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Volition Meetup - Insurance for Investors

  1. 1. @volitionproperties www.volitionprop.com Volition Investment Mastermind: Insurance for Investors – “Insuring” you avoid coverage pitfalls! March 2021
  2. 2. @volitionproperties www.volitionprop.com Who is Volition?
  3. 3. @volitionproperties www.volitionprop.com Who is Volition? ● Mission Statement: To help people navigate the complex world of real estate and to be the team who has your back. ● Complete Solution Provider: Everything you need to be successful. ● We Figure It Out For You: Cutting-edge research, analysis, and (more importantly) synthesis in putting together solutions for the competitive Toronto market.
  4. 4. @volitionproperties www.volitionprop.com Who is Volition? ● Credentials: ○ $30M+ personal holdings in Toronto Real Estate (over 50+ doors) ○ Certified Real Estate Investment Advisors ○ Michael Millenear Real Estate Investing Leadership Award nomination ○ Investor Realtor Awards: Chairman Award, President Award, Top Producer Award ○ Featured in Real Estate Investment Magazines ○ Expert Speakers on national stages & podcasts ○ ...and more.
  5. 5. @volitionproperties www.volitionprop.com Mentorship, Education & Consultation Leasing & Property Management Toronto’s Leading Real Estate Investment Advisory & Realty Firm Volition Services Realty Management Advisory Renovations Acquisition of Properties Design & Renovations
  6. 6. @volitionproperties www.volitionprop.com Toronto’s Leading Real Estate Investment Advisory & Realty Firm The Volition Team Matthew Lee Founder & Partner Ming Lim Advisory & Realty Alcina Sung Design Florence Lee Strategic Initiatives Sam Ho Founder & Partner Edward Zhang Advisory & Realty Janny Fu Leasing Services Shelby Hagymasy Operations Coordinator Brian Li Construction PM
  7. 7. @volitionproperties www.volitionprop.com The Investing Maze The Volition Team!
  8. 8. @volitionproperties www.volitionprop.com Private Volition Mastermind Chat Group ● Exclusive to Investor clients & Advisory clients ONLY. ● Talk about news, tenant issues, share contacts, basically help navigate the difficulty of this investor world! Let us know if we missed you!!
  9. 9. @volitionproperties www.volitionprop.com Ming’s Market Minute
  10. 10. @volitionproperties www.volitionprop.com Sales Volume
  11. 11. @volitionproperties www.volitionprop.com Average Resale Home Price
  12. 12. @volitionproperties www.volitionprop.com New Listings
  13. 13. @volitionproperties www.volitionprop.com Sales to Listing Ratio
  14. 14. @volitionproperties www.volitionprop.com Volition Market Data
  15. 15. @volitionproperties www.volitionprop.com Volition Metrics - Downtown municipalities
  16. 16. @volitionproperties www.volitionprop.com Volition Metrics - Downtown SF Detached
  17. 17. @volitionproperties www.volitionprop.com Article Spotlight
  18. 18. @volitionproperties www.volitionprop.com Volition Metrics - Downtown Condos
  19. 19. @volitionproperties www.volitionprop.com Volition Metrics - Toronto - Everywhere else
  20. 20. @volitionproperties www.volitionprop.com Volition Metrics - Uptown SF Detached
  21. 21. @volitionproperties www.volitionprop.com Case Study: CityPlace Condo
  22. 22. @volitionproperties www.volitionprop.com Should you prune your portfolio? ● What are your goals? ● Does this property map to your goals? ● If you refi at 80% LTV will it still cashflow? ● Do you want to take your investing to the next level (ie. from condo to multifamily)?
  23. 23. @volitionproperties www.volitionprop.com Case Study: CityPlace Condo ● Purchase price: $305,800 ● 2007 pre-construction, registered in 2010 ● First rented for $1,850 including parking + locker ● Cashflow positive the entire time ● Only 2-3 weeks of vacancy when the owner did cosmetic renos ● 823 sqft 2 bed + den, 2 bath, 2 balconies ● Parking and locker
  24. 24. @volitionproperties www.volitionprop.com Case Study: CityPlace Condo ● The unit has run its course ● The owner had already pulled equity to buy another property a few years ago ● Is now looking to re-allocate equity to real estate that provides more opportunity to create value (major reno or development), which is difficult to do with a condo
  25. 25. @volitionproperties www.volitionprop.com The Main Event! Insurance for Investors – “Insuring” you avoid coverage pitfalls!
  26. 26. @volitionproperties www.volitionprop.com Dan Tetzlaff – Insurance Expert Dan oversees the HUB Ontario regional real estate practice, manages $5,000,000 in insurance real estate premiums and has 10+ years of experience. He specializes in rental properties, rent-to-own, student housing, construction, surety, and large complex real estate schedules. Dan has partnered with some of the most prominent real estate groups in Canada including the Canada Landlord Association, REIN, OREIO, REITR club, and more.
  27. 27. © 2017 HUB International Limited. 27 © 2017 HUB International Limited. 27 Advocacy. Tailored Insurance Solutions. Peace of Mind Volition Properties Coverage pitfalls to look out for in your investment property insurance policy
  28. 28. © 2017 HUB International Limited. 28 Most Common Pitfalls • Named Perils/Fire & Extended Coverage vs. Broad Form Coverage • Actual Cash Value vs. Replacement Cost • Permission for vacancy period • Limited Coverage during vacancy • Vandalism caused by tenants • Rental Income Insurance • Sewer Back-up, Flood & Earthquake, and failure of sump pump coverage.
  29. 29. © 2017 HUB International Limited. 29 Named Perils/Fire & Extended Coverage vs. Broad Form There are two forms that your investment property may be currently insured under: • Named Perils Coverage This form is limited to the causes of loss that are named on the policy. Named Perils form is a more “restrictive” coverage form. You do not get as much coverage as you would get on a Broad form. OR • Broad Form Coverage This form is highly recommended as it covers “all causes of loss” unless excluded.
  30. 30. © 2017 HUB International Limited. 30 Actual Cash Value vs. Replacement Cost Methods by which your insurance company may calculate the settlement amount are as follows; • Replacement Cost is the cost to replace the property with new materials of like kind and quality, without depreciation. This is the most favorable. • Actual Cash Value is the cost to replace the property minus deduction for depreciation. Also known as market value. It represents the dollar amount you could expect to receive for the item if you sold it in the marketplace excluding the land value.
  31. 31. © 2017 HUB International Limited. 31 Vacancy Allowance Period Most policies have an exclusion on the policy that indicates that if the home was vacant for more than 30 consecutive days, a loss would not be covered. You must notify your insurance broker if your property is vacant for more than 30 days. They will have to add a vacancy permit to your policy. There is typically a charge for this. However, some insurance packages designed specifically for investment properties may have a longer vacancy period allowance. This is certainly helpful considering a rental property may be vacant until tenants are found. • Conditions to keep in mind relating to this permission: • All doors and windows be securely closed and locked. • All rubbish be removed from within the described buildings and premises. • Buildings must be checked a minimum of once a week or more depending. • You have shut off the water supply and drained the system and appliance of water, or you have maintained heat in the building and have made arrangements to assure heat is continued.
  32. 32. © 2017 HUB International Limited. 32 Damage/Vandalism Caused by Tenants • This is a common exclusion on most rental property policies. You retain the loss if your tenants damage or vandalize the building. It is recommended that you double check with your insurance carrier to ensure that this is included. • Damages can be significant. From our experience we notice this is most common during an eviction process.
  33. 33. © 2017 HUB International Limited. 33 Rental Income Insurance • After an insured loss and during the period of restoration, rental income insurance will reimburse you for the rental income that you were getting prior to the loss. Check with your insurance broker or agent to be certain that you have this coverage. • Is the Rental Income Insurance on an Actual Loss Sustained basis? Actual Loss Sustained basis means that there is no limit on the rental income. However, this does not mean an unlimited source of payment for your loss. The loss must still be proven and the proof is the amount that will be paid. • There is also a limit as to when the rental income coverage is paid out. For example,12- 24 months. It varies between policies.
  34. 34. © 2017 HUB International Limited. 34 Sewer Back-Up, Flood & Earthquake Always ensure you have these as part of your insurance package. • Sewer back up – Loss or damage caused directly by the backing up of sewers, sumps or drains. • Flood – waves, tides, tidal waves, and the rising of, the breaking out or the overflow of any body of water, whether natural or man made. • Earthquake – snowslide, landslide, or other earth movements occuring concurrently with and directly resulting from an earthquake shock.
  35. 35. © 2017 HUB International Limited. 35 Tenants Insurance Recommendation • Always recommend that your tenants have tenants insurance. It is not uncommon to ask for a copy of their policy for your own peace of mind. • If there is a loss and the tenants are negligent, your insurance company can recover the loss from their insurance company if they are insured. This avoids the payout from showing on your record. • If there is a slip and fall incident and your tenant was negligent, it will likely be your policy that responds if your tenant does not carry insurance. Even if there is no payout, there is still defence costs that are involved in lawsuits. This means that the claim will be shown on your loss history report, hence could result in higher insurance premiums on renewal.
  36. 36. © 2017 HUB International Limited. 36 How much should you insure your building for? • You should insure your building for the amount of money it would cost to re-build the structure. The cost of land or the market value of the property does not have any bearing on the cost to rebuild. • Don’t forget to take into consideration Detached Structures – Coverage for sheds, detached garages and other structures not connected to the main dwelling itself.
  37. 37. © 2017 HUB International Limited. 37 Contents Insurance Limit • You should insure your contents for the figure it would cost to replace them. Being a “landlord”, there may be some items such as appliances and furniture that you own and would want to replace following an insured loss. • The tenant should be insuring their own contents. Your policy does not cover their contents.
  38. 38. © 2017 HUB International Limited. 38 38 Advocacy. Tailored Insurance Solutions. Peace of Mind Introducing Investment Property Asset Protection Program for Investors:
  39. 39. © 2017 HUB International Limited. 39 What type of properties are eligible? 1. Single Family Homes 2. Duplexes/Triplexes/ Etc. 3. Apartment Buildings 4. Commercial Buildings 5. Rent to owns 6. Student Housing 7. Condominiums
  40. 40. © 2017 HUB International Limited. 40 Highlighted Coverage Benefits 1. Broad Form/All Perils Coverage 2. Replacement cost 3. Vandalism caused by tenants -$50,000 4. Permission for vacancy – Up to 120 Days, all other carries offer 30 5. Days. 6. Flood, sewer back up, and earthquake included up to the limit of the policy
  41. 41. © 2017 HUB International Limited. 41 Highlighted Coverage Benefits, continued… 6. Loss of rental income for 12 months 7. Building by law upgrades 8. Contents coverage of $5,000 free 9. Ice Damming coverage 10. Debris Removal – Additional limit of $25,000 11. Liability coverage of 2 million dollars with option to increase to 5 million
  42. 42. © 2017 HUB International Limited. 42 HUB Commitment to Investors 1. Dedicated Sales/Service Team only for this investors 2. Internal Claims Handling free by claims specialists 3. Knowledge and expertise in the Real Estate sector, example rent to own, law office relationships 4. Free review of your current policy 5. We offer educational workshops and presentations.
  43. 43. 43 Thank you. . 43
  44. 44. @volitionproperties www.volitionprop.com Now what?
  45. 45. @volitionproperties www.volitionprop.com Sign Up for Advisory! ● Sign up for a complimentary Advisory Consultation session ● We will help you determine ○ Where you are at ○ Where you want to go ○ Help you build a customized plan to get there ● Fill out the form (link in chat) or send us an email at info@volitionprop.com to schedule a session!
  46. 46. @volitionproperties www.volitionprop.com Next Investors Mastermind: What does construction REALLY mean? ● Wednesday, April 21 from 7:00 - 9:00 pm ● RSVP at www.meetup.com/Volition ● The Volition team will guide you through the construction process of legal multi-family conversions while pointing out potential problems and offering up solutions.
  47. 47. @volitionproperties www.volitionprop.com Masterclass 201: Advanced Business Models ● Summer 2021! ● Deep dive into the EXTREMELY complex world of Legal Luxury Multi Conversions & Laneway Housing. ● Bigger $$$$$, but bigger ROI. ● Overview of: ○ Process (Volition’s Stepping Stone Approach, COA, Permits, etc.) ○ Financials ○ Timelines ○ Costs ○ How to avoid major pitfalls that can make or break ● You will walk out being familiar with the process and the business model.
  48. 48. @volitionproperties www.volitionprop.com
  49. 49. @volitionproperties www.volitionprop.com THANK YOU!

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