Real Estate Investors Association of Greater Cincinnati

Running a real estate business can be incredibly rewarding — but it also comes with risk. Not just market risk or deal risk. People risk.

What happens if you can’t operate the business? Most owners intend to put a plan in place. Few actually get around to it.

And when something unexpected happens, families are left trying to figure out who runs the business, what needs to be done, and how to keep income flowing.

The good news? Making such a plan isn’t complicated. It just needs to be done.

The Two Phases of a Succession Plan

Phase 1: Short-Term Disruption (3–6 Months)

This is the “something happened” scenario — an injury, stroke, heart attack, or other temporary incapacity. In this phase, the goal is simple: keep the business running.

That means:

• Identifying someone who can step in temporarily
• Making sure they’re willing and capable
• Creating a way to pay them

How Do You Fund That?

If your business has reserves, great. If not — or if using reserves creates strain — there are insurance-based solutions designed to provide cash when you need it:

• Accident Plans – Lump-sum payments for covered accidents
• Stroke Plans – Coverage specific to stroke events
• Heart Attack Plans – Lump-sum support for cardiac events
• Cancer Plans – Financial protection tied to diagnosis
• Critical Illness Plans – Broader coverage combining multiple scenarios

These plans provide immediate liqui ... Read More…

 

The type of policy available to property owners varies based on the type of building, the building occupancy type, and the frequency of the building being occupied.

There are six categories for insuring investment properties, but we will look at only DF1 and DF3.  

The DF1 policy is a base policy with limited coverage for the building.  It can be used for vacant (rehab/flip), rental or owner-occupied properties, but the coverages are generally very limited, usually to:

1. Fire and lightning
2. Explosion
3. Windstorm
4. Hail
5. Riots
6. Smoke damage
    

The risk to any insurance policy is the exclusions. This list is usually rather lengthy and is “required” reading.  It explains in detail the various conditions for which the policies offer no coverage,  Some of the common EXCLUSIONS include:   

1. Flood and water damage
2. Frozen pipes
3. Roof damage due to sleet or snow
4. Falling tree damage
5. Ordnance or law and government action
6. Earth movement
7. Power failure
8. Neglect
9. War
10. Nuclear hazards
11. Intentional loss
12. Mold

 

Some policies may allow you to “purchase” these coverages, for a fee.   

Generally, a DF1 policy has coverage as actual cash value. In the event of a claim, this means the reconstruction value is calculated and then depreciated for age and condition.   

If your goal is to recover what you’ve invested, this may be a reasonable option.  If the go ... Read More…

 

             One of the most boring topics – to most real estate investors, anyway -- is insurance.  That’s why so many get themselves in trouble when it’s too late to do anything about it. 

             As a real estate investor, you NEED to understand the basics of insurance that directly impacts your business.  Property insurance and liability insurance are the backbone of your business’s asset protection plan. Having a major insurance issue – and not having the proper insurance coverage in place – could easily cause your real estate business to go OUT of business, and take all the wealth you’ve built up over time down the drain with it.

            Our goal, thru these articles, is to provide a better basis to your real estate insurance knowledge so that you can ask the right questions and make the right decisions when it comes to your insurance.

            The first topic, as a basis of understanding, is to discuss “reconstruction value” versus “street value”.  Too often people use street value—what the property would sell for today—to try to determine what value they need to use to insure a property.

            Unfortunately, street value is not really a valid insurance valuation, because the cost of ... Read More…