Today, Mike Wrenn, Founder of the NREIG insurance program, gives us his quick, blunt advice for avoiding losses and building a successful REI venture. Mike built this insurance program from 32 insureds in 1999 to now over 13,000. You’ll want to know what he has to say and implement his advice. His guidance is aimed at the clients of National Real Estate Insurance Group but rings true for any residential real estate investor.
To My Many Clients:
Since day one I have been involved in the claims side of our relationship. That remains true even today. Yea, every day I open incident reports and read them and wonder how in the world could an investor allow this to happen? I wonder, gosh, they own or are paying to own this asset, yet they won’t even manage it properly, go see it when vacant, or they let anyone rent when they should pass and wait for a better occupant. These losses will now result in consequences that are not pretty and very costly in some cases. There are claims that have simply taken some of my clients out of the business due to unforeseen loss or damage not perhaps covered by insurance.
No, not everything that happens to your property is resolved with my insurance product – sorry to tell you this if you didn’t know it already. And… that’s true not just for my product but the product offered by most every carrier today in some fashion. Please do yourself and us a favor if you’re in this business and hope to make a profit from your assets. It’s simple yet you guys just don’t do it to the extent you should and trust me I know as I’ve seen thousands of claims in my 40-year career. Just do the following and you’ll reduce your risk to loss by 50%:
- Please have the property inspected by a pro before buying it. Yes, pay the $300 bucks to know everything as inspectors today are very good at telling you most every weakness in that house.
- Please enforce your mandate for tenants to carry and maintain renters insurance. It’s in your darn lease but you don’t enforce it! Remember, it’s only YOUR asset they are harming most every day potentially. Also, have at least a one-month deposit for security and or for harm done during their occupancy. I’d prefer two months if you can get it too.
- Please get a credit check or some information on your tenant before you hand them the keys. You must know your tenants’ history and employment. If you don’t you’ll get what you may deserve – a loss via damage to your house not covered by us (or most) if done by a tenant who is angry at the world.
- IF you get a disgruntled tenant then do the “cash-for-keys” approach to get them out. Even if you have to pay $500 or their entire deposit back, this method is effective and is a far cry better than allowing them to destroy your house before they walk out. Damage done by a tenant on the way out and for about seven days afterwards is not normally a covered insurance claim. Yes, please get unhappy tenants out and eat crow or eat the cash, but don’t allow them any length of time to destroy your rental. This is great advice, so never forget it!
- Lastly for today, go visit and inspect each house every 6 months and do not let any vacant house you own go without making it very, very secure. Force the thieves to another house because yours is too hard to break into.
Just do these 5 things religiously on every house you own please. If you don’t then find a different method of building wealth like investing in gold or silver or your IRA mutual fund. These houses you own are valued assets so treat them as you should, and they’ll reward you. If you don’t, they’ll turn on you and harm you financially. Yes, I know this all too well, and I want you to know too.