E39: How to Protect Your Real Estate Investments with Jeremy Goodrich
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Are you looking to maximize returns while protecting your commercial real estate investments?
In this episode of In the Champion’s Corner, commercial real estate and insurance expert Jeremy Goodrich discusses the ins and outs of CRE investing. Jeremy shares his unique journey from elementary school teacher to insurance advisor for large CRE portfolios. He offers invaluable insights into risk management strategies, agency compliance, and navigating the changing insurance landscape.
Learn how to properly assess insurance needs for deals, avoid costly surprises at closing, and maximize returns over the long run. Tune in to hear Jeremy's advice on partnering with the right insurance professional, setting clear standards, and achieving financial freedom through entrepreneurship.
Here are some power takeaways from today’s conversation:
00:00
01:39 - Jeremey’s career background
03:45 - The value of prioritizing risk management
06:57 - Understanding agency compliance requirements
09:57 - Finding the right insurance agent
12:07 - The cost of cheap insurance
16:47 - Insurance rate increases and their impact on multifamily property investments
20:29 - Insurance claims and losses due to hail damage
29:21 - How local factors impact underwriting deals
35:13 - A mindset shift towards financial freedom
43:12 - The keys to running a business successfully with your spouse
Episode Highlights:
[03:45] Prioritizing Risk Management and Tenant Safety for Optimal Returns
Jeremy emphasizes the importance of leading a discussion around risk management when engaging investors as an insurance advisor. He wants to ensure the safety of tenants, properties, and the investor's finances. By taking a proactive approach to risk management, an investor can achieve a better return on their sleep by knowing their assets are protected, as well as a better overall ROI.
[06:57] Understanding Agency Compliance Requirements
Jeremy discusses agency compliance for Fannie Mae/Freddie Mac loans. Inexperienced agents sometimes provide cheap estimates without understanding guidelines. This often causes problems at closing. Jeremy ensures compliance upfront to avoid any insurance issues delaying the closing process, emphasizing that agents need experience with agency debt to submit compliant policies for a seamless closing.
[09:57] Finding the Right Insurance Agent for Your CRE Needs
When assessing which insurance agent is right, Jeremy recommends they be a specialist in commercial real estate who understands the industry from both an investing and advisory perspective. It's important they can explain complex insurance concepts simply and have relationships with multiple carriers so they can access the best options for clients rather than being limited to one company. Trust also plays a key role, as investors need to feel confident relying on an agent's expertise and recommendations.
[12:07] The Cost of Cheap Insurance
Jeremy shares a story of a client who chose a cheaper insurance policy over his own more expensive quote, saving $15,000 annually but having major coverage gaps. The property suffered a $500,000 loss from a fire six months later, and the client only received a $150,000 payout versus the near $500,000 they would have gotten with Jeremy's policy due to its more robust coverage. This illustrates how opting for a low price can end up costing significantly more in the long run if a claim occurs.
[29:21] How Local Factors Impact Underwriting Deals
When underwriting deals, it's important to understand how local insurance market dynamics in a specific area may impact costs. Jeremy notes factors like weather events, replacement costs, and litigation environment can vary significantly between regions. Properly assessing these local considerations is crucial for accurately gauging insurance expenses when underwriting a property in a given market.
Resources Mentioned:
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