Deborah B. is the first winner in the $100 Expense Reduction Challenge! $100 Expense Reduction WinnerShe did it by fine-tuning her insurance policies then converting them from Replacement Cost Value (RCV) to Actual Cash Value (ACV). The cost-cutting scheme saved her over $200 per month ($25 per property)!!!


This concept of RCV vs. ACV was new to me. I had to have several people explain it to me several different ways before I could really grasp it. Here’s a really good explanation from

Deborah B. owns inexpensive rentals in Oklahoma’s “tornado alley.” She doesn’t plan to rebuild if disaster strikes. She just wants enough money to pay for clean up and recover her initial down payment.


Shifting Her Thinking

Since she wasn’t planning on replacing her buildings, there was no need to pay for “replacement” insurance. So she converted all her insurance policies to ACV. So now if there was a catastrophic event, her insurance carrier would cut her a check in the amount needed to replace her rentals (RCV) less her deductible and less the depreciation.


Here’s the equation: ACV = RCV – deductible – depreciation


This will likely not be enough to rebuild, but Deborah doesn’t care. She just wants the ability to recoup her original down payment investment (in addition to the insurance check, Deborah B. might need to sell the land to fully recoup her initial investment).


Congratulation Deborah! We’re emailing you get a $25 Home Depot gift card!


An Interview from the Winner’s Circle

Deborah B. was kind enough to answer some interview questions. Here is what she said:


When did you start landlording? I started in 2002


What city and state are your rentals located? In the Oklahoma City Metro/Oklahoma


What types of rentals do you like owning? Single Family Houses


What is the #1 challenge of owning those types of rentals and how do you mitigate the challenge?  Families are vulnerable to economic changes, we mitigate by extensive tenant screening and being supportive when families face sudden changes.


How did you come up with the idea to slim down the replacement values in your insurance policy to find savings? Oklahoma has been experiencing unusually severe hail for a few years. Even on replacement value policies, roof deductibles were climbing so we did a risk:benefit analysis and came down on the side of ACV policies


How much will you save per month per property? We actually raised the value of a few properties so the number is a bit blurry but in the neighborhood of $25 per mo per property


Any advice for other landlords who are considering taking the $100 Expense Reduction Challenge? Your initial question on Bigger Pockets challenged me to quit thinking about it and DO something.  I’m certain that every landlord has some small opportunity they haven’t made the time to capitalize on.