430: My Rental Burned Down! What I Wish I Knew Before It Happened w/Aaron Sallade

Real Estate Rookie

BiggerPockets

How To, Education, Business, Investing, Entrepreneurship

4.8 • 1.7K Ratings

🗓️ 10 July 2024

⏱️ 40 minutes

🔗️ Recording | iTunes | RSS

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Summary

You get a call one day from the fire department, telling you, “You’ve had a house fire that’s destroyed your rental property.” What do you do first? Check on the tenants, call the insurance company, or start thinking of ways to financially recover? Your tenant has lost all their belongings; you’ve lost an investment you worked hard to acquire. If everyone is safe, what’s the next step you should take? Or, a more important question: what would you have wished you knew BEFORE this happened? If you think the elite investors at BiggerPockets are immune to these tragedies, you’re wrong. BiggerPockets CFO Aaron Sallade was in this exact position earlier this year when he got a phone call no one wants to receive. His property was destroyed, but thankfully, his tenant walked away unscathed. He now needed to go through the next steps: submitting insurance claims, getting restoration quotes, and, if he chose to do so, selling the property. Aaron shares the entire timeline from the rental burning down to reaching out to insurance, getting restoration quotes, and eventually deciding what to do with the property. He even dives into what he wishes he had known BEFORE this tragic event, and not hearing his advice could cost you! In This Episode We Cover What to do when a tenant accidentally burns down your rental property Why you MUST require renters insurance on every property in your portfolio Filing rental property insurance claims and how long it’ll take to get paid for the damages Rebuilding vs. selling and whether it’s worth the time to renovate a burnt-down home The rarely discussed “1033 exchange” that can help you during a tragic event like a house fire The two things you NEED before you can get reimbursed from your insurance company And So Much More! (00:00) Intro (01:05) First Rental Property Numbers (03:55) "Your House Was Destroyed" (06:49) Getting the Tenant Settled (09:10) Working with Insurance (13:15) Restoration Timeline and Insurance Payout (14:47) What to Know BEFORE This Happens (18:53) Rebuild or Sell? (22:52) Other Options to Sell (26:46) Final Numbers On the Rental (28:32) Insurance Rate Changes (30:50) Worst Case Scenario Resolved! Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/rookie-430 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is real estate rookie episode 430.
0:05.0	My name is Ashley Kerr.
0:07.2	What would happen if your investment property burned down?
0:12.4	Welcome to the real estate Rookie Podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to kick start your investing journey.
0:22.0	In real estate, sometimes you have to turn a
0:24.6	worst case scenario into a best case scenario even if you did everything right.
0:29.9	Our guests had to do just that in March of this year he lost his first rookie deal in a fire
0:37.6	We are bringing him on the show to discuss what is the insurance process like for dealing with a fire?
0:44.3	Does it make sense to keep the property or to sell the house?
0:48.6	And why it's always important to read the fine print.
0:53.4	So Aaron Saladay, welcome to the show
0:56.8	and we are bringing Aaron here as Bigger Pocket's very own
1:00.2	CFO.
1:01.0	So Aaron, welcome to the show. Thank you you Ashley. It's a pleasure to be here. So let's start off with how you
1:07.2	acquired this property and when did you acquire it? Sure. So it was my first real estate transaction actually acquired it my, or while I was in college.
1:17.6	So my freshman year of college, I was also in the National Guard, 9-11 happened and I was attached to a Special Forces unit. I was deployed for almost a year to Afghanistan. Upon coming back from deployment, one nice thing about being deployed is you really don't have, you know,
1:35.2	expenses, most of your expenses are covered. So I was able to save up quite a bit during that deployment,
1:40.4	came back and said, well, you know know where should I invest and real estate
1:44.8	seemed like a logical practical investment to make versus paying rent so at that
1:50.6	point in time came back talked to a realtor at that point in time came back, talked to a realtor.
1:54.0	At that point in time, I think that was before Zillow even existed,
1:58.0	so they would send me emails of listings.
	...

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