Why Insurance Costs Can Destroy Real Estate Cash Flow and How Investors Should Underwrite Deals
Show summary
Grant Francke shares his extensive experience managing a diverse portfolio of rental properties in Southeast Nebraska. He discusses systems for managing multiple property types, navigating insurance challenges, leveraging networks, and strategic growth without chasing arbitrary numbers.
Key takeaways
- Grant Francke's company, GLF Properties, manages about 215 rental units in Southeast Nebraska, including small to mid-size multifamily and some single families, with unit counts ranging up to 44 units in a building.
- A recent deal underwriting mistake: they trusted sellers' stated insurance costs instead of getting their own quotes. When they finally got quotes, the actual insurance cost was double, and in one case about 150 times higher than what the seller reported.
- The lesson learned: sellers who have owned a property for 30 years often have grandfathered-in insurance rates that a new buyer cannot keep. Investors must underwrite deals using their own new-policy insurance quotes, not the seller's existing premium.
- Grant now builds a large insurance cost increase into his underwriting from day one on every new deal, and will go back to sellers to negotiate price or terms when real insurance numbers don't pencil or won't appraise.
- He invests across about five communities within roughly an hour's drive of Lincoln, Nebraska, with the bulk of the portfolio concentrated in Lincoln itself.
- He intentionally mixes unit types (one-, two-, three-bedroom apartments plus houses) within the same community so tenants can move up as their household needs change (single renter to married couple to family with kids), keeping tenants within his portfolio as they grow.
- He delegates operations (leasing, listings, maintenance) to a team so he can stay focused on acquisitions and underwriting, which he says has been the biggest change enabling portfolio growth over the last couple of years.
- Grant doesn't scale for the sake of a number goal (no unit count or cash flow target); he takes on new deals or partnerships only when the numbers work and his team can handle the added volume.
- Writing a book two years ago ("The Unlikely Investor") opened doors to mastermind rooms and mentors operating at much bigger levels, which changed how he thinks about what's possible for his business.
About Grant Francke
Grant Francke runs GLF Properties in Southeast Nebraska, where he and his team self-manage about 215 rental units across small to mid-size multifamily properties and some single-family homes. He has been investing for 10 years, focuses on value-add cash-flowing real estate in Lincoln, Nebraska and surrounding bedroom communities, and wrote a book called "The Unlikely Investor."
Listen to the audio
“We did underwriting based off what the sellers were saying their insurance was... Then when we got quotes, it was double, maybe 150 times higher.”
Grant Francke
“You've had this insurance for 30 years, right? Like it's your grandfathered in there. Us going to get new insurance is going to cost this. We still need to make the same amount at the end.”
Grant Francke
“I had to stop thinking about myself as the guy with three duplexes. Like I'm not that person anymore and I need to operate my business as such.”
Grant Francke
“I have no number goal. I have no cash flow goal. Like we're just going to scale to what makes sense. I don't need to own 20,000 units.”
Grant Francke
Questions answered in this episode
Why did Grant Francke's deals underwrite wrong when it came to insurance?
He underwrote deals using the seller's stated insurance premium instead of getting his own quote. Sellers who had owned the property for decades often had grandfathered-in rates far below current market insurance costs, so Grant's actual quotes came back double or in one case about 150 times higher, which broke the deal's numbers and appraisal.
How should investors underwrite insurance costs on acquisitions?
Grant now writes in a large insurance cost increase from day one in his underwriting rather than relying on the current owner's premium. He recommends getting your own insurance quotes before underwriting a deal, since a new buyer typically can't inherit a seller's old, grandfathered rate.
How does Grant Francke manage such a diverse portfolio of property types?
He deliberately mixes unit types, one-, two-, and three-bedroom apartments plus houses, within the same community. This lets him move tenants up as their household size grows (single renter to married couple to family), keeping them in his portfolio long term. Operationally, he has delegated leasing, listings, and maintenance to a team so he can focus on acquisitions and underwriting.
What markets does Grant Francke invest in?
He invests in Lincoln, Nebraska and about five surrounding bedroom communities within roughly an hour's drive of Lincoln, with the bulk of his roughly 215-unit portfolio located in Lincoln itself.
How did networking help Grant Francke grow his business?
Writing a book called "The Unlikely Investor" about two years ago got him into rooms with investors operating at much bigger levels. Getting into mastermind groups and picking the brains of mentors operating five times his size changed how he thinks about real estate and what's possible, pushing him past seeing himself as just "the guy with three duplexes."
Does Grant Francke have a specific unit count or growth goal?
No. He says he has no number goal and no cash flow goal. He takes on deals or partnerships only when the numbers work and his team can handle the additional volume, rather than scaling just to scale.
Resources and links
- Grant Francke’s Website
- Grant Francke on Instagram
- Grant Francke’s Email Address: grant@glfproperties.com
Full transcript
Grant Francke (00:00)
you
bet. it really it comes out of insurance for us right now and the last couple deals we had
was really kind of a smack in the face for us. We did underwriting based off what the sellers were saying their insurance was, which was like, all right, I mean, we’ll believe it. Then when we got quotes, it was double, maybe 150 times higher. So like, it’s a large difference for us. And we just had to go back to the seller and say, look, we can’t keep your insurance. You’ve had this insurance for 30 years, right? Like it’s your grandfathered in there.
Michelle Tack (02:02)
Hi folks, welcome to Real Estate Pros podcast powered by Investor Fuel. We’re really psyched to have our guest here today who is specializing in acquiring rental properties and a variety of types and sizes and has some really good ability to qualify.
Michelle Tack (02:24)
these properties via his own, you know, qualification system. what I’d like to have you introduce yourself, And
Michelle Tack (02:27)
you know, qualification system. So what I’d like to have you introduce yourself, please. And we’ll go from there.
Grant Francke (02:35)
happy to be here. My name is Grant Francke. I’m in Southeast Nebraska. We have about 215 rental units in our portfolio, self-manage those as well. So we buy small to mid-size multifamily, some single families too, in packages down here in Southeast Nebraska.
Michelle Tack (02:50)
Thank you very much, Grant. What impressed me when we had gotten prepared for this podcast today is the breadth and amount of properties you have that are part of your portfolio, you’re managing them, and your ability to do all that while underwriting them. Can you talk to me about how you’re able to do that?
Grant Francke (04:01)
Yeah, I’m a big systems and process person, so I really love having.
a process and a system for just about everything in my life. So that’s evolved now as we’ve grown our portfolio. So we’ve got people on the operations side that help us run the portfolio, whether it be leasing, listings, maintenance. And then I’m still doing the acquisition side of it. I still love the underwriting. I love, talking to other other investors into sellers, just to make sure, you know, I’m on the same page of what we’re trying to get done. But it’s really about delegating those two things out in the last couple of years, really helped. ⁓
kind of change that for us. ⁓ Yeah, main focus today is cash, you know, value add cash flowing real estate for us for small multifamilies, small to midsize multifamilies. ⁓ Our different markets are Lincoln, Nebraska, and then bedroom communities within about an hour drive of Lincoln. So we invest in about five different
Michelle Tack (04:34)
Thank you. When you talk about your main focus these days, you’ve got a lot of different types of properties that you and I talked about. Can you discuss that as well as what markets you operate in?
Grant Francke (05:01)
communities, including Lincoln, and that’s where a bulk of our stuff is.
Michelle Tack (05:05)
And we talked a little bit about this and it’s sort of unusual that you find an operator that has maybe some SFRs, right? You know, one or two, and then they have units up to 44 units. I know we talked a little bit about the efficiencies, you mentioned it, but can you really delve down about how you’re able to manage all that? You know, and more
specifically, because that’s a very diverse range of needs from a renter perspective.
Grant Francke (05:32)
Yeah, you know, it is. It can be challenging sometimes, too. It’d probably be easier if I had a two-bedroom apartment building, right? But like I couldn’t scale up to have that. I do like having the mixture of units, too, because in, say, one community, I have one bedroom, two bedroom, three bedroom apartments. And then I’ve also got a three bedroom house and a two bedroom house. If someone comes to me and they rent that one bedroom and then they say they get married, OK, we can move you to a two bedroom.
And they have a kid, all right, well, I’ve got a three bedroom house you can rent. So you kind of have that full progression and some, and something for everybody. Whenever they come to you, I usually have something available for someone.
Michelle Tack (06:02)
So that’s great.
That’s really smart, I hadn’t thought through that, right? You have opportunities as multi-generational families, right? They can start out small, now all of a my best friend, her.
Michelle Tack (06:54)
nephew, I remember sending a book up to New York that, know, for a three-year-old and now he’s 10, you know, and five foot four. It goes really quickly. So it’s amazing. I know that there’s always challenges in any business. And whoever says there’s not, I always look and say, hmm,
Michelle Tack (07:13)
I’m not sure about that because life is challenging. And certainly with a lot of renters that you have, there’s got to be some challenges there. Can you give an example?
of recent, not like 10 years ago, but recently how something may have gone sideways, but you were able to pivot and resolve the situation.
Grant Francke (07:25)
Yeah,
you
bet. it really it comes out of insurance for us right now and the last couple deals we had
was really kind of a smack in the face for us. We did underwriting based off what the sellers were saying their insurance was, which was like, all right, I mean, we’ll believe it. Then when we got quotes, it was double, maybe 150 times higher. So like, it’s a large difference for us. And we just had to go back to the seller and say, look, we can’t keep your insurance. You’ve had this insurance for 30 years, right? Like it’s your grandfathered in there.
Us going to get new insurance is going to cost this.
We still need to make the same amount at the end. So there’s going to be some give and take on your end to make this deal work and pencil out. Otherwise it won’t underwrite. It won’t appraise out. All those things change based off of this insurance number. So going in underwriting that and then now in our new underwriting, we’re we’re writing in for that large amount of insurance increase on day one.
Michelle Tack (08:28)
I think that’s the kind of stuff that people don’t talk enough about, right? Honestly, it’s what separates the folks who just dabble in real estate from the ones who say the long game, the long term. I think you’ve been doing this for 20 years. Did you say to me earlier today? Ten years. But it’s still a decade if you’re doing something consistently, it means you typically are very successful at it. ⁓ that’s pretty, you know,
Grant Francke (08:42)
10 years 10 years. Yep. Yep.
Michelle Tack (08:56)
pretty impressive, know, in terms of what’s next for you. I mean, what do you see as next in terms of your goals for your business itself?
Grant Francke (09:45)
Yeah, we we’ve taken the stance that we’re not really going to go out and just grow to grow like I’m not scaling just to scale. If deals come along, we’re going to take them down that as long as they work. If partnerships come along, we’re going to create those partnerships. And as long as those things work and the numbers work, we’re going to continue to go. But I have no number goal. I have no cash flow goal. Like we’re just going to scale.
to what makes sense. Like I don’t need to own 20,000 units. just, we’re going to buy things that make sense. And if it adds the bottom line and our team can handle it, then we’re going to take it on.
Michelle Tack (10:16)
So, you when we talk about a next move, as we sort of talked earlier about, that can…
Grant Francke (10:17)
When we talk about the next room, as we sort of talked earlier about, that can
Michelle Tack (10:21)
compound things, be a little scary, create chaos depending on how you play it. Now know a lot of people listening are either earlier in their journey or looking to level up. And I think they benefit from hearing a little bit about how you’ve been able to leverage your network, what that network is,
Michelle Tack (10:44)
and what’s made the biggest difference for you relative to that, if you wouldn’t mind sharing.
Grant Francke (10:49)
Networking has been huge for me. You know, I wrote a book about two years ago called The Unlikely Investor that really got me in some doors with people that are doing things at, you know, big levels, bigger levels than I am, which then allowed me to think at those bigger levels. So like finding that mentor that is double where you are or five times where you are and getting in the same room with them, picking their brain. ⁓
You know, getting into those mastermind rooms have really changed the way I think about real estate and what I think is possible for me. and kind of the way I look at my business too, like I had to stop thinking about myself as the guy with three duplexes. Like I’m not that person anymore and I need to operate my business as such.
Michelle Tack (11:28)
Yep. That’s what we had talked about before is getting, it’s always difficult, you know, giving the reins of power to someone else on certain things. But, you know, I, you know, I didn’t share this with you previously, but I’ve been in sales my entire career, 30 plus years and 25 of that was in high tech and the rest has been in real estate. But, you know, one thing that one of my mentors told me is always try to hire someone better than you.
Michelle Tack (11:57)
And that’s a real ego bust though for some operators that don’t want to do that, right? They’re afraid it’s going to fail, but we put that in our minds and guess what? It fails. So good on you that
you see the light there and you’re willing to pass on some of the responsibilities. Before we wrap today, I’m sure there’s a ton of people that are watching this podcast. I’d like to contact you and do you mind providing, again, the name of your company, again, your name and email contact so they can do so?
Michelle Tack (12:25)
your company, again your name and an email contact so they can do so.
Grant Francke (12:34)
Yeah, you bet. Grant, Francke, my company is GLF Properties.
If you want to email me it’s grant@glfproperties.com or you can find me on Instagram grant.francke FRANCKE
Michelle Tack (12:45)
Grant, this has been fantastic. I really appreciate your attendance. For those that are listening to podcasts, if you enjoy this and would like to have other such operators to provide some information, as well as potential investors, please subscribe to Real Estate Pros. Till the next podcast. Again, Grant, thanks so much.
Grant Francke (13:05)
Thank you.
