Apr 20, 2023
In this episode of The MHP Broker’s Tips and Tricks podcast, Maxwell Baker, president of The Mobile Home Park Broker, interviewed Kurt Kelly, president and CEO of Mobile Insurance. Kurt’s company specializes in selling mobile home community insurance products to park owners.
This and every Tips and Tricks podcast episode is brought to you by The MHP Broker’s’ proprietary Community Price Maximizer. Use this four-step system to get the highest price possible for your mobile home park or RV community when you sell it through The MHP Broker. Guaranteed. Ask Max for details.
Here Are the Show Highlights:
· Today’s interview is with Mobile Insurance owner, Kurt Kelly. Kurt has been a faithful advertiser in Max’s newsletter for ten years. (Max, 0:22)
· The company Kurt leads was once owned by General Electric. In the 1990s, GE did most of the financing for commercial and consumer mobile home sales. (Kurt, 2:01)
· In 1991, GE decided to get out of the business, which would have put Kurt’s stepfather out of business, so the older man bought what was left of Mobile Insurance, and ran it. (Kurt, 2:21)
· Kurt joined his stepfather in the business in 1996 and took it over in 1998. Kurt took inspiration and lessons from Jack Welch, the former CEO of GE, when running his own business. (Kurt, 2:52)
· Kurt works with a network of insurance companies across the nation that specialize in some aspect of insurance needs for community owners. He sees one key responsibility as helping park owners realistically evaluate their mobile home values. He points out one park owners who had his newer homes severely undervalued at $10,000 to $12,000 each for insurance purposes and would have gone bankrupt if the park has sustained significant damage such as by tornado or hailstorm. (Kurt, 3:59)
· Max pointed out that he’s seen parks both undervalued and overvalued for coverage. (Max, 5:24)
· Today, the main problem is that parks are undervalued in about 95 percent of cases because of the escalating rise in the value of parks, though improper valuation either way can lead to major loss. For instance, if your park worth an estimated $1 million is insured for $2 million, your insurer will settle for replacement cost or what you insured the park for, whichever is less. So you’re probably only going to get $1 million. (Kurt, 6:14)
· Coverage is getting more expensive because of climate change. Now we’re seeing more severe storms everywhere, and fires in the West. This increases building costs so that building that might have been built for $200,000 just three years ago might cost $300,000 to build today. When the structure is more expensive, so is the insurance. (Kurt, 8:24)
· Property owners should therefore look at their valuation annually, so their insurance keeps up with rising value. Kurt offered a personal example of what can happen if property is undervalued. He owns a condo in a building in a ski resort in Montana. The building was insured for $15 million, but informal appraisals put the replacement cost at more like $50 million. If the building burned to the ground, they’d be severely underinsured and condo unit owners would get pennies on their investment. (Kurt, 10:02)
· General liability insurance is important for park owners, but they must be aware of what the exclusions on coverage are. (Kurt, 11:26)
· Such exclusions such as for contractor bodily injury, swimming pool accidents or animal bites might cost owners plenty. Park owners also need to get site revenue insurance. If a tornado knocks everything out for six months to a year, you won’t be making any revenue for that long. (Max, 11:43)
· Cyber liability is a new need for park investors today. (Kurt, 12:39)
· People in the business tend to have big chunks of cash sitting around in bank accounts between deals. Cyber criminals know this and make every attempt to get it. Both Kurt and Max have experienced serious attempts at high-dollar cyber theft. (Kurt, 12:52)
· Wire transfers can be particularly risky, so, in addition to having cyber insurance, it’s important to have protocols worked out with your bank as to how transaction requests are handled. (Kurt, 15:04)
· Among Kurt’s business book recommendations is Never Split the Difference, by Chris Voss. It’s on the art of negotiating, from a former FBI negotiator. Kurt, 17:06)
· If anyone is looking for mobile home community insurance, or just has questions on the topic, they can reach out to Kurt by calling his cell phone at (281) 460-8384, or dropping him an email at Kurt@MobileAgency.com.
Reach out to Max to learn more about winning strategies in the mobile home park industry and to find out how to sell your property for the best possible price. Just drop Max a line at info@themhpbroker.com or give him a call at 678-932-0200. And be sure to check out Kurt Kelly at Mobile Insurance for all of your mobile home community insurance questions or needs.
Power Quotes in This Episode:
“(GE was) going to spin off the little insurance agency that my stepfather ran and lay him off when he was 55. So, he decided to buy what was left of that agency and make it even more of a commercial-focused agency.” (Kurt, 2:21)
“...valuation of property may be the biggest mistake that most investment property owners make…if you insure a million-dollar property for $2 million, and the property burns down, they're gonna come out and write you a check for a million. They're gonna write you a check for either the replacement cost, or what you…insured for, whichever is less. ” (Kurt, 6:14)
“...the house that you used to have insured for $15,000, that was a 1990 single section three bedroom, two bath in good condition. Is that worth it? Can you go out and buy another one like that for $15,000 today, bring it to your park and install it for 15 grand? No. In fact, if they gave it to you, you probably couldn't bring it to your park and install it for 10 grand.” (Kurt, 8:45)
“The good news for owners of those properties, your property’s worth more. The bad news is, when you value it for insurance, you’re gonna pay more.” (Kurt, 9:33-9:34) (On the rising threat of cyber crime)
“You know, when I first started in insurance,probably 90% of theft was physical. Today, I would say that 70% of theft is electronic.” (Kurt, 12:39)
"We love the Southeast, and then parts of the Midwest.” (In announcing recently buying a Nebraska park) . (Sam, 1:32)
“When we got into this business we determined…we needed to be vertically integrated.” (Sam, 2:33)
“Anybody bidding in that market kind of knew they had us over a barrel and we were not going to be a great customer for them because we’re gonna do this one job and then we go away, right?” (On why he thinks he got outrageously high quotes from local contractors.) (Sam, 4:23)
“We’re going to build our own communities, too.” (Sam, 8:54)
“We got to be ready for the next year or two or whatever, and I think it can be a little tough.” (Comment on economic headwinds) (Sam, 17:35)
“The mobile home park investment is more about operating a business than it is about owning real estate. Right? I mean, there's not very much real estate out there where you can have such huge impact on your bottom line by how you operate it, but mobile home parks, there's a ton there, right? (Sam, 23:26)