Protecting the growth of your portfolio

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hey everyone and welcome back to the

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profitable rental podcast by landlord

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Studio where we explore the six building

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blocks of real estate profitability and

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this is all about helping you to

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maximize and grow your rental portfolio

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I'm Logan ransley again the co-founder

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of landlord Studio we're a property

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management and accounting software

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designed for small to mediumsized

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landlords who are growing their rental

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portfolio and want to start to automate

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a lot of the day-to-day job jobs

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including the accounting aspect and

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management side of the

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[Music]

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business in today's episode we want to

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explore the importance of insurance or

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landlord Insurance particularly when it

0:56

comes to scaling your portfolio and what

0:59

investors uh need to know about landlord

1:02

insurance and uh in order to ensure that

1:04

their portfolio is protected against

1:06

unforeseen circumstances and all those

1:09

possibilities that might come up and to

1:11

help us dive into this topic today uh

1:14

we've got a special guest called Max Max

1:16

McClure from stadle Max is uh Chief

1:19

underwriting officer at steadley uh an

1:21

insurance company uh that has

1:23

successfully disrupted the insurance

1:26

industry uh over the last few years

1:28

particularly in the landlord space

1:30

welcome Max how's it going yeah thanks

1:32

Logan for for inviting me hello everyone

1:34

look forward to the Lively discussion on

1:36

insurance not your typical uh you know

1:39

conversation you want to have early in

1:41

the morning but hopefully everybody's

1:41

got their coffee and is ready to go love

1:43

to start off just before we sort of kick

1:45

into the uh podcast episode uh I always

1:48

ask my uh guests on this podcast their

1:51

favorite quote and it sort of just helps

1:54

to set the scene about who you are and

1:56

what what's important to you but what's

1:57

your favorite quote and why my my

2:00

favorite quote is from a Charles Dickens

2:03

novel and it is have a heart that never

2:06

hardens a temper that never tires and a

2:09

touch that never hurts and what I really

2:11

like about that quote is you can apply

2:14

it to many different aspects of your

2:15

life whether it's you know leadership

2:17

whether it's as a husband as a father as

2:19

a son as a friend I think that that

2:21

quote is a really good guide to a lot of

2:24

different aspects of life I like it

2:26

Charles Dickens good author love to sort

2:28

of dive into

2:30

steadily a little bit before we kind of

2:32

start um obviously mentioned that

2:34

steadily is an insurance company sort of

2:37

disrupting the insurance space but give

2:39

us a 30 second Pitch or a bit of an

2:42

overview of who steadly is and and what

2:45

you what your team does and why it's

2:47

important especially for landlords that

2:49

are growing their their rental portfolio

2:51

sure so steadly is focused exclusively

2:54

on insurance for landlords and rental

2:55

property owners the industry has largely

2:58

been stagnant for the past past 30 to 40

3:00

years and it is in desperate need of

3:03

more speed automation ease of use all of

3:06

the founders of steadly were landlords

3:09

before founding it and saw the Gap in

3:11

the market they had seen how the

3:13

industry had made a lot of progress on

3:16

auto and on homeowners and saw the need

3:18

for that to extend into rental

3:20

properties and so that's what we're

3:21

focused on we're focused on being the

3:23

best direct direct landlord insurance

3:25

provider in the world nice I see you've

3:27

done a recent raise as well and uh

3:30

scaling the team up and congratulations

3:33

on that sounds like a lot of stuff is

3:34

going really well for you guys and and

3:36

it's exciting to see sort of the space

3:39

being disrupted and streamlined

3:41

particularly for you know maybe

3:44

landlords that have had bad experiences

3:46

with insurance companies before so

3:47

that's awesome sort of want to dive in

3:50

or start to dive into uh ste's role and

3:53

how you sort of approach the space I

3:56

guess I have a question around the sort

3:57

of technology or the process that

4:00

typically uh take landlords through in

4:02

comparison to say uh other sort of

4:05

insurance providers and and this role

4:08

that steadily sort of played with

4:10

partnering with tech companies like

4:12

landlord Studio Etc love to sort of hear

4:15

your view on how sort of leveraging

4:18

technology is helped sort of provide a

4:20

really customized and you know

4:22

personalized experience uh to sort of

4:24

secure the best deals for landlords how

4:27

how does that work and how has it been

4:28

really important part of of Ste Le's

4:31

growth and and business model great

4:32

question so I'll start with explaining

4:34

what my role is at steadly so I'm the as

4:36

you mentioned the chief underwriting

4:37

officer which is a big fancy term for

4:39

being keep steadily profitable and so my

4:42

job is to make sure that we're selecting

4:44

the right risks the right homes and

4:46

we're pricing them correctly and the

4:49

great thing about a technology company

4:51

like steadly who leads the technology it

4:54

not only leads to a great customer

4:56

experience but it also leads to a lot

4:58

better price segment mation and so what

5:01

price segmentation means is that we're

5:03

able to customize the price of our

5:05

insurance to a much more granular degree

5:08

than the kind of incumbents the people

5:09

that have been in the space for a long

5:11

time and the reason that we're able to

5:12

do that is because of the technology we

5:15

have a caliber of engineering talent

5:17

that we have in housee and effectively

5:21

what we're able to do is we're able to

5:22

price Stu better to give our customers

5:24

the lowest price possible and so how

5:26

that plays out in real life is we have

5:28

all these different partnership ship

5:29

with property management companies

5:31

systems um all these vendors that

5:34

traditional insurance companies would

5:35

probably struggle to integrate with from

5:37

a technology perspective but we're not

5:39

only able to bring that into our own

5:40

systems but we're able to price on it

5:42

too so that is a huge differentiator for

5:45

us and it has led to our you know a very

5:49

competitively priced product that's

5:50

helped us like you mentioned finish

5:52

raising our series B in the last couple

5:53

months so we're very proud of that and

5:55

the price segmentation is a huge piece

5:57

amazing and

6:00

how does ste's approach sort of differ

6:03

from current industry players like

6:05

what's the sort of experience that a

6:07

landlord could experience as they're

6:09

going through this process to get

6:11

landlord insurance from steadley how

6:13

does it sort of compare against what

6:15

they're typically familiar with or would

6:18

usually go down we are obsessed with the

6:21

idea of exceptionally fast White Glove

6:24

treatment when you're coming to buy

6:26

insurance from stle when you compare

6:30

getting a quote from steadily in two

6:31

minutes or less to the companies that

6:33

have been in this space for decades it

6:35

can literally take days and even some

6:37

cases if you've got multiple rental

6:39

properties weeks to get quotes and in

6:41

both of those scenarios it's steadily

6:42

you're talking about minuts and you have

6:44

heal immediately available if you need

6:46

it to walk through your quots and

6:48

discuss coverages and that is the the

6:50

principal differentiator for us and sort

6:53

of to divert slightly when landlords are

6:57

thinking about insurance more thinking

6:59

of about as their portfolio grows how

7:02

important is it to start to Encompass

7:05

landlord Insurance into their portfolio

7:07

like what are some of the benefits and

7:09

why are they very important to consider

7:11

when you're either maintaining or

7:14

streamlining your current portfolio or

7:17

sort of looking at the future to grow

7:19

your portfolio over time yeah I mean I

7:21

think you know all Real Estate Investors

7:22

know that that insurance is going to be

7:24

an expense when they're looking at

7:26

whether or not to invest in oural

7:27

property or not and all inv s are used

7:29

to saying like what is our you know how

7:31

risky is this purchase of this Ral

7:33

property like that's a general question

7:34

that every real estate investor is going

7:35

to ask themselves you have to have a

7:37

similar conversation with yourself on

7:39

insurance it's how how good of insurance

7:42

do I want to buy like how much how much

7:44

how high of a deductible do I want to

7:45

have it'll save my money but I may be

7:47

out that out of pocket if an event

7:49

happens like a hail storm or a fire

7:51

whatever it is so you have to ask

7:53

yourself what is your risk tolerance for

7:55

insurance once you decide on that you'll

7:58

generally speaking be able to get get a

7:59

range of what it's going to cost you

8:01

know I think that most of that's going

8:03

to be pretty intuitive to to most

8:04

investors what's less intuitive is

8:06

really where the industry is headed and

8:08

so we are in I'll get i'll nerd out on

8:11

you for a second so forgive me we're in

8:13

what's called A Hard Insurance Market

8:15

which means that premiums are kind of

8:16

rising across the board so if you have

8:19

you know if you've been looking at a

8:20

rental property or rental properties

8:21

over the last few months you've priced

8:22

out insurance we are in an environment

8:24

where rates are increasing pretty

8:26

rapidly and it doesn't really matter

8:28

where you are it's more exact mated like

8:30

in California or Florida Texas if you're

8:32

looking at those areas but generally

8:34

speaking the market is moving up so it

8:36

probably needs to be you know if I was a

8:39

real estate investor and actively

8:40

looking for something I would be

8:41

factoring in um those rates going up

8:44

probably 30 to 40% over the next couple

8:46

years yeah and I think this sort of goes

8:49

into the whole economic sort of shift

8:52

and particularly around U mortgage rates

8:54

and and interest rates going up which

8:56

sort of leads me into a question around

8:59

how how does Insurance play like what

9:01

sort of role does Insurance play when

9:04

comes to mortgages and how does it

9:06

affect the relationship between you know

9:08

the investors and those Real Estate

9:10

Investors Etc how does that whole sort

9:13

of insurance piece fit into that process

9:15

itself generally speaking if you're

9:17

going to have a loan it your mortgage

9:19

compan is going to require you to have

9:20

insurance and they're not only going to

9:22

require you to have insurance they're

9:23

going to require you to have a certain

9:25

amount of insurance with a reputable

9:28

financially stable insurance company so

9:30

they your mortgage companies will verify

9:32

okay are you are you did you buy

9:34

insurance from somebody who has an

9:36

acceptable Financial stability rating or

9:38

is this some insurance company that you

9:40

know could go and bankrupt in you know a

9:43

year so they do their diligence doe

9:45

diligence in the back and you

9:46

unfortunately steadily we are very very

9:48

financially stable we have never run

9:50

into an issue with ratings but that is

9:51

something that you have to consider when

9:52

you're buying insurance if you have a

9:54

too good to be true quote on insurance

9:56

that sometimes is a red flag that you

9:58

may want to dig a little bit deer does

9:59

it impact the type of entity structure

10:02

that you're in say you're in an LLC or

10:04

you've got your properties owned uh

10:07

individually es Corps Etc doesn't

10:09

doesn't matter what sort of insurance or

10:12

the choice of insurance and and how it

10:14

covers those different entity structures

10:16

is what's that process sort of look like

10:18

so I think the the long and short of

10:20

that is it's it's complicated so it

10:22

depends on what's going on inside that

10:24

business entity so if you've got an LLC

10:26

or a corporation and maybe it

10:28

exclusively is what you the vehicle you

10:30

use to invest in rental properties

10:32

generally that's going to be very

10:33

straightforward if you're using a

10:35

business entity to own your rental

10:37

properties and it also I don't know is a

10:39

computer drop ship business where you're

10:41

sending computers all over the country

10:42

like there there can be an issue there

10:44

where you need to make sure that you've

10:45

got all the right coverages in place the

10:47

landlord insurance is not there to

10:49

ensure your business or the other

10:50

operations of this entity that you

10:52

formed um so you really want to make

10:54

sure that you've got all those coverage

10:55

gaps youve discussed all those coverage

10:57

gaps with an expert because they're if

10:59

there's a lot of different operations

11:00

under that entity then you may need to

11:02

buy other types of insurance too and

11:04

we've heard a lot about umbrella

11:05

policies Etc and sort of how they weave

11:09

its way into the into those different

11:10

entities and I guess for the listeners

11:13

when they when they hear this term

11:15

umbrella policy and how does that sort

11:17

of apply to their their real estate

11:19

business or portfolio obviously I'm I'm

11:21

an insurance nerd but I am a huge

11:23

proponent of umbrella policies I'll tell

11:25

you a story that'll that'll emphasize

11:28

why why I have a I have a friend of mine

11:30

who owns some rental properties and he

11:34

called me one day and was like hey Max I

11:36

drove up to my rental property on I

11:39

think it was New Year's Eve and he saw

11:41

his tenants I don't remember why he was

11:43

there but he saw his tenants shooting

11:45

Roman candles onto his neighbor's roof

11:48

you don't know what Roman candles are

11:49

they're fireworks and like and he was

11:51

like what would happen if they had you

11:54

know caught that house on fire and it

11:56

burned down and I was like well I I

11:58

don't know what would have happened

11:59

happen but it wouldn't have been good

12:00

and he was like can you look at my

12:01

insurance and I was like sure and he

12:03

sent it all to me and I was like you

12:05

need an umbrella policy and he bought it

12:06

that day so there that's just like one

12:08

relevant example that I come across

12:10

where you should have it but I mean

12:12

umbrella policies are not expensive and

12:14

they give you a ton of Extra Protection

12:16

so if you're if you're a real estate

12:18

investor and you've been on the fence

12:19

about buying one I mean it's honestly a

12:21

no-brainer they're not that expensive

12:22

they give you a lot of extra liability

12:24

so to get in depth a little bit more if

12:26

you've got let's just say 300,000 500

12:28

,000 a million dollars of liability

12:31

limits on your rental properties what an

12:33

umbrella policy does is whatever limit

12:36

you purchase that sits on top of the

12:38

liability that you've already purchased

12:40

and so it protects you to a greater

12:42

degree from any sort of like Severance

12:45

in a second half and you're really

12:46

trying to you're trying to ensure away

12:48

severe catastrophic I guess it's similar

12:50

to sort of public liability insurance in

12:52

a company um obviously in this case it's

12:55

related to rental properties just sort

12:57

of diving a little bit deeper into I

13:00

guess Insurance particularly for Real

13:02

Estate there's a lot of different types

13:04

of insurances whether they're you know

13:06

tenant Insurance home insurance rental

13:09

insurance landlord Insurance in the case

13:11

or the context of steadily what should

13:13

they be considering when it comes to

13:15

choosing the right policy for their

13:17

house or their rental property

13:18

specifically I'll just do a quick

13:20

summary of the basics of those three

13:22

types of insurance you just mentioned

13:23

then I'll get into some nuances so

13:25

homeowners insurance intuitively is to

13:27

Ure your house and your personal

13:30

liability so whatever not only what you

13:32

do at your house but even what you do

13:34

elsewhere not necessarily in your car

13:36

that's Insurance that's car insurance

13:38

but it will insure you for certain

13:40

things that you do off of your home um

13:42

which is really important protection

13:44

landlord insurance which is what

13:46

steadily focuses on tends to be more

13:48

liability just for what happens on that

13:50

premises so if somebody slips and Falls

13:52

if there's a dog bite you know those are

13:54

the kind of things that that a landlord

13:57

policy will typically cover um rental

13:59

property insurance is more for just a

14:01

tenant so whatever stuff the tenant has

14:03

inside a home it'll there's typically

14:06

personal property coverage to cover

14:07

those objects inside the home and then

14:09

it'll pro it'll provide liability

14:11

coverage for the tenant and so studly

14:13

focuses on the landlord rental property

14:15

insurance but we also have a specific

14:19

product If a

14:21

landlord occupies part of a home a

14:24

dwelling so if you've got so if you're a

14:26

landlord you live in one unit of a

14:28

Triplex and you rent out the other two

14:30

steadily has a specific product where it

14:33

will combine the elements of the home

14:35

the homeowners insurance with the

14:37

landlord insurance so you kind of get

14:39

the both the protections you need which

14:41

is actually pretty rare in the market so

14:42

if any of your you know customers have

14:45

that have that dynamic they should

14:46

definitely reach out to steadly because

14:47

it's pretty unique just kind of going

14:48

back to that original question that I

14:50

sort of had and and how steadily is sort

14:52

of disrupting this insurance space as a

14:54

sort of final question about where the

14:57

industry is going

14:59

generally what are some of the trends

15:01

and innovations that you've seen or will

15:03

expect to see uh in the field of

15:06

landlord insurance that might be coming

15:08

over the next years or what are some

15:09

exciting sort of upcoming things that

15:12

steadly is working on yeah so once the

15:14

exciting thing about steadily is yes we

15:15

are very focused on landlord insurance

15:19

but once you're actually in this space

15:21

there are so many subcategories of

15:24

customers that today the solutions that

15:27

are available to them really aren't that

15:30

great they're kind of like we the the

15:32

the industry is saying there's one type

15:34

of landlord but we all know that's not

15:36

the case um so some of the more nuanced

15:39

work we're we're working on now is

15:42

around I'll give you an example adus

15:43

additional dwelling units and so there's

15:45

just like new thing that's going on in a

15:47

lot of urban areas where a a single lot

15:50

is basically being divided to where

15:53

there's multiple dwellings built on that

15:56

and they even there's also Solutions

15:59

where that there's a condo association

16:00

that's created to kind of facilitate

16:02

this legally um and so steadily we're

16:04

working on actively working on this now

16:06

to where we can we have a custom product

16:08

for those types of adus so there can be

16:10

you can have a landlord who owns one of

16:13

those units on this parcel and there

16:14

could be three 10 others that are owned

16:16

by other people and in practice on

16:19

insurance it gets kind of tricky on how

16:20

we protect the interest of our insured

16:22

and but we're working on that now so if

16:24

we have any customers that are you know

16:25

in that situation we have a product

16:27

that's coming out to where can people

16:28

find out more about steadily where uh

16:30

where should they go where where can

16:32

they learn about this product that you

16:34

that you're offering yeah steadly

16:36

ste.com you can come in and you can try

16:38

and you you can you can quote your

16:40

business yourself if you want to bind it

16:41

and do all that on your own if you want

16:43

some expert help then you can use our

16:45

chat feature or you can give us a call

16:47

and a smiling face will'll take the call

16:49

and help you awesome and also steadily

16:51

is available inside landlord Studio as

16:54

well we obviously surface that up when

16:56

you add your properties and we can give

16:58

give you a instant quote actually within

17:00

the product so it makes that whole

17:02

process a lot lot easier so that's it

17:05

for today's episode of the profitable

17:07

rental podcast absolute privilege having

17:09

you here Max and yeah really good to

17:12

just dive into the world of insurance

17:13

and give some uh nuanced advice and

17:16

insights about how this all works for

17:19

landlords either scaling their portfolio

17:21

or um considering landlord or changing

17:24

to landlord Insurance uh with your

17:26

existing portfolio so if you like this

17:28

episode uh everyone give it a like give

17:30

it a share subscribe to our Channel

17:32

we'll do a write up on this as well uh

17:34

and we'll also share some links to

17:36

steadily where you can go check out

17:37

their website and products as well and

17:39

also follow us on social media uh look

17:42

for us uh at landlord Studio on all

17:44

platforms um we'll share some more tips

17:47

uh in the coming weeks on how to scale

17:50

and make your rental portfolio more

17:52

profitable um so yeah stay tuned for the

17:55

next episode of the profitable rental

17:57

podcast and uh until next time have a

18:00

great week appreciate your time Max and

18:02

uh thank you again for coming on the

18:04

podcast thank you Logan appreciate

18:14

it

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