One of the many places where beginning AND experienced real estate investors can make a colossal error is in estimating the cost of commercial property insurance for their deals. It's quite common for due diligence to be done, a deal to be finalized, and then for the actual insurance costs to come in much higher than anticipated. There are many reasons for it, and Jonathan's guest on this episode, J. Darrin Gross explains.

You'll learn what insurers are thinking as they evaluate an insurance quote, what goes into the cost of insurance on their end, why claims history is important to future pricing, and why buyers never get the rates the seller is paying. This is a very enlightening conversation that can keep money in your pocket on your next deal. Don't miss it.

Insurance rates the seller pays are NOT what you will pay as the buyer

Commercial property insurance is commercial property insurance, right? Why would the quote a buyer receives for a property be any higher than what the seller is already paying on the very same property? In this conversation, J. Darrin Gross explains that a new insurance quote can't be compared to an old policy for many reasons, among them being differences in coverage, the condition of the property, inadequate coverages, and more.

Be sure you listen to this episode to understand how to get the right numbers on insurance for your real estate deals. Darrin is an insurance professional and also a real estate investor himself, so he's able to speak to the issue from both sides.

When estimating commercial property insurance costs, the sooner you engage an insurance broker, the better

Because there are so many variables when it comes to commercial property insurance, you don't want to settle for making an educated guess when putting together numbers on a deal. Your best guess is not likely to be anywhere close to the actual numbers. J. Darrin Gross explains why and gives tips for getting as close as you can to an accurate figure in your estimations.

But his best advice is very simple: engage with a commercial insurance broker as soon as you can. With the right information, an insurance professional can get you a number that is more complete, takes into consideration all the variables, and is based on your answers to questions you didn't even know to ask. You'll be glad you listened.

The past may not be a reliable indicator of the future - but for insurance purposes, it's often what is considered

When you're putting together the figures for your next real estate investment possibility, are you going to consider the history of the property in calculating insurance costs? You should. J. Darrin Gross says that though the past is not a reliable indication of what might happen in the future, it's often used as a basis for risk assessment when calculating insurance costs.

In this conversation, Darrin explains what investors can do to put their insurance broker's mind at ease when it comes to issues from the past. If you understand and apply what he explains in this conversation you could save yourself thousands in insurance costs over the life of your investment. Be sure you listen.

Your commercial property insurance quote will be based on 4 primary things

One of the valuable things Darrin explained in this conversation is that the property itself is the main barometer of what commercial property insurance will cost. That's because the property is the best gauge of what claims may be made against the policy in the future. If you can show that the things the insurer is most concerned about are not concerns at all, you'll get a better rate.

The four things most insurers are concerned about are the roof, the electrical system, the heating system, and the plumbing. As you go into a potential deal you'll want to learn the loss history in each of those areas (insurance claims made), know what repairs or upgrades have been made, and plan to make your own contributions to upgrading those systems if they need attention. Doing so will enable you to negotiate the best insurance coverage possible.

In This Episode Darris Gross says...

• [1:07] The issue of commercial insurance: a hornets nest for any investor
• [2:46] How Darrin's insurance business connected him to real estate investing
• [11:38] Why the gap is so big between seller insurance costs and buyer insurance costs
• [14:01] How to navigate the difficulty of estimating insurance costs during underwriting
• [24:38] The things that add cost to the insurance coverage you need for your deals
• [28:32] How loss history (claims) impacts insurance pricing on commercial real estate
• [31:08] What can you do to minimize insurances costs from the start?
• [35:10] Do what you can to keep your policies up to date. Here's why

Resources Mentioned In The Episode

• [email protected] - Learn to be an asset manager and Investor
• Bellwether Enterprise (sponsor) - contact Will Oldham [email protected]

Connect with Darrin Gross

• http://JDarrinGross.com
• The Commercial Real Estate Pro Network: http://commercialrealestatepronetwork.com/
• The CREPN Radiot: http://commercialrealestatepronetwork.com/podcasts/

Connect With Jonathan and Real Estate Launchpad

• To invest with me go to www.TwoBridgesMgmt.com/investors
• To learn from me go to www.MultifamilyLaunchpad.com
• Join my free Facebook community

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