How to NOT get wrecked by Insurance Companies with David Melzer

David Melzer: [0:00] When you have these desk adjusters that work in these call centers in small town, you know, Midwest, they see estimates from all over the country. So they'll see a job. They're like, Oh, well, you know, I just paid the same job. It cost $10 down in Louisiana. But we're like, Well now we're in Suburban San Diego or Los Angeles or something like that. I'm like, Hey, 50 an hour isn't a viable price to hire anyone here and any tradesman kind of thing. So it's, there's a lot of just lack of knowledge and experience in the industry. Welcome

Speaker 2: [0:35] to the Collecting Keys Podcast. The show where you'll learn how to use real estate to create massive income, not just passive income. Real estate doesn't have to be a get rich slow game. Listen to the country's top real estate operators, and you'll have all the tools you need to replace your w two income and go beyond in under twelve months. Ready to take things to the next level? Let's jump in with our hosts, Mike DeHaan and Dan Austin for today's episode of the collecting keys podcast.

Mike DeHaan: [1:12] What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. Today, we have David Melzer, who is a personal friend and an insurance adjuster out of Southern California. He lives in San Diego specifically. And we have a great deep dive into what you're supposed to do when you have a rental property or your own house that has some sort of insurance claim issue. And you're looking at it and you're going, I feel like I'm not getting enough money for the situation. Guys like David, they can come and help you solve that and help you get significantly more money, by, you know, working with the insurance company and helping adjust the claims that, you know, you're battling back and forth insurance. So this is a really, really awesome episode. We go into everything you need to know about working with an adjuster. He talks about some tips and tricks for how to get the most out of the conversation, when exactly you should look to hire an adjuster, and how you vet adjusters, make sure that you're getting a good one. And really, you know, if you're a real estate investor, this is a must listen because, you know, it's not if you eventually have an insurance problem, it's when. Because if you own real estate, stuff does happen. We got weather changing all around the world. We got weird stuff that goes on. You have, you know, wiring that wears out.

Mike DeHaan: [2:23] You have plumbing that wears out. Eventually, you're gonna have problems and insurance companies are not fun to deal with. But that's why guys like David exist. So grab your notebook. This is a really, really awesome episode and will be super educational for you. Also, great news is David works in a bunch of the Western States and also Tennessee and Kentucky. So if you like what you're hearing and you wanna reach out to him, definitely do so at the links that he drops at the end, and he can help you figure out any of your insurance was your deal with. So we appreciate you all listening. Please go and leave us a five star review wherever you listen to your podcast and enjoy this really, really educational show with David Melzer. Alright, we are here today with David Melzer from San Diego. And I am super excited to have you on the show today, David, because I met you in Lake Oconee at the GoBundance conference. And you have a business that I think is so applicable to real estate investors. And you are a, I guess, tell me if I explained this wrong, but you are a insurance claims adjuster, like a consultant. We can kind of go into it. But either either way, your property is called property claims consultant, and you help people like us or other real estate investors not get completely screwed over by insurance companies when things go awry.

Mike DeHaan: [3:38] So super excited to have you on the show, man. So I guess maybe give us a little background about you and what exactly you do with your business.

David Melzer: [3:44] Yeah. Absolutely. Thanks, Mike. I'm excited to be here. The proper term would be public insurance adjusters. Sometimes it changes a little bit state by state, but that's kind of what we're most mostly known as as public adjusters. And so what I always kind of tell people is that envision you're going through the worst of all scenarios when it comes to your insurance claim, your home burned down. Let's just say it's your single family, your primary residence and you have nothing. I mean, you leave the house with the, you know, it's in the middle of the night, you leave your house with what sleep attire and and, you know, maybe your cell phone or things like that. And now you've gotta try and piece together this home on your own against like the biggest bureaucracy in the world pretty much, these these multi trillion dollar insurance companies. And so the insurance companies always will come out, they always give you a lowball estimate. I mean, know I think we had talked briefly where you even said the same thing where you guys have been lowballed and it happens all the time. Our main goal and focus is really just tackling the financial aspect of the claims and getting people the highest dollar that they can get out of these insurance claims and maintaining like absolutely like an ethical boundary when it comes to that. Everything that we do is just playing the cards that the insurance company does right back at them. So like the insurance company has teams and teams of adjusters that are trained endlessly to be able to adjust the claim that brings the outcome that they're looking for.

David Melzer: [5:00] I always say this kind of to our clients to say, well, why don't you have a team helping you adjust the claim on your end as well? So we're just advocates in in the core of the of the homeowner. And that can be the homeowner, the investor. We do everything from businesses to warehouses, to manufacturing facilities, to manufacture homes, to residential homes, to apartment complex. It's kind of the whole spectrum. As long as there's when there's like first party property damages and that's how we really come in and most public adjusters work on a contingency fee. Someone will kind of do some hourly consulting work, but most of the time it's a contingency fee. So we're very inclined and motivated to get you guys like the most you can for your buck because that's how like we have a direct linear correlation of how much we get paid and selfishly, we wanna make a buck as well. So I

Dan Austin: [5:47] got so many questions on this one, but like let's start with, so the idea of like what that insurance company's team looks like, and you know, like Mike and I have gone through these, and what I see, and so I'll just share this, and then I would love to get your insights on like the insider baseball stuff on this, because I think you worked for insurance companies prior, right?

David Melzer: [6:04] Yeah, yeah, was with them

Dan Austin: [6:06] for ten years. Perfect. So, yes, so like, you file a claim, you've got your, you know, we have an insurance agent who just shops for us, so we call her and say, hey, we got this claim, and then they obviously refer us to the insurance company that's on that property, We go through it, and then they send out an adjuster that works for that company. They come out, look at it like, yeah man, this is damaged, and then they come and give an estimate of what it's gonna cost to fix, and then basically, you can go and get a contractor to do the work for that price. Hopefully, that's the price that the contractor can do it for. I would have thought it would be the other way around, like, go get your contractor, get quotes, and then tell us, but it's not. Can you kinda give us, like, the rundown on how that whole business works? Because it seems terrible.

David Melzer: [6:48] It's really just a whole succession of checks and balances on the insurance carrier side that really sets the consumer up for failure. Yeah. And let me kinda focus on on that question first and like how the adjusters work. And so I mean, they're trained to work off of their specific estimating platform and there is so much criticism and so many eyes on an estimate or so. So like let's say for instance, they come out to your house, you had a flood in your kitchen something. The adjuster comes out and writes you know, X, Y and Z for the cabinets, some countertops, some drywall or whatever. That might get looked at four or five, six times by their superior, a reinspector, a quality assurance type person, quality management type person. They have you know different names within each insurance company. And so each person's gonna say, Oh, that line item isn't justified. Let's pull that one out. Oh, that one's not justified. So this adjuster that comes out there might start with a $20,000 estimate, but by the time it goes through the wringer with this internal review team, it might get cut down in half. So even if the adjuster missed some stuff, now it gets cut down two more or three more times and so you're left with this work product or your estimate from them that's just so minimal that you just can't Mhmm. You can't actually get the the job done. Mhmm.

David Melzer: [8:02] And then you'd mentioned like why doesn't it go the other way where hey, I've got three contractors, they say it's gonna be x y and z dollars. Why can't you just pay the mean of these estimates kind of things? And that was kind of the the long ago, like late nineties, early nineties kind of perspective on the insurance companies is that they would do that exactly is that before the impact of you know internet and the ability to handle things remotely, everybody would just go to their respective contractor or in the cases of an auto body claims, they'd go to like a body shop and get three estimates. The insurance company would kind of just take the mean of the estimates and pay that. But since then, now they're doing things virtually, they're sending out adjusters and things like that, trying to minimize that dollar amount to be competitive in the industry. And so they very seldomly will actually just take a contractor's estimate and pay it, it's always gonna go through this gambit of reviews internally.

Dan Austin: [8:55] So that's funny, or not funny, it's interesting because you brought up auto claims and I feel like that system's pretty dialed in because I go to like an auto body shop and they're like, yeah, our cost is gonna be exactly what the insurance company's gonna pay. So like, they figure that out, you know. I don't know if the work is quality or whatever, but generally, when I get my car bashed in, I go there, my insurance company says, take it to one of these three body shops, they fix it, they all figure out. So they got like these like preferred people or whatever. But it definitely seems the opposite with like houses and contractors, like they definitely don't listen to what another contractor, to your point, and I wonder if there's a reason why that is, or maybe there's just so much variability compared to cars.

David Melzer: [9:31] It's just the variability. I mean, you look at, so and I worked in auto claims as well years and years ago. So I I've seen the difference of it. And like when you take a a Honda Civic, I mean, there is a a book that'll show you the cost of every single part. The actually the labor that's associated with installing this headlamp or this hood or this. So it's like, it's a very linear equation. When you get into a home, it's not the same because then it's like, okay, you've got continuous flooring. Does that flooring go into other bedrooms? Then when you Does that flooring go under cabinets? Like there's so many other elements and variables. Then also like how much stuff is in the way? Like, do we need to pack the whole house out to do the repairs? You know, are we painting just these walls? Are we painting those walls? So it's the big difference is that variability component and that's what plays into it. The the auto world, the reason why it's actually gotten pretty successful is they've automized a lot. A lot of it does go through an AI like system. When I was at Farmers, that was 2000 and I think 12/13 before I left there, they brought in this was with AI, I was very very new. And they brought in kinda like an element, an entry type system and it would just scrub estimates. So literally it would just take an estimate and just knock 20% off the top and approve it because it was cheaper for the insurance companies to do that than employ, you know, people, staff, sending them out to inspections, drive time, a workers comp and

Dan Austin: [10:58] all Yeah. That Fascinating. So okay, let me, if you don't mind, Mike, let me indulge myself here and let me share an example of an insurance claim we dealt with, and I would love to get your opinion, David, on like how you would have served us in this situation. So we had, this was, gosh, a year and a half, two years ago now, Mike. Yeah, last like spring, clock. We had an insurance claim A while ago. Yeah, so it was an Airbnb property that we had just done a top to bottom renovation in, same floor and basement. The one thing we foolishly didn't replace was the oil furnace. So it still had an oil tank, and it was like a concrete utility room, oil tank in there with like a little teeny copper wire or a copper tube that went from the oil tank to the furnace. The furnace itself was fine, but that copper tube failed and it flooded with hundreds of gallons of oil into this basement. It was like new carpet, new LVP, brand new shower, brand new I mean, everything was brand new in this, including furniture. Finished basement. Finished basement.

David Melzer: [11:52] Yep. Go back.

Dan Austin: [11:53] And so, essentially, we called our insurance agent, she called the insurance company, got it all set up, and this this lady with the company came out and she's like, okay, yeah, this is really bad. I'm going to dispatch a company, a remediation company, and I was like, okay. And so they dispatched the remediation company, and then had to get like a hygienist in there to look at what it was. Then they got, I guess, the quote from somebody to build up what it would take to replace this. And then this remediation company that they had sent out basically just didn't hold up their end of the bargain, and did a bunch of the work, got a bunch of the oil soaked up, but didn't finish the job. And then they were arguing with the insurance company about replacing the floor, what are they called, the sill plates of the walls that soaked up oil, and the insurance company said, you don't need to do that, they said, you do. And essentially, they end up walking off the job. I'm gonna make this long story short. And then we had to bring in our contractor and finish it all, and this was like a six month process, Mike, maybe eight months, so the whole time we're obviously missing rent on this thing, and of course we didn't have the Airbnb, whatever they call that, rider on the policy.

David Melzer: [13:01] Oh, never mind, okay.

Dan Austin: [13:02] Yeah. So finally, it all gets wrapped up. They had to give us three different adjusters from the same company because they kept having such problems with the situation, and I know that they must have messed up because at the end, they were willing to cut us a check for the lost revenue of like $15,000 from the Airbnb, which they 100%, and I 100% in email agreed we were not owed because we did not pay for that policy. So I know they messed up at some level, but yeah, it was like this big battle and they were essentially just fighting everything as far as the cost to do anything and so we ended up bringing our contractor in and just finishing it and didn't matter what they paid us, we had to get it done and so yeah, it took six, eight months.

David Melzer: [13:43] Yeah, and that's something that I hear so frequently is that, so when we had touched earlier where you said you just take it to an auto body shop, it's their preferred vendor when you have a car accident and they just kinda settle it out on the back end. That's how it's kind of supposed to work in a perfect world on the property with their specific vendors. Okay. But it's not when you have things like oil like that, it's just not a standard water loss. So they were probably treating that like you just had a toilet overflow or something like that. It's water, let's just clean up the water. But when it's oil and you're affecting sill plates and things like that, that can actually you're right. That can cause a substantial amount of damages. And then I would imagine that oil's flammable or combustible at some ability or at some component too. So it's like you don't need you have that in the walls, seal up the walls, and now you have an electrical short. You might cause like an actual explosion type thing. So I guess I'll kinda speak high level of like how we would come in and get involved and kinda fight for something like that. And just I speak to what the insurance companies have done. So typically it's just like that. Yeah.

David Melzer: [14:46] We would enlist the services of a hygienist, an industrial hygienist right out of the gate because it takes the ambiguity out of the discussion with the insurance company. Because the insurance company, you've got someone behind a desk working the job, ventilated virtually and they're like, oh, it's just oil, you know, put some rags down, clean it up and walk away. And it's like, no that's not how you do it. So these industrial hygienists that would be the right approach, come out and they're completely another third party company that takes us out of the equation, takes the insurance company out of the equation and put together, they'll usually put together a scope of work and that helps us kind of begin the argument. But the public adjusters are really good and known for being very detailed document. So like the insurance company, for them to pay x, they need to see y or they need to see some documentation for that. And so what we do is what we would do is come in in something like that. We would take readings that will probably show moisture. It's elevated moisture of actually the oil and stuff, the oil and whatever compounds are in there. We have the industrial hygienist and then we even put together an estimate.

David Melzer: [15:52] So like we put together this whole package, photo documentation, industrial hygienists, an estimate itself and provide them with like everything to check their boxes. Because in a perfect world, we wanna settle the claim just as fast as they wanna settle it because we want you guys to be happy. We wanna move on and help other clients. And you know, the insurance company doesn't wanna deal with us because we're not going away. So the big thing that we would do is really just come in and try and document and to get an estimate, the proper estimate to them as soon as possible rather than kind of saying, oh, let's just get this contractor going and have them kind of, oh, they'll work with the insurance company on the back end because you see how that kinda caused some some issues in the beginning. Uh-huh. Yeah. It's something we often see where there's just disputes between these third party vendors that they they send out that they say are a part of their vendor program. Yeah. I mean you've got was that desk adjuster even in

Dan Austin: [16:48] the same state or was that adjuster you were dealing with at a call center in, you know, the Midwest? No. She was the one she was actually located in in our hometown where the property was and then the other one, after they kicked her off, was in, like, somewhere in the Midwest and then the the third one was some other guy from this local area and he actually is the one that was like, okay, I'm gonna get this shit resolved for you and all that sort of stuff and I think he kinda had to clean up a little bit of a mess.

David Melzer: [17:13] Yeah. I mean what what also kinda speaks to is that when you have these desk adjusters that work in these call centers in small town, you know, Midwest. They see estimates from all over the country. So they'll see a job, they're like, Oh, well, you know, I just paid the same job, it costs $10 down in Louisiana. But we're like, well now we're in, you know, Suburban San Diego or Los Angeles or something like that. I'm like, hey, 50 an hour isn't a viable price to to hire anyone here and any tradesman kind of thing. So it's there's a lot of just lack of knowledge and experience in the industry. A lot of these these desk adjusters that you're working with are also fresh out of college. I mean, that's how I got the job and got into the industry originally is I came in right out of college with very little experience. They they put you through a training program that fits their curriculum and like their narrative and their Yeah. The way that they wanna drive claims and then you go out and kind of you're you're fairly autonomous for at least the field, a lot

Dan Austin: [18:12] of the field inspections and things like that and that's where stuff gets missed. So your role when people come to hire you is essentially to give a full proof like you can't deny that this is what needs to be fixed and here is the cost based on this data of what that will cost.

David Melzer: [18:27] Kind of

Dan Austin: [18:27] the hope, right?

David Melzer: [18:28] And we provide them with everything they need. Mean there could be, hey, when we remove these baseboards, it actually peeled up the paint so now we've gotta paint the walls. We take a close-up photo of that and label it and say, hey look, now you need to paint the walls. Then they're like, okay cool, that documents our file and now when I include it, you know, my file gets reviewed by some quality assurance person or a manager, they're gonna see, oh, that's what happened. There's direct physical damages, let's pay it and move on kinda thing. It makes sense. So it's really like a detail oriented documentation and plan of approach for the entirety of the claim itself so that they've got everything in front of them. I mean, like we do a lot of the jobs for these insurance adjusters because we just wanna move these claims along where they'll be like, they'll be fighting, hey, we didn't see damage in the in this room. Okay, cool. Here, we've already got photos showing moisture readings or oil in the room if we're talking about your instance. So they really just try and take it, take the reins on it and drive that claim to the narrative that we know is gonna have the best financial outcome for our clients.

Mike DeHaan: [19:32] Right. Okay. Fascinating. Do you ever have situations where, I don't know, I would say you have a client who feels like the insurance adjuster is too low. You come in and you do your thing and you find that it's actually the way around that the insurance is being too generous. At that point, do you have like a fiduciary responsibility on either side or do you kind of just like keep your mouth shut?

David Melzer: [19:54] It happens. Yeah. It happens. Yeah. I mean, we've been got being called out and what I see that happens more often than not is there's usually like cultural differences where you've got maybe a first generation American where the way that things work in their culture is everything is negotiation. So no matter what, know, if the insurance company came out with $10, even if it was $10, they still feel that there's some sort of level of negotiation. And yes, we do see it. And there's been a lot of times where we come out and say, hey, look, like, we don't think there's anything more on the table. You know, you were taken care of. We can't help you. You know what? We wish you the best of luck and move on. And so it does happen because we do have a fiduciary responsibility to our clients. And when that happens, it's I mean, I guess it's really the best situation for the clients. I mean, we really don't in a perfect world, our role really wouldn't exist, but

Dan Austin: [20:44] it does. But it's needed.

Mike DeHaan: [20:47] How do you get paid in all these? What does that relationship look like? Are you paid basically by the person that hires you directly? Is there like something that's worked into like the size of the job? Do you get paid the same if it's like a water leak in a kitchen versus a house fire? You know, what does all that look like?

David Melzer: [21:04] Each state is a little bit differently, but most states you have to work on a contingency basis. So like in California, it's a fairly limitless, they call it like a limitless or non non cap fee agreements, but we can exceed 49% and that's kinda pretty standard. Like we can't charge more of a fee than what the client gets. But so most of the times we come on in a contingency basis. It depends on what type of claim we get involved in and at what stage of the claim. So sometimes people call us and say, hey look, we've been driving this claim for nine months. There's another $50 on the table we think and we look at it, we're like, okay, that's gonna be, we have to rehash the entire claim. We've gotta start from scratch and now work through where they have already done and then try and get this this additional supplemental 50 so to speak. Instances like that will be on a contingency fee usually on a higher contingency fee like 30%, sometimes even higher. So that would mean that we would charge 30% for above and beyond where they've already gotten. So if they struck out at $50, we think there's another $50, then we would be on a contingency fee for that additional 50 that we get them. When you alluded to where you had mentioned about like big house fires and things like that, if we get involved in those claims in the early onset, so let's say for instance, like we signed up an apartment, our client Monday, yesterday, two days ago, they had an apartment fire. So it's two apartments with an attached single family home kind ish. Kind of a weird property, cool property, but we signed them up before the insurance company even got involved because it was a direct referral from a friend. And something like that, we're on 10% from dollar 1.

David Melzer: [22:42] And so we just, we build in 10% there or we charge them 10%. They end up paying us. The money doesn't really come directly from the insurance company. It does come from our clients, but in instances like that where we know we're gonna get them two, maybe three, maybe even four X the dollar that they would get. They're like no one ever shies away from saying, oh yeah, hey, you're really owed that. So it's like they see it because the insurance company's first undisputed estimate might be a $100 and we'd land at 400 and they realize, oh, if I'm on a 10%, yeah, this this person definitely deserve that that $40,000 that they get. Okay. So, tends to regression big like kinda high level contingency fee. It does come from the clients and that's why typically public adjusters are more suited for the larger claims because there's just a lot more items to build in. Like for instance, some people will, if it's really a financial crunch, get them a lot more money. They'll say, okay, hey we're gonna take that money and put it towards the kitchen cabinets and we'll save money on the flooring we can pay their fee or something like that. Or I'm gonna hire a contractor to do the inside damages but I've got a roofer that can do the roof. So I'll subcontract out the roof and that's where I'll kind of gain back the money or the fees for the public adjuster. There's a lot of things and then they're not unethical. It's just you kinda have to do work around it, but it's we still get them so much more than the insurance company actually pays.

David Melzer: [24:14] Yeah. That I mean, out of the 400 clients that we've helped over the last few years, I've had one actually walk away from us and stiff us. Single one other one has been more than happy to to pay our fee. I mean, there's not they just really have any disputes.

Dan Austin: [24:27] I would have definitely paid your fee.

Mike DeHaan: [24:28] Yeah. We totally.

David Melzer: [24:29] Yeah. Mean, that's thing. It's they see the first estimate because we tell them, we're like, hey. Look. We're getting out there. We're like, hey. Look. You're gonna they're gonna pay you a $100. But we think we're probably gonna land at 3 or 400 in this instance. And they're like, sure, whatever. You know, because it's super early on and then when they see the first check, they're like, shit, you guys are right. And then we, you know, we get into it and then here's another $100. Another $100. Like, okay. Hey. You're good. Yeah. Keep doing your thing.

Mike DeHaan: [24:53] So typically, it best for people to reach out to you or like someone like you, like early early in the transaction? Like like, based in the process, like, right when it happens or until they're getting Yeah. Until they're getting screwed by the insurance company?

David Melzer: [25:05] Honestly, the best bet for all parties involved is early on because a few different components. One, the insurance companies are becoming more and more denial basis, I guess, kind of things. We're seeing it a lot in California where a of lot the insurance companies are denying claims a lot sooner and a lot quicker. And when a claim gets denied, it's very difficult to overturn it. And most public adjusters, a lot of public adjusters may not even take the claim off. So sometimes people give up information that isn't even related to the claim that leads in and denied. Mhmm. So for instance, roof claims. It's an often a common thing that we see across the country. We don't see them a lot here in San Diego, but we see them a lot in the rest of the country. Different insurance policies have different limitations when it comes to leaking roofs. And sometimes people will say, oh yeah, I had a leak to my roof 10 ago. But they never said that they actually did get that roof repaired. Now come present day, they had another leak to their roof. The insurance company says, oh, well it leaked ten years ago, you never repaired it, denied. Boom and just close the file out and walk away. And refuse to really hear new information that may actually be the smoking gun to overturn the claim. So I don't wanna go on a crazy tangent but things like that happen because when the insurance companies get on the phone with these, the homeowners, for some reason, homeowners just wanna just talk and talk and talk and and tell and the insurance companies will ask questions that sometimes lead in a denial that really aren't legitimate true denials. And there are some instances where, hey, look, this policy does not cover that. There's nothing we can do about it.

David Melzer: [26:46] It's just the policy that you signed up does not cover x y and z. And that is what it is. But

Mike DeHaan: [26:52] Yeah. That is interesting. I mean, we see that a lot just like on the real estate transaction side too. Right? Whether it's, you know, sellers sharing a lot of information with us and we're doing off market stuff. Can't tell you how many times we've been on the phone with sellers and they'll drop back a little clip about their divorce or like, you know, yeah, Timmy stole some money from me or whatever. And we're like, oh, really? You know, and now we have a cued in motivation. So you're motivated. Right? Then also too, even on the retail real estate side, I think it's just because naturally as humans, you wanna converse with other people, you know, especially when they're on the phone or you're you're talking about a situation. People shoot themselves in the foot by mentioning things to lenders, like about, oh, yeah. How getting ready to start a new job. It's like you're not supposed to freaking do that when you're buying a house. Right? And now the lenders are, like, nervous about that or people mentioning things like that to title companies. And it's interesting. I think it's just a very important reminder for everyone who goes through this when you're talking to that insurance company. Like, don't overshare things at all. Like, let them kind of ask the questions and just, like, give the most plain answers that you can and let them make their own decisions.

Mike DeHaan: [27:51] Right?

David Melzer: [27:52] I always say it's like it's like you're getting arrested. You kinda have the right to remain silent. Yeah. Sure. The questions, just answer them very directly. Yeah. Are you employed? Yes. But you know what happened? I had a leak to the roof. Like, don't go on to, oh my cat was up there and might have kicked something. You know, it's you're right. It's just people give up a little bit too much information and it can be misinterpreted.

Mike DeHaan: [28:14] Yeah. Exactly. And they're like, you know, are there drugs in your trunk?

Dan Austin: [28:17] I don't know. And they're not mine.

Mike DeHaan: [28:18] Right? Just just yeah. Just just just plead ignorance. That'll see what happens. Yeah. Yeah. I agree. If someone's looking to work, like, with an insurance adjuster, what are the kind of questions that, like, the person that's looking to hire you should ask? Or like what designates a good insurance adjuster versus a bad one?

David Melzer: [28:36] I would think the big things where we found success is just the experience and the the way that they process claims. Our claims are the entire process of how we handle a claim and process it is driven by in California, the California regulations and insurance code. So we create an argue all of our arguments and the demands that we put forth are on a basis of those regulations and insurance code. Because at the end of the day, if it doesn't work out with us, which it doesn't often, but every once in while it will, we can hand it over to an attorney and the attorney is like, hey, you've already made these legal arguments so to speak and they can run with it. So I think that the big thing would be is experience in the industry. I think that public adjusters do very well when they have prior experience working for the insurance company. And that's how a lot of my team is. A lot of my team came from some component or some avenue in the insurance industry. I also see a benefit of them looking for referrals just like anything else. Like when you get a referral from, I see my family friend worked with them or looking at like past reviews on Google, Yelp, social media, Facebook, things like that.

David Melzer: [29:45] I think that's another place to rule out and kind of separate from some of the bad the bad eggs in this in our industry. Unfortunately, are just like any other industry, there are some bad apples in our world and it can get tied up with things but I often see that when people look for like Yelp reviews, Google reviews, those tend to weed those guys out of the mix because they help a few clients and people go there are very vocal about it.

Dan Austin: [30:10] Yeah. Mhmm. That makes sense. Makes sense. Yeah. So I I have so many questions, but I'm gonna bring up, for the interest of time, I know we're gonna run short here, insurance prices. Like as real estate investors, we're all seeing insurance prices drastically jump, and I know this isn't necessarily your business, but just because you're in the industry, I'm curious, because we're seeing obviously in markets like Florida, markets like Texas, like specifically Houston, like, there's insurers leaving altogether. We've had that in Washington State, some insurers leaving, I think some of that has to do with legal policy, but like what is going on in the industry? Because it's cutting into everybody's margins right now seeing prices increase 10 to 20%.

David Melzer: [30:49] Yeah. The high level answer is the reinsurance component. It's so a lot of these large storm hurricanes, natural disasters, fires in California, hurricanes in The Gulf Coast area. Those are causing such substantial and huge impacts on the the environment there that these insurance companies can't get reinsurance. And so reinsurance is, know, let's just say farmers insurance, like a big name insurance company that everybody knows. They have insurance to cover a billion dollars worth of damages if a big fire happened in Southern California, but they have insurance for their insurance. So if there is a huge huge effect, someone has to come in on the back end and say, hey, if it goes beyond a billion, we'll step in for you. And so what's happening is that with the increased natural disasters and cost of these natural disasters, those reinsurance companies aren't even writing policies to cover the larger insurance. So it's like a trickle down type effect. There's also been some regulatory and legislative stuff, at least in some of the West Coast states that have come down to where specifically in California, they have stopped allowing the insurance companies to take rates. So that means like adjust their their rate on premiums. And so that kind of prohibits them from just being the free market and saying, okay, everybody's just gonna be as efficient as they can and try and provide a competitive product. And when there are regulatory type agencies that are limiting their ability to operate at their fullest extent as the free market would allow, that's where you kind of run into those issues as well. And that's what we're seeing. An answer to it, I don't know.

David Melzer: [32:28] I think it's a part legislative and part environmental impact. I think you nailed it. So I did not

Dan Austin: [32:33] know that there were insurance companies for insurance companies and that would make sense because I do think that some of these natural disasters that cause so much damage is just driving the cost for everybody in the country, because the same insurance company in Florida, say Farmers, is up here in Washington, that company still has it's same profit margin regardless of where the storm's at, and so it affects everybody. And then we know here in Washington, have similar rules where they can no longer use like credit or income to insure people, like it has to all be across the line, and we've seen insurers leave the state because of that, and just the legislative effects of that. So it's, I think you nailed it.

Mike DeHaan: [33:07] Yeah. Yeah. That's very interesting. It's a complex business. Right? And there's so many different variables.

David Melzer: [33:13] I would say for the real estate world, what I say is is shop it yearly. Mhmm. Get a broker or get a few brokers and I I work with a bunch and shop. I mean, if you've got over three or four properties, think you are gonna see an a huge benefit of shopping those properties once a year.

Mike DeHaan: [33:29] Yeah. Sounds true. Totally. Awesome. Well, really good stuff, David. I I really appreciate you coming and sharing all that. So we are coming up on time here. So we're going to dive into our end of show questions. So I know you're not a professional real estate investor, but you still have a little bit of real estate investing experience. And I'm super excited for your crazy story because we talked about it in Georgia, and it's one of the wildest stories I've ever heard. It does. Our number one question, which is always the crowd favorite, what is your craziest real estate investing story?

David Melzer: [33:59] Yeah. So I know. I've told this story a bunch. So before I started my company, I owned a multifamily here in San Diego and it was it's technically two small houses on a lot, but you've got so I have to kind of envision and play out the layout of the property to understand what's going on. So you've got the City Street up here and then the houses are down here. So there was probably about a 20 foot gap between the City Street here and the property down here. If you know anything about plumbing, drainage in the plumbing world works on a gravitational level. So there's no pumps typically in a normal house. Like so when you flush the toilet, it goes into a drain, that drain is just sloped and so it drains into the city me. So most instances, houses sit slightly above the city street so that it can just drain into the city me. Well this property when I kind of drew it out, is that the City Street was up here, the houses were down here. So they all drained into a well in the front of the property and that well then had a pump. And in that well, there was a pump, the pump would pump into the city street. Flush the toilet, goes into a well about 50 feet in front of the property. And at the bottom of the well about fifteen, twenty feet, there's a pump, it pumps it up to the city street.

David Melzer: [35:19] So I bought this property and turned over to the both of the units, both of the homes. And I was pretty much it was pretty much all in for. I didn't really have much left over for, you know, closing costs, buying it, and then the amount of work that it needed. I was about three or four months into it having some serious issues with this pump and they call it a sewage ejection pump and system. And so I found myself and I wish I would have pulled up the photo, but I am sitting at the top of the well, realizing that I have to go down in this well. I am in a full Tyvek suit, like goggles, respirator, Tyvek suit, gloves, booties. And I'm I've got a an extension cord wrapped around my body. The extension cord is connected to the back of my 72 year old mother's Hummer because when you go down into these wells, it's shit water and methane is heavier than oxygen. So when you get down to the bottom, there's technically no oxygen. So my mom is sitting up there with a big fan, a big box fan trying to circulate water. I've got a eccentric cord because I didn't have any other ropes. If I were to pass out, it was connected to her car. She could just rip me out. And I climbed down this well and I am about waist deep and shoulder deep in water, blindly tried to disconnect this pump so that I can bring it up to the surface, reconfigure it. I had to fix one of the the there's a spinning motor on it.

David Melzer: [36:40] And then go back down there. So keep in mind this well is about about three feet in diameter. So I'm a pretty large human. So you're you're bent over and you actually your head is up and you can't even see it. You're just working blindly. And so, I mean, I did got it. I got it. I had to disconnect it from the city main. And when I disconnect City Main, it's like spewing out poop water. And then I had to disconnect it from the bottom. And so then by I mean, I got it, disconnected up. I I had a small ladder in there that I climbed up. I was up the top. I fixed it. But then I had to go back down and reconnect it back up. And as soon as I reconnected back up, it started it wasn't connected fully at the top mount. So it started spitting water against the wall and splashing everywhere. But I mean, got it sick. Oh my God. And didn't pass out and got out of the well. And you know, that was one of the big turning points of me realizing that I'm not gonna self manage real estate and I do need to hire out and know my own value and worth. Bro,

Dan Austin: [37:41] there's so many things in this story that I am blown away. A, that you're alive. Like that's like a serious thing. Like enclosed space training. Like, guys go down there with, oxygen masks, not Tyvek suits and respirators. Yeah. An extension cord that is not rated for a guy your size.

Mike DeHaan: [37:57] That's the first thing I said too.

Dan Austin: [37:58] And your mom your mom's 72 and she has a Hummer. Like, what? That's awesome.

David Melzer: [38:03] You're like an old school Hummer H3 and it was, and I mean, we only rope we had and like it was leaking out into one of the homes so like I had to get it done right then and there and the only thing I had was an extension cord and I'm like, it's wired. It's gotta have a pull straight of, you know, 300 pounds. I I weigh two twenty plus everything else. Like, it's gotta cover at least two hundred plus pounds.

Mike DeHaan: [38:24] So Yeah. And Dave is not a small dude, Dan. Dave David's like as big as I am.

Dan Austin: [38:28] Oh, I met him. I I yeah. I know how big he is. Yeah. He's big dude. He's bigger. He's probably stronger

Mike DeHaan: [38:31] than me. Oh, definitely. Everyone's stronger than me at this point. I'm old and washed out. But no. That's so freaking wild. Like, yeah. I'm glad that you lived at another day. That's amazing. So how old were you when you were doing this?

David Melzer: [38:45] I was like 17 2017. So it's six years ago. So like '28, '29.

Mike DeHaan: [38:49] '28, '20 you were old enough to know better. Awesome. Yeah. Well, I didn't realize

David Melzer: [38:53] that it I was on the way down to do this knowing that I would probably have to climb down it and my dad calls me and he's like, hey, dumbass. Methane is heavier than oxygen. You're not you won't have anything. And it's not like you will be like, oh, I'm running short of air. He's like, no. You would just pass out. He went into some chemistry behind it. He's like, you would just pass out and you wouldn't even know about it. And so I was like, oh, I'll just run a fan. And so I just had a fan circulating oxygen. I was like, that that'll do. And then I even went to the point where the first time I climbed down, I was like, I'm just gonna hold my breath, but it took me a lot longer. So I would like kinda go up and down a few times and yeah. It was Dude.

Mike DeHaan: [39:33] You know, I can I can open water diver, but in shit water

Dan Austin: [39:36] and methane tube? Shit water and methane tube.

David Melzer: [39:39] That's crazy. I was getting like, there's little floaters and everything. Like, it was it was in the thick of

Dan Austin: [39:44] it. That's so bad.

Mike DeHaan: [39:45] Anyway, so then when you got it fixed, did you have to go back down or plug it back in again?

David Melzer: [39:49] I had to fix it because the sewage injection pumps have it's like a sump pump, but it has a little grinder. So it grinds up the solids before it ejects it out. Yeah. And that little grinder got, like, clogged up with some stuff on it. Yes. And so, yeah, I had to I had to take that and then run it back down.

Mike DeHaan: [40:08] Then you had to go tell your tenants to stop eating so much fiber because they're blocking up your sump pump. Right.

David Melzer: [40:13] Yeah. Because it was just clogging up the yeah. They clogging up the rotor on the ejection pump.

Dan Austin: [40:17] Dude. Crazy. I'm just having nightmares right now. What was floating in there?

Mike DeHaan: [40:21] Wow. That's awesome. I appreciate you sharing that, David. That's a good story. That's a that's a great podcast story. I bet too after a couple drinks, you become the guy with like the best story everyone's ever heard because that's crazy. That's a good story.

David Melzer: [40:32] But it's funny because when I I that's how I kinda led the GoBundance called here. I wonder, can I share a screen with you guys? I think I've got the photo.

Mike DeHaan: [40:40] Yeah. Yeah. You should be able to share screen at the bottom if you wanna

David Melzer: [40:42] do that. I know you guys are running out of time.

Mike DeHaan: [40:45] You're you're good. You can also send it to us and we'll work it into the YouTube video too. So if you guys wanna see that video, what has going on, you go check out YouTube. Alright. Second question. We usually do what is the number one piece of advice you would give to a small investor looking to take their business to the next level. But instead, maybe let's change this and go, what's the number one piece of advice you would give to a real estate investor that is dealing with an insurance issue and they're looking to hire someone like you? What's kind of like the one or two things that they should absolutely know?

David Melzer: [41:15] I mean, you're going through an insurance claim that's anything over $25,000, it's to seek out help from a public adjuster. Do your due diligence on them. I mean, just as you would with a real estate agent or whatever buying a property, know, do your due diligence on it. But there's really never been an instance where we've gotten involved where we haven't Just from a cost benefit analysis provided a huge benefit from our It takes the emotional stress off of our clients. You know, sometimes our clients, you know, the husband and wife are in crazy disagreements. You know, the wife is super stressed out about the property. The husband's trying to manage this insurance claim and it just creates a big feud in the family and we're able to alleviate that. So like, it's not only just the financial components of it, it's the emotional stress it puts on people. And I really say that now seeing and so that property too that I showed you, I had an insurance claim there as well. And that insurance claim, they tried to pay me $8,500 Wow. And we ended up at a 180 on the settlement on that. So like Wow. There's a benefit there. So like if that was me and I came on it 20%, like so you pay me $40 to get you an additional $140, like that's worth it. I would put money down on that investment all day, any day, every day.

David Melzer: [42:29] So my biggest thing is just don't think that the insurance companies are on your side. Know, they're not always maliciously there to to financially impact you, but they just have a different perspective and financial outcome and goal than what you're looking for and finding help in the public adjuster sec

Mike DeHaan: [42:46] is is always gonna be there. Awesome. That's great advice. Cool. Alright, David. Last question. Where can people find you, follow you, and reach out to you if you'd like them to do so?

David Melzer: [42:55] Yeah. Absolutely. Best thing would probably be just on our Instagram or Instagram account is just at propertyclaimsconsultant.com. And we're there. We're pretty active on on Instagram, Facebook, Yelp, and Google. And we're here in pretty much almost pretty much every West Coast state, pretty much all states West Of The Rockies were licensed and and operated.

Mike DeHaan: [43:16] All the states that really matter. Let's be honest. West Coast, the West Coast, and all of our Southeast listeners, which is most of them, just stop listening. Awesome, David. Well, thanks so much for coming on the show.

David Melzer: [43:27] Well, mean, actually, we are in Kentucky and Tennessee as well.

Mike DeHaan: [43:29] Yeah. That's good to know. Have a lot of people in Tennessee. Absolutely. Thank you. Surprisingly. But it said there's, like, certain states over there we get a ton of listenership. You know, from Georgia,

Dan Austin: [43:37] a ton from Florida, and

Mike DeHaan: [43:38] a ton from Tennessee that list doors on a regular basis. So it's good to know. Awesome. Well, David, thanks so much for going on the show, man. We really, really appreciate your time. And you guys, I hope that you learned a lot from this episode. If you are a real estate investor and you own any sort of properties, there's a ton being get out of this. And you should definitely reach out to David if you live in any of the West Coast states or Tennessee or Kentucky, because he can potentially help you out if you have any insurance woes. And besides that, if you don't live in one of those states, then find who the good person is in your market because it could save you an insane amount of money here. So thanks for listening everybody, and we'll talk to y'all next week. See you.

Speaker 2: [44:17] Thanks for listening to collecting keys. Drop us a five star review on iTunes and send us a screenshot to mike@collectingkeys.com for your chance to receive a free collecting keys t shirt.