SPC038 – Fundamentals – Insurance w Ed Babtkis – Deductibles, actual cash value vs replacement cost, and much more

 

1)   Why are some policies more expensive than others?

Coverage, deductible, location

2)   What is the difference between actual cash value and replacement cost coverage

Actual cash value will depreciate the claim depending on how old the house is, replacement cost will pay up to policy limits if you rebuild

3)   Why should I care about liability coverage

Many investors will be wiped out if sued if there is a major occurrence on their property

4)   How is coverage amount determined

Many providers have their coverage methodology determined by software that takes into account labor rate and material cost per zipcode and its usually too high. Since premiums are computed based on coverage amount this can be a critical pricing component

5)   Brief discussion on flood insurance

Lender required if in flood zone, if cash purchase owner should at least know if property is in a flood zone or not

6) Shared blanket programs vs Individual policy for each property

Most of the programs offered outside of a couple are shared blanket programs meaning you are an Additional insured vs the “Named Insured”. This means less rights when a claim occurs, kind of like giving someone a power of attorney to negotiate and received an insurance settlement on your behalf

Podcast #34 – Jorge Newbery goes $28 million into the hole and the fight to get back to even

Jorge Newbery, Founder and CEO, American Homeowner Preservation. On a mission to help Americans crushed by unaffordable debt. This Ex-Apartment investor talks about going $28 million dollars into the hole. This is quite honestly the most authentic and insightful interviews I have had this 2016… editing the podcast was like watching a freaking drama movie.

1) How much simple passive Cashflow are you making today and how are you doing it?
(You don’t need to give a number if you would like privacy. You can be vague such as halfway to quitting my job, cover my mortgage, Make 25% of my expenses, over $10k, although people like when people open up the kimono.)

My wife and I put extra money in AHP. It’s in the low seven figures.
2) What is your Han Solo moment – Han Solo and his buddy Chewbacca from Star Wars were cruising around the galaxy as lowlife smugglers but then cross paths with Luke and Leia and his life took a pivot point. Describe the resistance that was the catalyst for change.

Always been an entrepreneur. My last regular job was 25 years ago as branch manager of a mortgage company. Even then, most of my earnings came from commission, so the smarter I worked, the more I made.

Did you “burn the boats” or did you let it happen naturally – was there an internal (you decided to make a change on own – what was thought process?) or external trigger (ie got fired from your job)?
3) Worst life/business moment what did you do after? Lesson learned?

Shutdown of Woodland Meadows (my largest holding at 1100-units) and my subsequent financial collapse.

Lessons:

  1. The positive impact you can have on other lives is more important than accumulating cash. I use my Woodland Meadows experience to aid families struggling to avoid foreclosure. The best part is that AHP and our investors can also generate strong financial returns by doing so, which makes the effort sustainable and scalable.
  2. Some risks you cannot anticipate.

4) Current 2-week experiment and 6-month project? (90-180 day goal) A mark of a high performer is to put your ego aside and accept the help of others and mastermind maybe folks can help you by you asking.

  1. Next two weeks: complete improvements to ahpfund site in order to make investment process as easy and fast as possible.
  2. Next six months: execute marketing campaign to raise 50MM on ahpfund.com.

5) What is your simple passive Cashflow number? Now imagine you had 2x that amount… Describe your ideal day, detailed routine, and what projects you are working on.

Workout, work on higher-level growth of AHP (i.e. avoid getting involved in individual cases), spend time with friends and family.
6) Something that you have recently or thought about “burning your cash” on for time savings or an improvement in quantity of life.

Outsource/delegate more of what I do to experts, so I can focus on what I do best and free up my most precious possession: time.
7) Tony Robbins identifies two large concepts that we are continually struggling to gain perfection at: #1-Art of Fulfillment and #2-Science of Achievement. If you died tomorrow and I were to email this to your kids a couple decades later… this is what they would hear.

  1. What is your secret/hack for the “Science of Achievement?” How you do contribute back?

Stay positive and upbeat even during challenging times. Embrace difficult periods and endure – the effort often gets easier. Greatness is typically preceded by surviving difficult times.

  1. What is your secret/hack for the “Art of Fulfillment?” Any secret habits to share?

Strive for what you want, but allow yourself to be happy with what you have.

Investinahp.com

Podcast#31 – Hacking Life Insurance for Tax Free Double Dipping

Term life is like renting a home. You get to take advantage of living in the property but have no control of the house, there is not equity build up, no tax advantages, no appreciation, and when you move you take something with you. Term is inexpensive.
Whole life insurance is like buying a home. There are great tax advantages, equity build up, appreciation due to compounding interest, and it is an asset you can list on your balance sheet. Whole life has more up front costs, but you can get a total return of premium within the first 5-10 years into the policy.