Real Estate Insurance Mistakes That Can Destroy Investors (What Most Get Wrong)

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Show Summary

In this episode of the Real Estate Pros podcast, host Michelle Kesil speaks with MJ Martinez, an insurance broker specializing in serving families and real estate investors in Utah. They discuss the chaotic insurance market, MJ’s journey into the industry, the specific needs of real estate investors, common challenges faced, and misconceptions about insurance. MJ emphasizes the importance of transparency, understanding clients’ needs, and the evolving landscape of the insurance industry post-COVID.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • MJ Martinez Insurance Agency Website
    • MJ Martinez Insurance Agency Instagram
    • MJ Martinez on Facebook
    • MJ Martinez on LinkedIn
    • MJ Martinez’s Phone Number: (801) 540-2406

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  MJ Martinez (00:00)
  Yes, I mean liability is a huge factor right now. I I’ve seen cases where a homeowner hire a contractor, a plumber, and the plumber asks to borrow the ladder. The homeowner lets the carpenter borrow the ladder. The carpenter falls off the ladder.

  And now the homeowner has a liability claim and a medical claim, even though they let the individual borrow the ladder. So, I mean, I could go on and off about different claims scenarios. The key is to make sure that your agent really understands your situation. So my job, it’s not to find you the cheapest policy. My job is to make sure

  that I understand your entire picture, what I’m protecting, so that you don’t have to go make your money twice. Because one claim can seriously alter your financial situation.

  Michelle Kesil (02:39)
  Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, MJ Martinez, who owns an insurance brokerage in the Utah area. So excited to have you here today, MJ.

  MJ Martinez (02:57)
  Thank you, I’m very excited too.

  Michelle Kesil (03:00)
  Absolutely. I think our listeners are really going to take something away from how you’re supporting people and investors through all of the chaotic insurance market.

  MJ Martinez (03:12)
  Yep, it sure is chaotic right now.

  Michelle Kesil (03:15)
  Yeah,

  so let’s dive in. Just first off for those who are not familiar with your world, can you share what your main focus is?

  MJ Martinez (03:19)
  Absolutely.

  Absolutely. My main focus are families. And it’s a good mix of families who own businesses and families who haven’t really taken up a entrepreneurial journey. But they still need lots of protection. So we specialize in all things insurance, auto insurance, home, business, life, health insurance.

  Michelle Kesil (03:53)
  Awesome. And you’re in the Utah area.

  MJ Martinez (03:57)
  That’s correct. So we service the entire state of Utah and Idaho.

  Michelle Kesil (04:02)
  Cool. So what got you started in this role?

  MJ Martinez (04:08)
  So my story, it’s very dearing to me and I guess we all kind of own our own stories, right? And they become our identity. So I started in the banking industry and I was having a lot of success and this was in the early 2000s and I was also getting ready to graduate from college. And I loved the ability of having built a…

  portfolio of clients and at the time I was advising clients and a little bit of securities because I was security licensed and also banking products but I did not like the fact that I would lose contact with the clients because if there was a need for me to be transferred to a different location then I would lose contact with the clients so I had a good friend

  who was also a client who decided to open up a farmers agency and he told me what it entailed. And so I started doing some research. I was graduating from college with my econ degree and I knew I wanted to own my own business and I wanted to figure out a way to build a portfolio of clients where I could continue to advise clients and something that’s so critical, right? Insurance is boring.

  but it’s also so critical because it could be life changing. ⁓ so I started by opening up a state farm agency ⁓ in 2012. And I did that for about seven years and decided to pursue my dream of opening up a brokerage. So what I mean by a brokerage is that with State Farm, I was only a captive agent, meaning I was only able to sell for one company.

  And as a broker, I’m able to sell for several different companies. So I contract out to more than 80 different companies, which allows me to be able to do some shopping and have more access to appetite and be able to ensure different risk. So that’s my story in a nutshell.

  Michelle Kesil (07:14)
  Awesome. So a lot of the listeners here are real estate investors. How do you particularly serve this market?

  MJ Martinez (07:19)
  Yes.

  So I have been involved with several local organizations and I will name them now. I started by sitting on the board of directors for the National Association of Hispanic Real Estate Professionals known as NAREP and they’re a national organization. So I served on the board for the Salix City chapter and I was able to connect with a lot of

  individuals involved in real estate, whether that’s agents or lenders, title or investors. But more primarily, what I’ve enjoyed a lot, which gave me the fullest exposure to the investor market was the Salt Lake City Real Estate Investor Association. So SLURIA, I’ve also sat on their board and this group

  these chapters are pretty much 90 to 95 % made up of investors. So we’re talking about individuals who are flipping homes, multi-family, ⁓ buy and hold, you name it, all the different creative financing options out there as well. So I helped a lot of them. Yeah.

  Michelle Kesil (08:39)
  God

  and like are you what policy specifically do you support them with?

  MJ Martinez (08:48)
  Yes, so I support them with their investing ventures. So a really hot one lately is flips vacant homes and those vacant homes can be a little tricky because we have to make sure that they’re classified vacant. Otherwise, you know, if you run into a scenario where the the home was not classified as a vacant property with active renovations, if you have a claim, that claim will be denied.

  So that’s my primary, I’m their primary go-to person for FLPS and also some, lots of rental properties, lots of commercial, multi-family hotels, apartment buildings. And then of course, once you, once I’ve established that level of trust and I’m able to transition them into advising their insurance needs for their personal.

  Auto home, life, umbrella.

  Michelle Kesil (10:23)
  Awesome. What are some common challenges you see that your clients face that you support them with?

  MJ Martinez (10:28)
  So lately, specifically with homes flips, I’m going to name three challenges that are the most critical in my opinion, because I really could name a long list of challenges. But I’m going to start with premium. Premiums are unpredictable. And there’s so many rating factors that take into account how that insurance premium is going to lay up.

  once we process a quote. Another challenge is homes being insured.

  with the incorrect intent. So if I have a flip home, but it was written as a tenant policy, so that’s incorrect and that’s a huge liability for clients. And then the third challenge will be age of these homes. So the older homes are becoming very, very hard to ensure. Roofs, they…

  Companies are now looking at roofing age, plumbing, electrical, when those renovations have taken place, whether homes are in historical registry. So that has been a big challenge ensuring those older homes.

  Michelle Kesil (11:44)
  Yeah, definitely that makes sense.

  What are some of the main keys you feel have made the biggest difference in allowing your business to grow and run smoothly?

  MJ Martinez (11:55)
  That transparency has been a big, has made a big difference and my ability to tell stories, right? So let me tell you about a time a client went through the situation with their home insurance. And my job is to make sure that you don’t have a life altering situation like my client, for example. And so that that’s what’s

  I feel like that’s what stands me apart from other agents and that’s created a lot of success. It’s my ability, my knowledge level and my desire to continue to learn and understand how policies are ever changing and my relationships as well with underwriters. So I have a really good relationship with underwriters. I have key people that I can turn to for whether it’s advice or strategy.

  we have if we recognize a certain risk so for example I have a client that recently bought a home and they are so it’s a single-family home but and it’s a young couple and they are living downstairs in the basement and they are renting the upstairs well none of that was disclosed at the time that we wrote the policy so we wrote the policy as a homeowners policy and it was not this close

  that they were using it as a rental as well. And now certain companies are going out to the homes to inspect them, right? To inspect the roof. How does the roof look? How does the outside of the home look? Are the bushes too close to the home or windows, et cetera? So my underwriters came back and said, we knocked on the door and someone answered and said that they’re actually a tenant.

  So what is happening? This home was written incorrectly. So it took a phone call to the client, explained to them the situation and the client admitted, yes, we are renting the upstairs and my wife and I live downstairs, which is totally normal. so it just took some clarification and ⁓ more explaining as to, it’s important that we rate it correctly because if your tenant initiated a fire and we

  don’t know that there’s a tenant in your home, the claim will be declined. So just situations like that where like we needed to add extra liability to the policy, ⁓ which was only a $13 difference for the year, by the way. So just knowing the way policies work, my level of knowledge and transparency and open communication with clients, it’s really what spiraled my growth.

  Michelle Kesil (15:27)
  Yeah, absolutely. Those are some powerful pillars to focus on.

  MJ Martinez (15:32)
  Yes, I agree.

  Michelle Kesil (15:33)
  Yeah. What are you most focused on solving or scaling to next in your business?

  MJ Martinez (15:39)
  So I am focusing on growing my team, bringing more hands on. So I, as the agent and the owner of the agency, can continue to do the things that I enjoy the most, which is meeting with clients face to face. I don’t have the capacity. I’m almost at my limit where I meet with clients and I don’t have the ability of coming back and still working on their policies. So I need more office support. So that’s my next big goal. I mean, I have a pretty good team now.

  And we operate very solid, but I have a big focus of continuing to grow and give back, continue to give back to the community through education on insurance, which I’ve had a lot of success lately, getting out there and educating my investors on these are the things you gotta watch out for, because.

  The insurance industry has changed drastically and if your policy is not set up correctly, you’re going to have a life-altering claim.

  Michelle Kesil (16:45)
  Yeah, that’s so important. What are some like misconceptions that you find some of your investors have that you support them with understanding better?

  MJ Martinez (16:47)
  Yes.

  Yes, so a common misconception is really coming out of that post-COVID rating industry where I could go buy a I could go pick up a $500,000 home and expect my insurance payment to be $50 a month. So a CSIN investor does know that

  a home in the $500,000 range, could calculate insurance, $50 a month. so really coming out of that, no, insurance has changed drastically. I mean, we can also take into account inflation. We can also take into account rate increases. Now, a $50 a month vacant policy, it’s unheard of. So that’s a common misconception or another common misconception.

  is homes under LLCs or corporations.

  clients assuming that because they’re their own entity, they’re at zero liability risk, from exposing their other assets. So, I mean, I’m not an attorney, I’m not a CPA, so I’m not giving legal advice, but it is a misconception as well. it’s all kind of like a fair game or, another misconception is

  I have an umbrella, so I’m fully protected. So no, the answer is no. Like you have to have the umbrella set up correctly. We have to make sure we get to know the entire picture. I mean, I would love to have a client that just gives me here, I’m flipping a home. Can you please ensure it? Okay. But for I’m not, it’s, I’m not doing my due diligence if I don’t get to know the entire picture of your situation, because you could be held liable for certain different scenarios, that it could bleed.

  and to other areas of your personal life and assets and put your assets at risk.

  Michelle Kesil (19:03)
  Yeah, definitely. That is really helpful information.

  MJ Martinez (19:07)
  Okay, good to know.

  Michelle Kesil (19:10)
  Yeah, I’m sure people would

  be glad to know that.

  MJ Martinez (19:16)
  Yes, I mean liability is a huge factor right now. I I’ve seen cases where a homeowner hire a contractor, a plumber, and the plumber asks to borrow the ladder. The homeowner lets the carpenter borrow the ladder. The carpenter falls off the ladder.

  And now the homeowner has a liability claim and a medical claim, even though they let the individual borrow the ladder. So, I mean, I could go on and off about different claims scenarios. The key is to make sure that your agent really understands your situation. So my job, it’s not to find you the cheapest policy. My job is to make sure

  that I understand your entire picture, what I’m protecting, so that you don’t have to go make your money twice. Because one claim can seriously alter your financial situation.

  I think that I hope that helps.

  Michelle Kesil (20:28)
  Yeah,

  definitely amazing. What are some of the ways that the industry is shifting for investors?

  MJ Martinez (20:40)
  Again, I will say that the biggest thing has been appetite and carrier availability. Some carriers are pulling out of the market. Not all carriers are ensuring flips. Now homes are, in my opinion, every policy being submitted is being scrutinized.

  They will look at the details of your home. They will inspect your home. Whether that’s by information available online through Google lenses or drones or a physical inspection of your home. Most of these inspections are happening on the outside of the homes. Some inspections do are

  on the inside of homes but that is like the biggest situation that’s changed with insurance is carriers, premiums, and scrutiny of these properties.

  Michelle Kesil (21:47)
  Yeah, definitely that makes sense. Thank you so much for sharing.

  MJ Martinez (21:51)
  You’re welcome.

  Michelle Kesil (21:52)
  So before we wrap up here, if somebody wants to reach out, connect, learn more, where can people find you and connect with you?

  MJ Martinez (22:01)
  Yes, I am in social media. My Instagram is MJ Insurance and I can also be reached by phone at 801-540-2406. On social ⁓ media, on Instagram under MJ Insurance, you can find links to my website. You can message me directly on Instagram. You can find

  links to request a quote where it allows you to put all the information yourself or a lot of people send me a text with their information pretty accessible and I’m also on Facebook under MJ Martinez. I don’t have a business page for Facebook

  Michelle Kesil (22:42)
  Perfect. I appreciate your time, your story, your perspective. Thanks for being here.

  MJ Martinez (22:46)
  Thank you.

  Thank you so much for the time. All right.

  Michelle Kesil (22:51)
  Of course.

  Yeah. And for the listeners tuning in, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators who are building real businesses and we’ll see you on our next episode.