Archive | January, 2015

Comparing Replacement Cost Estimates for Home Insurance

21 Jan insurance replacement cost estimate

Insurance agents and I have a complicated relationship. I hate up-selling, and once that line is crossed it’s hard for me to distinguish between greedy self-interest and sound financial advice.

Call me cynical, but when my agent told me a property worth $157,000 would cost 79% more to replace it seemed prudent to get a 2nd opinion.

Home Insurance Replacement Cost Calculation

(photo by Anna)

Too much coverage and you’re wasting money, too little and you’re not fully protected after a catastrophic event. Where’s the goldilocks zone? Consumer Reports recommended Building-Cost.net and AccuCoverage.com, so I decided to compare these 3rd-party sources against the carrier’s estimate.

Data Point 1 – Insurance Carrier / Agent
This replacement cost estimate comes directly from the carrier’s online tool, which is used by agents when pricing a new policy.

homeowners insurance replacement cost estimate

(photo by arbre_evolution)

There are legitimate reasons why the cost to rebuild would be higher than market value, but I question whether the agent and carrier have a conflict of interest (financial and liability) that incentivizes them to over-estimate.

Also, pay attention to the accuracy of the inputs – your agent might assume more expensive finishes than what is actually there (brick vs. wood siding, wool vs. acrylic carpet). I had to send mine back with corrections – twice.

Original Replacement Estimate: $280,600
Revised Replacement Estimate: $273,100

Data Point 2 – Building-Cost.net
A free tool provided by the publishers of the National Building Cost Manual. This no-frills estimate consists of roughly 8 sections with the usual criteria – location, square feet, # of kitchens and bathrooms, HVAC, finishes, etc.

One unique input was the quantity of exterior corners. I’m merely guessing that more exterior corners = more complexity = higher construction costs.

Building-Cost.net Replacement Cost EstimatorSince it is more contractor-oriented than insurance, it does not include the costs to remove the original structure/debri. P.S. – if you have problems viewing the emailed report, try opening in WordPad instead.

Replacement Estimate (w/o debris removal): $245,874

Data Point 3 – AccuCoverage.com
AccuCoverage costs $7.95 and is the consumer arm of Marshall & Swift, a provider of building cost data for the insurance and real estate industries. This estimate was probably the most comprehensive, and Fool.com’s insurance board calls Marshall & Swift “among the best.”

AccuCoverage.com Replacement Cost Estimator

Marhsall & Swift also offers a separate replacement cost estimate tool to insurance agencies, so you might have access to a similar report for free through your agent. Again, keep an eye on those inputs.

Replacement Estimate: $310,478

Final Thoughts
Credit where credit is due, the average of both 3rd-party estimates comes out to $278,176, which is pretty spot on with the carrier’s $273,100 estimate. Satisfied, we finalized the policy and moved on to umbrella insurance.

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Make Ready Checklist with Auto-Populating Fields

12 Jan

There’s no way around it, make ready work is full of details to remember:

  • Will the electricity automatically transfer?
  • Is the trim painted the same color as the wall?
  • Do any fence pickets need replacing?
  • What size are the air filters? How many are needed?
  • Is the drill battery charged?
  • Are any doorstops missing? Light bulbs? Shower curtain rods?

Each misstep is another trip to Home Depot or another loose end to button up later. To complement my grab-and-go kit, I needed a make ready checklist.

Rental Make Ready Checklist

How it Works
The checklist needed to be universal in some ways (light bulbs, lawn care) and property-specific in others (paint colors, window dimensions). I also didn’t want to update 6+ separate documents every time I made an update.

My solution uses an Excel spreadsheet with a drop down list of properties. The drop down selection triggers vlookup formulas that auto-populate the property-specific fields with data from the last tab. Since we have duplexes, our data is separated by unit instead of property.

Rental Make Ready Checklist Drop Down

Once you’ve tackled the initial data input, you simply select the rental property (or unit/apartment) in the upper left-hand corner and print the first 2 tabs. Voila!

Tab 1 – Make Ready “Prep” List
I found myself distinguishing between tasks that happen during vs. immediately before a vacancy. The first tab addresses errands that begin a week or two prior: transferring utilities, charging batteries, pulling together supplies, and ordering discounted gift cards.

Rental Make Ready Checklist Clipboard

I also included a section to remember unit-specific projects that had been saved for another day/vacancy. For example, we provide a fire extinguisher in each of our units, but we haven’t bought a set for our newest property yet.

Tab 2 – Make Ready Checklist
My pièce de résistance. Selecting the property (or unit) in the upper left-hand corner will auto-populate:

  • Air filter quantity & size
  • Wall & trim paint color
  • Date of last dryer duct cleaning
  • Quantity of fire detectors
  • Fire extinguisher expiration year
  • Drip pan quantity, size & brand
  • # of bags of mulch needed
  • All window dimensions

This make ready checklist is COMPLETELY over-engineered – but I love it. ❤

Printable Make Ready Checklist for Rentals

My list intentionally excludes cleaning tasks since we hire that out. I also added some blank spaces for vacancy-specific tasks – like damage, prioritized improvements, and infrequent maintenance items.

Using the Make Ready Checklist
During my last vacancy, I printed a fresh copy each evening so I could translate that day’s notes and reminders into tomorrow’s shopping list and to dos.

The final copy is filed with my property-specific paperwork. Now if the refrigerator shelves go missing, I can reference the last checklist and be certain they were accounted for during the previous vacancy.

Feel free to download the make ready checklist template here. The document is partially-locked to help prevent inadvertent formula breaks, but the more adventurous are welcome to unlock it and customize (there’s no password).

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Making New Mistakes

1 Jan

Happy 2015 Everybody!

New Years Eve Party

In honor of New Year’s Day, and new beginnings, I wanted to take a brief moment to share this wildly-appropriate quote from author Neil Gaiman:

“I hope that in this year to come, you make mistakes.

Because if you are making mistakes, then you are making new things, trying new things, learning, living, pushing yourself, changing yourself, changing your world.

You’re doing things you’ve never done before, and more importantly, you’re Doing Something.”

Whether you’re an investor or landlord, aspiring or experienced – may each of you find your own unique and special way to Do Something this year. ♥

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