted to build a platform that I think provided a bit more of a consultative and transparent insurance process that I think what myself and my brother, who’s my co-founder, we used to see when we were in the real estate private equity world.

Speaker 3 (03:30):

So you’ve been in the real estate world before then?

Speaker 1 (03:33):

Yeah, correct. So we spent a lot of time in that space. Ryan, more so than myself, although he’s the one that gave me the real estate investing bug. He was buying value at apartments, single family rental portfolios, primarily across the southeast and just got really frustrated by the insurance process. I had had my insurance license for a while, so I knew what those pain points looked like, but he always felt like, and this is more so true now today than probably in the last decade, but he always felt like it was one of the largest line item expenses that he had, but the one that he always felt like he had the least amount of control and insight into, he always felt like, and people describe it the same way to us, a miserable black hole. Nobody likes insurance, but it’s made worse by the fact that now you’re operating this business or you’re trying to run a p and l and maybe you trusted the investment sales broker, maybe you were hoping that rates would stay flat to what the previous owner had. And for a lot of folks, it’s a wake up call. And so we wanted to build a product that people at least felt a little bit better about. We wanted to put owners in the driver’s seat to make their own decisions. We’ve been really successful being able to help real estate investors be able to do that.

Speaker 3 (04:39):

Okay, awesome. I like that. That came from the aspect of like, yeah, they saw a need fill a need in that space. Now you mentioned that technology company. So are you more of broker or do you actually have the insurance in house with Obi?

Speaker 1 (04:53):

That’s a great question. So we started as a broker initially years and years ago. And while the website and the form might’ve looked pretty, it was really just me behind the keyboard entering those quotes into websites as quickly as humanly possible so I could make it feel techie. But it worked out. We wanted to be able to validate the thesis that we had in the market, and it turned out everybody else felt like insurance was a miserable black hole too. So that worked out well for us. We ended up, that led us to building our own insurance products. We can still broker policies out, we still have about 60 carrier relationships out in the market, but we wanted to build, I think really the product and the experience that we wish we would’ve had. And so now at this point we’re underwriting these. We have the rates, the forum, we built these products internally. We’re available in all 50 states plus Washington dc. We really wanted to be able to provide our partners and our clients with the type of experience that we think the insurance market should be at today.

Speaker 3 (05:49):

So then, okay, in the insurance world, since you’ve got the behind the scenes working, and I love that you’re underwriting it as well too and that you have those partnerships. So then what else do you see? It’s obviously a big line item for real estate investors. What other black hole type things or is there anything else there? You’re like, yeah, this is another reason why we went down this road. Then I’d like to go into some of the insurance process too.

Speaker 1 (06:16):

We always felt like insurance. We never really found that insurance broker or that process where somebody would think about our deal and our business inherently like we did. And so if I was, and it’s to no fault of an insurance agent, a lot of ’em are generalists and we can certainly talk about why it makes sense to use a generalist or really a specialist in this space. But I wanted to talk about cap rate. I wanted to talk about my net operating income on this property and I wanted to have a conversation with somebody to say, Hey, if I move my deductible from a thousand dollars a year to 10,000, what is my savings going to look like over the next couple of years? Am I inherently going to be paying for the claim that I may or may not have versus right now I know I’m going to be able to have the savings?

(07:04):

And so that was the piece that I think was really missing in this space. And as an owner, I think we’ve all taken for granted that the last little over 10 years since the financial crisis in 2008 and 2009, people started pouring money into the alternatives to the public equities market. One of those has been real estate. And so from that, the times have been great. People think the top was 2018 and then the top was 2020 and then the top was 2021. I think we started to hit that ceiling interest rates certainly helped push it in that direction, but when times are great, you don’t have to worry as much about your p and l. And I think now that the market is caught up with where the rest of the players are at, it really does have a big material impact. And so that’s the black hole for everybody.

Speaker 3 (07:55):

Yeah, that makes sense. So it’s finally caught up and now the people are paying attention to it. So now that they are, how do you separate yourself out from the pack then? Because there’s a lot of insurance carriers out there, some of ’em deal to the REI world and are specialists in that. So what does OB do that helps people?

Speaker 1 (08:14):

The first thing I would say is that we’re quick and transparent about the process. So whether you access us through your independent insurance agent, we work with a bunch of independent agents around the country or you come to our website yourself, what I like to tell people is you can sit on your couch on a Saturday morning and buy insurance without having to talk to anybody. You can go through our quoting process, you can sit there and you can mess with the combinations to your heart’s content. One of the biggest frustrations that I had as an owner is that I would fill out a spreadsheet, I would fill out a PDF application, then I’d send it off to my broker, and then that broker would go out and they’d procure a bunch of quotes for me. And again, to no fault of their own, this is the way the market is set up.

(08:55):

If I wanted to look at any different combinations, maybe I want to look at a higher deductible or a lower deductible, maybe I want to add this coverage or not. Every one of those is that poor broker having to go back to those carrier or maybe multiple carriers and say, Hey, can you run these five different combinations? And that poor carrier has a real person sitting on the end of that email that has to replug all of this back into a spreadsheet, much like we’re underwriting a real estate deal. And so what we inherently did is we digitized that underwriting model, we took all the rates and the forms and looked at that and said, Hey, there’s a real human sitting behind this model. Why don’t we build a computer model around that? How about we allow people to be able to do that instantly?

(09:36):

And so that’s what we’ve been able to build more often than not. Any one to four unit structure, residential investment structure, multifamily is a little bit harder to do. It’s not as instant, but any one to four unit structure in the us, we can underwrite that instantly. And what that means for you as an owner is then again, you get to sit there, you can check out with our recommended coverages, or you can play around with it. You can plug those numbers into your proforma for the year, or maybe you’re looking at acquiring an asset and you want to make sure that the insurance line item or your insurance assumption actually matches with where the market’s at. You can do that as many times as you want, right? No insurance agent, myself included, and I say this with love as an agent, I don’t want to sit there and help you, David, you’re looking at 50 different properties on Zillow. I don’t want to run all 50 for you because you don’t even know if you’re going to buy it yet. And that’s the way the market’s been built. So that’s the big piece for us is that speed and transparency and more of a consultative approach to what it is that you’re buying, what you’re paying for. That’s the difference with ob.

Speaker 3 (10:38):

I like that a lot because a lot of people need that. In the real estate world, then do you cater more to the buy and hold landlord or to the fix and flipper someone who short-term doesn’t matter?

Speaker 1 (10:51):

Doesn’t matter. I would say, again, kind of going back to what I was saying before, a lot of carriers would shy away from that fix and flip model or people that were only going to hold the asset for maybe three to six months. And that’s because they had so much business coming through the door. They didn’t want to have an underwriter sitting there, underwriting a three month deal or a six month deal when they could spend the same amount of time underwriting a 12 month policy. But for ob, again, it doesn’t matter for us. If you want to come in and you want to be able to quote that out, there’s a machine that’s doing that. Now. We have people in the background. If you want to talk to somebody, you’ve got questions, you want to talk to a sales agent or a service rep, really understand that coverage. There’s people available to do that, but we found that the average real estate investor today, they’ve grown up with an iPhone, they have an expectation of technology and immediacy. And so we wanted to be able to build a product that supports the way that they want to own and manage and purchase investment assets versus somebody that’s sitting there really sitting with the status quo of the way this has been done for ages.

Speaker 3 (11:49):

Okay. No, I like that. So it really doesn’t matter long-term, short term, you’re just trying to get them the best thing. Like you said, you’re taking the more consulted consultative approach of what is your business trying to do. I really like that a lot as well too. Usually just a cog in a wheel. Let’s just move it along as far as for most people, okay, so insurance is so crazy across different states, I feel like Florida’s gone nuts. How do you maintain a competitive rate versus other places or especially in these states that I feel like have gone a little bit cuckoo bananas recently?

Speaker 1 (12:31):

It’s a tough challenge. We leave that up to really smart actuaries who are a hell of a lot smarter than I am, but it’s tough. I think Florida always kind of gets the brunt of the insurance world. I think Louisiana, southeast Texas, everybody’s really loved the Harris County area, both in the single family, the multifamily areas. So your best markets to have invested in the last probably 5, 7, 10 years are also the ones that are getting hit the hardest with the insurance. And so that’s really a couple of things. One, people think it’s usually the weather, and that’s true, but weather patterns, even though they’ve gotten a little bit more erratic, they’re fairly predictable, right? Insurance carriers run what’s known as a PML study, so probable maximum loss. What is the probability that you’re going to sustain a total loss on these assets? And they’re running that every year.

(13:18):

So it’s not about the weather per se, it’s about everything else that’s being added into that. So you’ve got inflation, these carriers that said, you know what, David? I’m going to rebuild your property. I agree with you on this replacement cost, something happens to it. There’s a tragic fire. The entire place burns down. I’m going to rebuild that for you. But what carriers I think didn’t underwrite for is the fact that lumber prices were going up material and labor costs were going up. And so where they thought they were going to have this slim margin of profitability, and that’s the way the insurance market has grown successfully for decades, suddenly they all see themselves taking in a dollar in premium and paying out a dollar 10, a dollar 20 in losses, and that’s not sustainable. So you add that in. I think Florida fortunately has dealt with I think a little bit more of the litigious nature of a lot of the claims processes.

(14:07):

People show up at your door after a hurricane and say, Hey, let me put on a brand new roof for you. Your insurance company will pay for it. I think the state’s starting to tack down on that a lot. But what we hear often, and I think this is again, the first time you’ve had this confluence of events, people in Ohio or people in Michigan or people in Pennsylvania or North Dakota, they say, Hey, I don’t live in Florida. I haven’t gotten hit by a hurricane. I don’t live in California. I don’t live in southeast Texas or Louisiana. Why are my rates going up? And I think for the first time, people are realizing that the insurance market has operated at a loss in a lot of those states, those southeastern states, and they’re supplemented by everybody else. And that’s what makes a beautiful insurance market work is that in the wildfire seasons out west isn’t necessarily the same times as you’re getting hurricane season, which isn’t always necessarily the same times you’re getting tornadoes to rip through to alley, which isn’t the same time as really bad winter storms.

(15:10):

And so these national carriers are able to balance out those risks and be able to refill, I guess their reserves, for lack of a better term, all around the country. And so that’s really what’s been happening. And so it’s important for folks to look at their portfolio and say, number one, find an agent that knows and understands the real estate investment space. I can’t encourage that enough. That could be Obie or anybody. Find somebody where real estate investors are a large part of what they do. And then in those conversations talk about the things that you as an owner can do to mitigate those potential future claims. You’re never going to be able to stop a wildfire or a hurricane, but you can do some things to make sure, hey, maybe that tenant caused kitchen fire or that water issue at your property. You might be able to not be able to prevent that, but you might be able to at least decrease the severity of that coming up and a really good agent’s going to be able to talk through some different ways of doing that with you.

Speaker 3 (16:03):

Yeah. What about claims? How are claims, the claims process, is it pretty streamlined? There’s been some insurance companies I’ve worked with before where it’s like, wow, this is pretty streamlined. And it’s like, oh my gosh, I’d rather pull my hair out than go through this process. So how’s claims?

Speaker 1 (16:18):

Yeah, I mean, claims, there’s the two worst days of anybody’s life and insurance, right? It’s the day you pay for it and the day you file a claim, right? Yeah. What I have to say about that is the feeling that people have around insurance is that they buy insurance. Insurance is a very complex product. They file a claim and then that claim gets all completely denied or partially denied, or it takes a really long time. And so what we’ve done at OB is a couple of things. One is that as soon as you file a claim, you’re going to get a claim number. You’re going to have an adjuster that’s going to be assigned to you very quickly thereafter. We try and move that process quickly as long as possible. If I’m paying out that claim, I don’t want to be the carrier that sits there for a month or two months or three months to get you that check.

(17:04):

A policy is a contract. If you have coverage, I’m giving you your money, right? I’m going to do that as quickly as humanly possible within reason, assuming that it’s a very clear clut claim. The second thing that I would say is that in doing this in a digital way and empowering you as a real estate investor, we have folks that come to us and maybe they get a claim denied or they picked a deductible that was too high, but they finally made that decision. I think that’s the powerful thing of what technology can do for the insurance world is that, David, you might’ve been paying a thousand dollars deductibles for the last 10, 15, 20 years, whatever it might be. And then you look at that and you say, wow, I never file a claim. Why don’t I move up to a $10,000 deductible? I’m going to see immediate, right?

(17:50):

There’s going to meet an immediate ROI for this change. But you made that choice, right? It wasn’t you going back and forth with an agent or an agent just throwing a bunch of PDF documents in front of you. You might’ve wanted to add on the roof replacement. You might have wanted to add in some enhancements or maybe not, right? Maybe you said, you know what? I’m willing to take that risk, but when a claim happens, you were the one that decided whether or not you wanted that coverage, you were the one that decided, and you were empowered to make that decision on the size of the deductible. So if you said, Hey, I’ve never had a claim, knock on wood, nothing happens. You went from up to a $10,000 deductible and you have a $7,500 water leak issue right in the property, and you’re like, oh, damnit should have kept a thousand dollars deductible, but that’s on me, right?

(18:37):

I did that. I made that choice. And so I think flipping that narrative, I hate that there are carrier experiences out there where you’re waiting forever. That makes no sense. And then people get annoyed and frustrated by the time it takes, but they’re also annoyed and frustrated because they don’t understand why this happened. And then when they go back and they look and they say, well, my agent and by extension the carrier, they only gave me a couple options and I didn’t feel empowered to go back and say, Hey, can you run this a couple of different ways? That’s what we want to change. And if you can change that, you’re never going to like insurance, but maybe the experience you have to either get that loan or to refi or to change property managers or to just shop your insurance costs, maybe we can make that experience just a little bit nicer and a little bit more pleasant for you.

Speaker 3 (19:20):

Yeah. So it sounds like, do you have a standard operating procedure for a claims turnaround for at least communication or something? Then it

Speaker 1 (19:27):

Sounds like you like, yeah. Oh, 100% right. The more I can automate that, the less I have to use actual real humans. And humans are what ultimately it’s no fault of their own. That’s what delays things, right? Yeah. You don’t know if somebody’s having a good day, a bad day, whatever that might be. They get to your email, maybe they go to lunch. If it’s an OB products like one of the ones that we’ve built ourselves and you file that claim online, there’s an automatic process that is kicked off, and then we have SOPs with our adjusters and everything else to make sure they’re evaluating that claim. They’re seeing. If it’s something that requires a site visit, maybe it’s something that with the appropriate amount of evidence, which we give everybody the opportunity when they’re filing that claim, give us as much as possible, give us everything a yacht, then I can get to a decision and we can adjudicate that claim much quicker. So that’s the type of experience we want people to have, because again, if you’re paying out the claim anyway, why make the situation worse by waiting a month or two?

(20:25):

These people are like, well, we gave approval to issue the check and the check processing times are seven to 14 business days, and then we got to put it in the mail and then we get, come on, man, A CH me my money and let’s move on.

Speaker 3 (20:39):

Right? Yeah, no, I like that. That’s usually one of the bigger questions I think most carriers and just people get about insurance is the claim process. And what was your experience with the claim if you had to file a claim when the rubber meets the road usually and how they separate out from the pack. Now you just do, is it residential real estate investing properties or do you do homes as well like personal homes or is it just the specialty of the real estate investing space?

Speaker 1 (21:11):

Yeah, that’s a great question. So we don’t do owner occupied, we don’t do person lines. Somebody comes to us and has a rental property and then their home and their auto. We have a couple of agencies that we partner with, people that I think share the same type of ethos that we have about approaching insurance in this way. And so it’s a very nice reciprocal relationship. Anybody that needs an investment property, they’ve got an appointment. And then anybody, any of our clients that might need that type of products, we get to ship them over there. And so we really want to focus on this niche. There’s 17 million landlords in the us. They spend over 60 billion a year on insurance coverage just in this market. We want to do one thing and do it well, and I think this is a place that we can have a really good impact.

(21:56):

And then from there we get to say, all right, we’re just in the residential real estate investment space. Can we start doing commercial? Can we do self storage? Can we start expanding this exact same type of thought process and this go-to-market to other verticals that we see our own customers investing in? And I’m sure you see that from your world as well. Once somebody gets the real estate bug, they might have that condo or that townhome or that first starter home, they turn that into a rental. That rental turns into two to three other properties sitting there at night on Zillow, and then that turns into a 10 unit or a 15 or a 25 unit building they went in on with some friends. And then undoubtedly, you get that guy that calls and says, Hey, I found this self-storage place. The owners are getting up there in years.

(22:39):

They want to sell. I really want to get into self storage. And I’m like, I don’t have a product for you yet, but I will soon. And so that’s the thing. It’s such a large community, but it’s such a small network that people are always constantly looking for new deals and new opportunities because once you get over that first hump of being a landlord and you dive headfirst into becoming really comfortable as a real estate investor, you see people start to branch off and they get that same itch that I got years and years ago to say, wow, maybe we want to underwrite this 20 unit building. This looks really interesting. Or Wow, there’s this small three story office building, it’s fully leased up. Maybe I can use that for my business. I go into one floor and I rent out the other two. Maybe I find a mixed use property. That’s how we see the evolution of real estate investing, and we want to be the brand that continues to service them throughout all the assets that they end up putting in their portfolio.

Speaker 3 (23:32):

Yeah, awesome. I like that. I do have one random question. Is it the actual cash value versus replacement cost that most carriers give? Do you give that option between actual cash value and replacement and which one do you prefer people choose or what would you choose?

Speaker 1 (23:48):

That’s a great question. I think probably ever more important today, right? Again, with inflation costs and everything else, the first thing before I directly answer your question, what I can tell everybody and it’s related is go check your policy. And number one, find out if you have actual cash value or replacement cost. A lot of people are confused by that. For your listeners, it sounds like the exact phrase, right? Replacement cost is the amount that the carrier’s going to pay to rebuild your property in a light condition at the time of the loss, right? Actual cash value is we’re going to give you a check. Whatever you do with that check, best of luck. See you later. And there are contingencies in policies at times to say, Hey, if you don’t have enough coverage on the replacement cost side, we’re just going to give you the check.

(24:32):

And so the biggest piece of advice that I can tell your listeners is go check out how much property coverage you have, depending on the carrier, it might be called coverage A, it’s your property limit and you want to look at that and you want to say in the event, the entire place burned down, not just to rebuild the property in like condition, but also to haul away everything that just burned down to remediate that property and then to rebuild it in a like condition. What’s the average price per square foot? And if you don’t know, just go ask any of the local builders that you might be around. Any of them are happy to tell you. They can tell you off the top of your head. But we have seen clients where they bought a rental property or an apartment 10 years ago and they listed the replacement costs at $80 a square foot, and they’ve never updated it, and they keep renewing with their agent and their agent, they might not focus in this area, they don’t know what your goals are. So you look at that and you say, Hey, there’s probably not a place in America right now that you can rebuild for less than $120 a square foot,

Speaker 3 (25:31):

Right? Yeah.

Speaker 1 (25:31):

Do you only want to rebuild just the first floor? And then you kind of have this light bulb moment. And I think the one piece from an insurance perspective that a lot of people don’t realize is if you have a loan on that property, of which 93 to 95% of investment properties have debt on them, when the carrier says, Hey, you don’t have enough coverage here to rebuild the place you selected replacement costs, you wanted to be able to rebuild it. This is how much you told us as the carrier, you could rebuild it for. You’re not going to have enough here. And they’re going to tell you that, and they’re going to tell the lending company, right? They’re going to tell the mortgage company. That mortgage company might say, listen, I’m not in it to try and be the lien holder or the note holder on a half rebuilt house.

(26:14):

Just give me my check. And it almost is mortgage company saying, Hey, I want my actual cash value. And so you’re then left with however much you have on it. Maybe you have 20%, you just bought the place, you got 30, 35, 40% in equity. That’s your pro rata portion of the check that you’re going to get. That’s going to be nowhere close to what it’s going to take to remediate that property. Clear everything out, start rebuilding. And we have tragically seen folks that are adamant that they don’t want to increase the replacement cost, and then they have that accident. And again, that mortgage company says, Hey, just give me my a hundred grand, that’s my 65% pro how much equity I got in the place. I’m out.

(26:57):

Then the owner’s like, what do I do? Do I just sell it for land? And that’s what they end up having to do. It’s literally, it’s a burned out shell. They’ve got a piece of land, they try and sell it, they try to get something for it, and there are groups that’ll buy houses like that, but you’re getting pennies on the dollar at that point. And so that’s my biggest piece of advice. So going back to your original question, my preference is always replacement cost. It’s going to cost a little bit more. And let me caveat that. I would say I would always do replacement costs if I have debt on the property. If you own it outright, that again gets back to the first decision we were talking about in the beginning. What deductible do I want? That’s about you as a real estate investor and how well you can sleep at night depending on the decisions you make as an investor.

(27:42):

And so if you say, Hey, listen, I own this thing outright in cash, place burns down, give me a hundred thousand dollars check and I’ll sell the property. And that’s okay for them. But that’s the thing. You want to think about actual cash value. Somebody is giving you that check replacement costs, they’re going to partner with you to try and rebuild that property up to the limit that you agreed on with them. They’re not going to go above that, and they’re also not, if you end up rebuilding that property for less, it’s not also a blank check that you’re going to be able to do a bunch of upgrades on the property. You had basic countertops and you want to try and go to Italian marble just because you have an extra 50 grand in that limit, they’re not going to do it, right? You submit invoices back to the carrier, that carrier is making payment.

Speaker 3 (28:22):

Yeah, that makes sense. So I like this a lot. This has been really good and helpful because on the Profit first RI podcast, I want people to keep more money. I want them to actually have more money at the end of the day. What I’m hearing here from what you’ve said from a lot of the things is, number one, you look at your policy. Do you want to a higher deductible so it’s less out of your pocket every month, but then more risk it’s like, or do you want a lower one and then it’s a higher monthly. So it really depends on your risk tolerance there. I would also say another big thing that you brought up was personal responsibility. You need to know enough to be dangerous to know what to look for on your insurance deck pages. Like, do I have replacement costs?

(29:02):

Do I have actual cash value? Am I insured for enough? If I’ve had this property a long time, am I covered? Because the best way to keep your money, it’s like to not lose money and insurance helps you not lose the money that you had into the place, and especially if you don’t know those things. So I’m glad you took the time between actual cash value and replacement costs, because if someone’s new, or even if they’ve been in there a long time, I feel like that’s going to help them make a more informed decision. And then making sure that at the end of the day you have the insurance that you really want in place, and using someone that knows the space that you’re in is going to help you really keep more of what you’re making. That was some of the big ones that I got from today. I like that you speed and transparency. Does that sound like some of the big ethos of what you’ve got going on over there that you really want to be, but also consulting the people on the other end and helping them make informed decisions, which is really good. Do you have any last advice here before? Just one final question.

Speaker 1 (30:01):

No, I would say again, if there’s nothing else that people do find an agent that knows this space, that is the biggest thing that you can do. So many insurance agents that actually work in this space are small real estate investors themselves, right? You’re going to know that instantly based on the conversation that you start having, and those are the people that are going to have access to the right markets, the most competitive rates, the best coverage, find those people, partner with them. It’s nothing against your agent. You can keep your home in auto and your life insurance and your boat and your RV with them. Find somebody that knows and understands your business and make them your partner going forward. Yeah,

Speaker 3 (30:38):

No, that’s really good. And I would just stress again what you said, it’s your personal responsibility. Just your lack of knowledge does not make it all the issues go away. So it’s like that’s why I like that you take the consultative approach of like, okay, where do we go here? What do we do? Being able to ask those questions because the insurance world isn’t something that everyone dives into every day. So I really like that a lot. Okay, awesome. Last question, how can people find you? How do people look up ob? Do they just type in ob?

Speaker 1 (31:11):

You can type in ob, you can go to the website, obi insurance.com. Obi is OBIE insurance.com. You can always email me where come from. Oh, great question. So my brother actually, he had a dog named Obi at the time. We came up for the company and the dog was named after a beer. Bell’s Obon.

Speaker 3 (31:31):

Okay, there we go.

Speaker 1 (31:33):

The beer named the dog. The dog named the company. Okay,

Speaker 3 (31:36):

Awesome. Sorry to cut you off. How do you get ahold of you? You said your email address you’re going to give? Yeah, yeah,

Speaker 1 (31:41):

Yeah. If people want to reach out to me, I can point you in the right direction. It’s aaron@obinsurance.com. We got a lot of smart people, people smarter than me, so I can always happy to answer some questions or find some experts to help you

Speaker 3 (31:54):

Out. That’s big too. You’re a co-founder here and he just gave out his email, so he’ll make sure to point you in the right direction. That means a lot to me when people like that, get involved and make sure you get to the right place. So Aaron, this has been interesting. I think this, I go, I think that some fundamental things discussed on this podcast where wherever you are in your insurance journey, I hope you’re a little bit smarter after this. And listening to Aaron, I feel like you put it on the bottom shelf for all of us here too, because some of this stuff I’m like, this is good. This stuff I needed help on as well too. So Aaron, thanks for being a great guest here. And if you’re listening to this podcast and you’re like, good grief, yeah, insurance going out to wazoo, everything’s going six ways from Sunday, make sure to reach out to Obie.

(32:39):

You can also reach out to us@simplecfo.com where we’re making sure that you’re putting the money in the right place. It’s like, do you have the right insurance? Do you have the right things? Do you have the right monthly expenses? At the end of the day, you got to make sure you’re making a profit or why are you doing this? So we got to make sure you’re profitable. Go to simple cfo.com. We can at least point you in the right direction, bring you great people like Aaron into your life as well too, so you can get the right help that you really need as a real estate investor. So Aaron, again, thank you for being on the show and providing all this great information today.

Speaker 1 (33:09):

Thanks, David. Lots of fun.

Speaker 2 (33:11):

This episode of The Profit First for REI podcast is over, but there are plenty more where that came from. Are you ready to learn how David and his team can help implement the Profit First system in your business? Schedule a discovery call@simplecfo.com right now. We’ll see you next time on The Profit First for REI podcast with David Richter.