Read Your Insurance Policy Now: The Roofing Mistake That Can Cost Investors Thousands

Kerry White (00:00)
Check your insurance policy for starters. There’s a lot of new stuff coming out in insurance policies right now that are just changing the game. ⁓ For example, ⁓ policies will convert at a certain age. If the roof gets seven to 10 years old, that policy will convert to a full replacement policy to a cash value policy that depreciates the payout. There’s other policies that

have what they call a RPS, it’s called a roof payment schedule, to where they apply an amortization schedule to the whatever that they would pay to a roof.

Cody Crabb (01:47)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. And today I’m joined by Kerry White. He’s the owner of Americana Roofing out in the Dallas, Fort Worth area. Kerry works with homeowners and investors on roofing, insurance claims, exterior stuff. And we’re going to talk today about how roofing decisions can really have a big impact on your deals. So thanks so much for joining us today, Kerry.

Kerry White (02:09)
Hey, thanks for having me, Cody.

Cody Crabb (02:11)
So in a home, you said we were talking, well let me say that again. We were talking a little bit before and you mentioned that a lot of the work you do is on single family homes. Now, a lot of times in a home, there’s only a handful of things that maybe cost more than an entire roof, is that right?

Kerry White (02:33)
Yeah, there’s not much that’s gonna cost you more than an entire roof. Maybe if you’re doing an addition, if you’ve got some foundation issues or things like that. But yeah, when it comes to home repair, we’re about as expensive as it gets.

Cody Crabb (02:49)
Yeah, so I just want to highlight, wanted to just kind of bring that up to highlight, like, this is a really important thing to ⁓ take note of here. ⁓ So, all right, so If an investor is starting off looking for a property, you deal with commercial stuff, you deal with residential stuff, what are some key things they should be looking for right away when they’re looking at a property for the first time?

Kerry White (03:13)
You know.

Looking at a property for investment can be really tricky when it comes to the roof. There’s so many things, for example, if you walk into a house and the cabinets are broke or the paint is peeling, that sort of thing, okay, I need cabinets, I need paint. But if you aren’t necessarily skilled in looking at roof damage, you may stand back in the driveway and look up and you go, roof looks fine to me. Even for me as a professional, I look at this every single day.

We’ll walk up on the job and go, well, it looks kind of okay. And we get up on the roof and we go, my gosh, this is a mess. And so things like hail damage just can’t be seen from the ground a lot of times. Wind damage, the shingles may be laying there flat, but they’ve been completely pulled loose. You just can’t tell it from the ground a lot of times. Sometimes you just can’t tell the condition of the shingles. they 20 years old and about to fall off or was the roof put on three years ago?

So from the ground, you just don’t know a lot of times. so any time some of the investors that we work for, ⁓ we try our best to get out there as fast as we can. Sometimes we’re able to even get out same day. And we’ll hop up on that roof. We’ll take a quick look at it and go, hey, yes, sir, Mr. Investor, Mrs. Investor, you ⁓ need to plan for this. You’re not talking a full re-roof, but you do need to plan for a couple of thousand

in repairs or you know heaven forbid no this is bad you’re going to need to spend $20,000 here and so the last thing you want to do is buy a flip property and then figure out ⁓ I’ve just lost 20 grand on this

Cody Crabb (04:52)
Yeah.

Yeah, and see that’s the thing is that, ⁓ and it’s also one of those repairs that, I mean, it’s a big deal because it can affect everything else. Like a roof emergency is like an emergency emergency. then like, you know what I mean? So it’s a big, big deal to make sure you get that right.

Kerry White (06:01)
⁓ absolutely. We…

It really is, and it’s also important that you know the quality of the, not just the roofer, but every contractor on your rehab team, you need to know what their true abilities are. We did a repair just yesterday. It ended up being about a four $5,000 repair for the homeowner, and she just had a roofer inspect her roof last year. And he charged her $800 for the inspection and suddenly,

we get a rain last weekend and her master closet ceiling fell out. so, and she’s going, I don’t understand. just inspect, had these guys out here last year. I was like, well, I don’t really want to say too much about them, but here’s what we found. the more we dug into it, the worse it got. And this was a nice home that, you know, in theory had been, had upkeep done on it periodically.

Cody Crabb (07:06)
Yeah, I mean, I think it’s a good call out that like you can do everything right, but man, if that goes wrong, there’s not a whole lot you can do except just cross your fingers that it’s not gonna be too pricey, ⁓ Okay, so another question I had was, so what’s something that looks small that is a huge red flag, can turn into a big problem down the line? So like people see it and they’re maybe like, it’s probably okay, but.

Kerry White (07:16)
Exactly.

So.

Cody Crabb (07:34)
It could be way worse.

Kerry White (07:36)
You know, one of the things that really, you know, we’ve run into a lot of different problems. You know, we’ll see pipe boots that are leaking or we’ll see some flashing that is deteriorated. And really that’s two of the big ones right there that if you don’t take care of them, they’re gonna come back to bite you in the long run. A pipe boot is literally a, you can buy a new pipe boot at Home Depot for $14 and

You can replace that yourself if you’re skilled in it and not afraid to get up on the roof. If you don’t take care of that, you’re going to have a thousand dollar repair easily because now you’re getting the pipe boot is broken or worn out. You’re getting water into the attic. It may not even show up into the interior until it’s already caused mold and wood rot and things like that where you can’t even see it. So it’s a big mess.

Cody Crabb (08:35)
Yeah, that’s a really good call out. Yeah, something that you can do yourself for under 20 bucks. It’s probably worth just taking a look, yeah. So I wanna talk about insurance, because a lot of roofing is tied up in insurance. ⁓ in your market, and well, just in general, I suppose, why is roofing so tied to insurance? There’s this really close relationship there.

Kerry White (08:42)
Right, right, yeah.

you

You know, so obviously any property that you own, you want to have an insured, properly insured. And, you know, I’ll give you an example here in DFW, our insurance rates have gotten really sky high because we have a lot of storms here. And frankly, the insurance companies are tired of losing money in Texas. And so, you know, our rates have gone up, but on the flip side, if you didn’t have that insurance and suddenly we get a big hail storm, you’re

about to spend $10,000, $15,000, $20,000, $30,000 or more to replace that roof when otherwise if you had had a good insurance policy in place, your only cost now is your deductible. you may have a, depends on the state, insurance deductibles vary across the country, but you may have a $1,500, $2,000 deductible. You may have a $5,000 deductible. And that’s a whole lot better when it comes to replacing

roof than having to pony up 15, 20, 25,000 or more.

Cody Crabb (10:07)
Yeah, and especially

from an investment perspective. If you’re living in a house, you can kind of justify, well, it’s my property and I live here. But it’s just money you’re throwing away unless you’re properly insured. So I think that’s a really good call out too.

Kerry White (10:10)
absolutely.

Right,

Exactly.

Cody Crabb (11:02)
So when does it make sense to, ⁓ when would it make sense to deal with ⁓ a claim ⁓ yourself, like without dealing with insurance?

Kerry White (11:14)
So if you didn’t want to get your insurance involved, a lot of times it just comes down to, there’s several things to weigh into that. you know, when we come out to a homeowner’s property and look at damage that they may have, you know, the first thing they say, well, is insurance going to pay for this? I ran an appointment yesterday. They had a wind, they had some wind damage. They lost about four shingles. Well, she said, well, will insurance pay for this? I said, yeah, they will, but it’s not even going to meet your deductible.

And this was a pretty nice property. I didn’t even ask what a deductible is, but I would expect it’s probably $5,000. The repair is going to be less than a thousand. And something like that, it just doesn’t make sense. Sometimes, you know, if it’s like right on the border, like, okay, you got 5,000 in repairs here. You’ve got a $5,000 claim, potentially. Does it make sense to let’s go ahead and get the insurance out here to look at it?

point, sometimes I’m going to lean towards, let’s go ahead and get the insurance because what if they see something that we’re not seeing and they say, okay, let’s go ahead and replace the roof. Well, you get a full roof for your $5,000 deductible or you just make your original repair for $5,000. You’re going to spend the same amount of money.

Cody Crabb (12:33)
Good point, yeah, if you’re nearing your deductible,

definitely I could see that.

Kerry White (12:36)
Exactly. And if

this is a storm damage claim, that’s different than a theft claim or a fire claim, something like that. It’s considered an act of God. You’re not supposed to get your rates increased from filing a claim from an act of God. ⁓

And so it’s not going to be a strike against you on your insurance rates typically. Some people may have a no claims discount, but if you go ahead and get a new roof replaced, you’re probably going to get a new roof discount now, which is going to be a lot more than that no claims discount that you were trying to protect in the first place.

Cody Crabb (13:16)
So ⁓ because you said you work with investors sometimes, ⁓ and what separates the ones that are really on top of things from the ones that maybe struggle a little bit? Like have you noticed a difference in what they do or what their approach is?

Kerry White (13:21)
Yes.

I have a couple of different investors that we do a lot of repeat work for. And I think the thing that probably relates the two of them together or the several of those guys together is they, one, they trust us. They know we’re going to take good care of them. We’re not going to try to scam them. Unfortunately, the roofing industry has so many bad actors in it. And so in my mind,

feel like those guys have developed a good bit of trust in us. ⁓ so they know when we come out and say, this is what needs to happen, then that’s a real world answer for them. And they can take that to the bank and go, OK, here’s my estimate from my contractor. Here’s my, you know, here’s our, here’s our.

our Performa and other information that they can take to their bank or take to their partners, their co-investors, that sort of thing. And they know they can trust that information. And when you’ve got a partner that you can trust, whether it’s your roofer, your foundation guy, your handyman, it speeds things up. And we all know in the investment world, especially if buying, ⁓ if you’re looking to say subprime property,

Speed is key to the whole thing. If you can get in and make your offer today and close next week, that’s going to beat a lot of your competition right there. So yeah, that’s what I’m going to say to a lot of these folks is, make sure you’ve got the guys that are responsive and that you can trust them and know that they’re going to have your best interest at heart.

Cody Crabb (16:00)
Yeah, we’ve talked to contractors a few times and that’s a very common answer that we get is the trust factor. You also get like the, hey, don’t worry about it, we’ll call it even this time, we’ll do one next time. You get that kind of relationship. That’s a really good position to be in for both of you, I think. All right, so we’re kind of winding down here to the last few minutes, just as a last couple things to go over. ⁓

Kerry White (16:07)
Mmm.

Sure, Yeah, absolutely, absolutely.

Cody Crabb (16:28)
A lot of people are concerned that they’re just gonna miss something. They’re gonna, especially on a roof, like I said, it’s one of the biggest things you can buy or fix or upgrade in a house. So I guess my biggest thing is what advice would you have just as a little snippet for someone that is trying to…

Kerry White (16:40)
Yep.

Cody Crabb (16:52)
They’re worried about it. Like, it keeps them up at night. They’re like, how do I know that everything’s okay? What can they check right now to be like, things are mostly fine.

Kerry White (17:02)
⁓ Check your insurance policy for starters. There’s a lot of new stuff coming out in insurance policies right now that are just changing the game. ⁓ For example, ⁓ policies will convert at a certain age. If the roof gets seven to 10 years old, that policy will convert to a full replacement policy to a cash value policy that depreciates the payout. There’s other policies that

have what they call a RPS, it’s called a roof payment schedule, to where they apply an amortization schedule to the whatever that they would pay to a roof.

And there’s other policies that were starting to exclude cosmetic damages. These are things that didn’t exist. A lot of these didn’t exist in policies even five years ago. read through your policy, read through your declarations, make sure you understand it. ⁓

Get your agent on the phone and go hey, tell me what this means in real world and then you know and then specific to the roof Shoot it over to your contractor to your roofing contractor if he’s if he’s skilled in doing insurance work like we are Shoot it over to him and go hey, what what does this mean in dollars and cents to me? What’s going to happen if we have a problem here and? Things like that can save you save you big we had a we had a customer last summer that had a policy

that he didn’t understand. And when a hailstorm came, he thought he was covered and it ended up costing him an extra $20,000 out of his pocket because he had a policy that didn’t give him the coverage that he thought he had. So that’s hard to stomach when that comes along.

Cody Crabb (18:51)
Yeah, so even just a quick review could save you so much trouble down the line. Yeah. ⁓

Kerry White (18:54)
Yeah, Exactly. And you

you paid for that insurance for the peace of mind. So yeah, don’t let it keep you up at night. Make sure you understand it.

Cody Crabb (19:04)
Yeah, that’s a really good tip. Yeah, it seems simple, but how many people can really define every little thing that’s in the policy? That’s a really good point. So investors listening to this, ⁓ who’s the ideal person that ⁓ is the best fit ⁓ to work with Americana Roofing? mean, obviously, somewhat in the DFW area, but on top of that.

Kerry White (19:11)
Exactly,

Sure, sure. we do, I mentioned we do lot of work for investors. ⁓ Some of our investors are geared more towards flips. And when we come in work with those guys, it’s usually, hey, let’s make some quick repairs, put a bow on it and let’s get in and out. For the guys that are holding properties, maybe have a portfolio, ⁓ we work great with them. We even have a program, we call it our overhead care club.

to where we’ll come out. I think it’s a minimal monthly fee and we come out and do an annual checkup. We’ll do gutter cleaning. We’ll do scheduled maintenance like that and things like that work out great for the portfolio holders as well. And so it gives them not just a one-off time of getting the roof checked, but now they’ve got a plan in place to make sure that

it’s going to be in good condition for the long run.

Cody Crabb (20:33)
Kerry, this has been really practical. think investors understanding that roofing is one of those things that can just look fine at first and just still cost you a lot of money if you miss it is a huge deal. so think teaching them to treat it seriously, I think is a huge deal and I really appreciate your input here. If people wanna get in touch ⁓ or learn more about Americana Roofing, where can they find you online?

Kerry White (20:39)
Absolutely.

So our web address is americanaroofing.net. And if you search Americana Roofing on Facebook, that should pop you up to us as well.

Cody Crabb (21:06)
Fantastic, okay, well, yeah, you’re the kind of person that’s an over-warrier, I would probably put myself in that.

in that category. This is probably a good, get up that insurance policy, know, do some of these things that, that Kerry suggested here. think you’ll feel, sleep a little better at night. Thanks again for joining us, Kerry I think this is helpful. ⁓ and thank you to all you listeners that, that checked out this episode today. If you got anything out of this, and I’m sure you did, please go ahead and follow us, ⁓ on YouTube, subscribe to the channel and we’ll see you next time on the real estate pros podcast.