E39: How to Protect Your Real Estate Investments with Jeremy Goodrich

Cash Flow Fight Club

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:

https://creclarity.com/