Investment Insurance: Do’s and Don’ts For Your Real Estate Business With Corey Maxwell

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The market is about to shift, and you have to be ready. Investment insurance is one way to do that. In today’s episode, Tim Herriage chats with Corey Maxwell, Co-Managing Partner of Birmingham Insurance Group. With volatile market conditions, you must start thinking of ways to protect your business and assets. Corey is here to share his wisdom on how you can do just that. Plus, he gives valuable insights on what you should and shouldn’t be doing for your business to succeed. Don’t miss the golden nuggets from this episode, and tune in to get practical tips and mindset strategies that will position you for success.

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Investment Insurance: Do’s and Don’ts For Your Real Estate Business With Corey Maxwell

I have Corey Maxwell. Corey, welcome to the show.

Thank you, Tim. I’m glad to be here.

I’m so glad you’re here. I can’t wait to talk about fishing and college football but first, why don’t you tell our readers a little bit about yourself?

I am one of the Cofounders and Managing Partners at Birmingham Insurance Group, BIG Insurance. We specialize in insurance for investors and property management companies. We take care of folks all across the country, 50 states. We’re also investors. We’re in the fight every day like everyone else is. We look forward to learning and growing along with everyone else here.

Full disclosure, in December 2021, when we met, we entered into an agreement for me to sell REI Choice Insurance to you at BIG. You’re my partner, you and Jason Henderson as well. I like to get that out there. I wanted you to come here, Corey, because you and Jason are investors and have been involved in hard money and other businesses. We all operate the largest real estate investor-focused insurance agency in the nation. There are some others out there but I’m going to call us the largest.

We’re the largest non-exclusive.

Every episode, I start with the Bottom Line Up Front. Imagine when I was in the Marine Corps, I used to brief generals. They always said, “You don’t bury the lead. You have to lead with the bottom line up front.” If the general has to get up and leave the room or if there’s a mortar attack, you’ve got to get the most important thing. I’m going to give you two minutes to tell the readers the most important things that you see happening in the real estate market, industry and businesses and then some things that you think they should be doing and anything you think they should stay away from or not be doing.

I appreciate the opportunity to share some ideas. In the marketplace, a lot is going on. Everybody’s paying attention to the midterm elections and inflation. Quite frankly, there are several things that I would recommend and focus on. First of all, being, “Don’t follow my path.” When it comes to achieving your goals, focus on your true self. Authenticity is key.

You can’t fake it but you can fake it until you make it. Be yourself. Go all in. Many people have too many opportunities. I’m one of them. Instead of getting analysis paralysis, find something that’s working and stick with it. Be committed. When I say be committed, be fully committed. Focus your attention, accomplish your goal and then you can move on to the next task or opportunity.

I also made a note to remind myself, as well as everyone else, to find a mentor. Learning it on your works but it’s one of the reasons why franchises like McDonald’s, Chick-fil-A and others that are well known make it a whole lot more often than mom-and-pop shops. Find a mentor, somebody that can show you the loopholes, opportunities and shortcuts. It saves you a lot of time, heartache and energy.

The two number one things I would focus on are tied for first. Be ready because the market is about to shift as inflation continues to hover at highs and the mortgage business has slowed down at a pace faster than any other time in the last several years. Foreclosures are about to start back over again and people are going to lose their businesses. Be ready, have your money in order and go get them.

There’s a lot to unpack there. Let’s dive into that. I’ll throw the hard part out there first. You said, “Don’t be like me.” What are we referencing there?

Everybody has wins and losses. If you are going to be successful, you have to be willing to try but more importantly, to fail because failure is where the best lessons come from if you’re paying attention and you are willing to learn from the process. What I recommend is don’t follow my path but more importantly, find a mentor, somebody who has already been down this road, is familiar with the bumps and the turns and who can tell you to brake, accelerate, hang a left and right. You and I both have been in the ditch at some point in our lives. The last thing we want to do is get back in that ditch because, in the best scenario, we’re going to have to winch ourselves out. At the worst, we’re going to smack a tree and game over.

Many people that are successful attempt to pretend as if they were never unsuccessful. They forget the challenges that we all make it through. It’s not the challenges we encounter. It’s the challenges we make it through. It’s those challenges that make us good business people, parents and spouses. It was interesting you said, “Fail but pay attention.” That’s a powerful combination of words to me because often we fail but rarely do we pay attention to why we failed. Corey, talk a little bit about some of the things you see going on in the marketplace. It could be on the investing side, insurance, lending, inflation or society. Take me there.

We don’t have enough time for all of it. We’ll talk about some things that have stuck out in my mind as far as items of note. One of the things that have aggravated me but it’s a reality in any business is you have a lot of fools out there trying to conduct business as if they are professional and worthy of your time, energy, effort, investment and trust.

Be wise. Ask questions. If they don’t know the answers, that’s okay. It doesn’t mean they’re not worth investing in but it’s how they answer the unanswered questions. “I don’t know. Let me get back to you.” Choose wisely, the people you associate yourself with in this marketplace. You never know who’s new but up and coming. Just because they’ve been around doesn’t mean that they’re worth sticking or hanging around. My business partner, Jason and I, made a commitment to one another that we’re only going to do business with people we know, like and trust. If we find somebody that doesn’t meet those three simple criteria, we move on.

The way I met you was I called someone that I know, like and trust. I said, “I own this and we were doing okay but it wasn’t going the way I wanted it.” I told Mark, the CEO of Arcana, “Mark, I want to sell it but stay involved in it.” For me to do that, I got to trust the people. I don’t have time to date, go through an engagement and all this. I’m wanting to get this thing behind me because I was joining RCN, as you know. Not only did he connect me to you and Jason but you all were the only ones he connected me with. He wanted me to do business with you. You said, “When you have that know, like and trust and you get a referral from them, this industry gets a lot easier.”

Anything that we can do to remove anxiety in this life, minimize it at least but there’s no better recommendation than that from a trusted friend. The same was on our side. I called Mark to share with him that we had made a move and expanded our business. I went from a part-time involvement in this business to full-time. He said, “I got an opportunity to share with you.” When he told me about it, it clicked. The thing that stood out to me the most is it’s a great opportunity for all of us but more importantly, I appreciate it when somebody stands up for another and vouches for them.

It’s been nice watching how little changes in the business like answering the phone can make people happier with you. Let’s talk about your investing business. Flipper, wholesaler, landlord, owner finance notes.

We are flipping homes and wholesaling homes.

The name of the insurance company is Birmingham Insurance Group. You only do insurance in Birmingham.

We are in the process of enhancing and improving our public persona so that people don’t view us as local only because we’re a national firm. It still has the same business underneath but we’re rebranding to BIG Insurance and going big for your home.

We’re flipping houses and wholesaling. Is that in the Birmingham area, Midwest or Southeast? Where are we going?

We happen to have a lot of exposure to different opportunities in different areas of the country. Exposure, meaning awareness. We have clients in 33 to 34 states, somewhere around 1,000 plus or minus clients. We get a lot of communication with active investors, as well as some passive investors. We are also selected and endorsed insurance providers for two national coach and mentor platforms.

Shameless, self-plug, William tingle does Sub2MAX. We’re still having conversations with each other but we’ve been blessed with exposure to these different markets. Oddly enough, the one that we invest heavily in is in our backyard in Huntsville, Alabama. Huntsville is one of the fastest-growing markets and the best place to live in the country. It has tremendous infrastructure and investment. What they don’t have is enough places to live because you have SpaceX, FBI HQ2 and Facebook service center coming in. An incredible influx of talented, well-paid individuals and guess what they need? A place to live.

I’m a big proponent of talking about the three necessities in life, food, water and shelter. You talk about something the institutions own. The institutions make our food and, in water, I don’t know how you make money selling water but I sure don’t want to try. I’m with you. Specialize in housing. People got to have a place to live. Our country has been shown for over 200 and something years that we’re not going to let people go homeless. We’re going to pay for where they live or find them a place to live.

Relevant to both of your businesses is replacement cost. It’s hard to build houses in Birmingham and Huntsville. It’s hard to find labor and materials. It’s hard to build houses in every market across the nation. I talk to both the BIG or old REI Choice customers and even the people that I loan money to that they’ve got to pay attention to their replacement costs. You can’t pick the value they ensure their house for. Can you talk a little bit about the replacement cost? What do you see nationwide? How that’s impacting not only investment operations but insurance too?

Could I pick it for them? Yes. Will I pick it for them? No. There are a lot of reasons, liability and otherwise but at the end of the day, replacement cost is an insurance term. Replacement value is more of a market term. What we focus on are the facts instead of the feelings. In different marketplaces, the best idea comes from the boots on the ground and the contractors who are building in specific areas. They’re going to be the experts on, “Joe contractor, how much would it cost me to build this house back like it is in this market?” He’s going to say, “$400 a foot or $100 a square foot.”

Since we don’t have ready access to a contractor in every market, we are fortunate because of our focus on the real estate market and, in particular, in the investment real estate marketplace, as investors and insurance professionals to have access. We received a nice spreadsheet from one of the national carriers that gave us the breakdown of certain ZIP codes, other Metro areas and so forth of our cost per square foot rebuilt guidelines.

It’s a moving target so you can’t hold someone to be 100% accurate all the time. That’s why the programs that we represent and, in particular, Arcana Insurance, which we both are familiar with, provide a 20% wiggle room factor in that but also a practical claim process. I’m not going to speak about their claims other than to say that we do our job with our clients on the front end. The clients are going to be protected on the back end. Regardless of what the market may do, we’re going to minimize the impact of the market on our clients.

I wear two hats. This is what I tell people. As an insurance guy, in 2022, I’m in my 25th year in this business. I don’t know it all and not even close. I learn something new every day. What I have learned is how to play the game better, this game of life, insurance, investments in real estate and so on. When I’m talking to clients on the phone, we’re a virtual agency so we’re doing business all over the place, I physically take off my hat and tell them, “I wear two hats. I wear my buddy hat and my insurance hat. I’m going to give you contract-based information on questions that you may have for me with my insurance hat on.”

As a practical person and one who likes to develop strong relationships with people, I’ll take that hat off, put my buddy hat on and say, “What that means to you and me here on the street is this. Here’s how it affects you and how you can address it. More importantly, here’s how we are going to work together to take care of any concerns, problems or anything that comes up that’s within our control.”

That answer is one of those answers that, if you’re reading, you should probably reread. I’ve been buying houses for many years. I don’t have an insurance license. I never did. I didn’t even know that there was a 20% wiggle room in a replacement cost because I don’t read policies like all the customers. I’ve always counted on someone that would be willing to take the buddy hat off and tell me if I was screwing up or not.

Interestingly, you say that and I’ll never forget when we started REI Choice. The first thing that happened was I went and moved all my properties over because if I was going to tell people to use it, I was going to put my properties there first. I went through any problems or anything confusing and made sure it was fixed before we put it out. A little shameless plug too but I like the system. I do want to keep talking about some of these things when we come back. The last segue on this is I was in Denver and they’re building houses in Denver for $160 a foot. It’s amazing to me that you can build a house cheaper in Denver than you can in Dallas.

Dallas, in some areas, is $350 a foot.

We were at a mastermind and it was one of the most intriguing conversations around the bar because this guy, we go to his house and it’s this nice multimillion-dollar home in the mountains. We’re all guessing $250 to 4300 afoot to build cost. When he said $160, my jaw dropped down through the floor and out of the building because the labor is cheaper up there and the materials are more constant. It’s moving target data. Service providers and experts are the way to go.

Corey, we’re now to the Money Minute. This is my favorite part of the show. Imagine there’s an entrepreneur, a real estate investor, a young version of yourself. They’re out there reading this and you’re about to give them 60 seconds of advice but here’s the catch. This is the only 60 seconds of advice they get in the next 30 days. This is it. It’s got to be your best stuff and go juice.

30 days, any investor I’m speaking to, I have 3 main points to hammer home. Number one, raise capital. Have access to money. It doesn’t matter necessarily where it comes from as long as it’s legal. You might have a piggy bank, line of credit, a friend, a family member or a banker that’s willing to loan you the money. With that money, you can leverage and become profitable.

Number two, get skinny. Make sure your expenses are in line and check. Minimize them. Tighten that belt. That will enhance your profitability without spending any additional money. The third thing is to have constant replicatable distribution processes that are effective in reaching your market because if you can’t reach the market, they can’t reach their wallet.

It’s time for Rapid-Fire. I’m going to go through some things and brevity is key. You were talking about fools in the market. How does one avoid being one of the fools?

It goes back to the very things I said. Number one, don’t follow my path. Number two, get serious and get committed. Find a mentor and follow their path.

In your mind, how does one be wise?

Be willing to make mistakes but learn from those mistakes. Pay attention because knowledge is nothing without experience and then it can become wisdom. Wisdom can be applied and perpetuated through generations.

What are you paying attention to in this market?

Cost of money, availability of money, creating inventory and maintaining consistent, efficient distribution channels.

When you look at your 1,000 plus clients in 33 or more states, is there something that stands out about them to you, a specific trait or something a lot of them have in common?

It’s the need for somebody like us. There are a lot of makeshift insurance programs out there and no one has the expertise and solutions to the problems that we have. Quite frankly, nobody takes care of their folks as we do. It’s something that we determined ahead of time, take pride in and stick to. That’s our MO.

Do you think that a small balance investor, someone that has 1 or 2 houses, needs more or less customer service than someone with 100 houses?

I would consider them to need the same amount of customer service. It’s that the service increments that are provided may be smaller because there are fewer transactions and interactions. It’s the same level of customer service and attention because a $1 million mistake can be made, whether you have 1 or 1,000 properties.

When you look at the larger investors, the ones that have 100 or so houses with you, is there anything that stands out about their operations or their portfolio mix that you think is anecdotal or something you could share with the audience?

There are two things. Number one is they are 100% certain what their target property is. Number two, they work more on their business than in their business. They have people who are on their team that handle certain aspects of the business that take away from the owner or lead dog’s ability to grow and develop new customers, properties and opportunities. Somebody’s got to be the visionary because not everybody can stand around and watch.

The first thing you said, you said it very emphatically. There are 100$ convinced about what their target property is. We see that at RCN. The investors that we’re financing 4 or 5 loans a month for, every house is the same. It’s not a $1 million flip and a $50,000 rental. It’s all $50,000 rentals.

The most effective investors that I see in the marketplace, regardless of whether they’re small or institutional, is they have a buy box. “I want this number of beds and baths. I’m willing to go in this age bracket and size of the house. I don’t want anything near a major roadway or power line.” It’s a list. Here’s what happens there. We’re doing investor insurance so we’re investing ourselves and wholesaling. We’re exposed to all this. Let me tell you something. Efficiency becomes the norm rather than the exception.

Efficiency is that thing that makes your business enjoyable and makes it feel like you don’t have to work twice for the same dollar. I read or heard a quote that is like, “Never worked twice for the same dollar.” I think it was Gary Keller or someone. A lot of times, even at the high levels of business ownership, you find yourself doing the same task over and over or even repetitive tasks for other people. It gets frustrating.

Don’t chase the same dollar past about two city blocks. If you’ve chased it that far, it’s probably already gotten away.

Corey, do you have any parting thoughts for the audience or parting shots for me?

Continue to be curious. Ask questions, seek knowledge and develop your expertise and skill set. Continue to be authentic because there’s nobody like you and God did it that way for a reason. Celebrate that. Don’t be scared to be unique. Having a mentor does not mean that you have a king who’s dominating and telling you what to do every day. They’re helping you stay between the lines and on the virtual path of success. As long as you can continue to improve 1% every day, we get pretty good after 365 days in a year.

Corey, if somebody’s reading, they’d like to do business with you or get in touch with you, how do they reach you?

We welcome any opportunities to speak with and share our story, learn how your story goes and hear how we can help you. You can reach us online at www.BhamInsGroup.com. You can call us at (205) 682-8856. You can find us on LinkedIn and Facebook. Our email is Info@BhamInsGroup.com. Call me on my cell phone at (205) 790-2420. We don’t hide. We’re here to help you. Come see us. We’re ready and excited. We’re having fun. If you don’t like to have fun, don’t call.

Corey, I hope that we do a good enough job on this show to make it where you regret giving out your cell phone number.

I would love to change that thing after several years.

We’re going to wrap up this episode. Thank you all for coming back and reading. We hope to see you next time. Remember, your network is your net worth and you’ve been growing both. We’ll see you soon.

Important Links

• Birmingham Insurance Group
• REI Choice Insurance
• Sub2MAX
• LinkedIn – Birmingham Insurance Group
• Facebook – Birmingham Insurance Group
• Info@BhamInsGroup.com

The following podcast program is furnished by RCN Capital LLC.  The information provided is for general educational purposes only and does not constitute any legal, tax, financial, investment or other professional advice. The views, thoughts, and opinions expressed of any speaker are the speaker’s own opinion and do not represent the views, thoughts, and opinions of RCN Capital LLC.   No information contained in this episode should be construed as financial, investment or legal advice from RCN or any individual, author, host or guest. You should always consult a financial advisor before investing.

• failure
• housing
• investor insurance
• mentorship
• real estate
• success