IS A "BOND" UNHEARD OF FOR A T/B? - Posted by jerry

Posted by Rob FL on July 25, 2002 at 19:38:15:

Most insurance policies contain a deductible. Call your local agent and find out what they have to offer.

IS A “BOND” UNHEARD OF FOR A T/B? - Posted by jerry

Posted by jerry on July 24, 2002 at 17:22:03:

Danger: Newbie. Okay, now that I’ve disclosed, here’s my question: As I envision doing deals with tenant/buyers, the single biggest concern I have is that for one reason or another, they won’t be able to ultimately buy the house and they’ll trash it to the tune of more than the security deposit in our lease and their option consideration combined. So - you hear of people being “bonded” in case they steal money on their job or some such circumstance. Has any CREI ever checked out the cost/benefit aspect of getting a tenant/buyer bonded (insured) against damage to your premises? Am I inventing a new approach, has this been done for years or (third choice) is it a bad idea?

How about TENANT Insurance - Posted by Frank Chin

Posted by Frank Chin on July 25, 2002 at 05:52:01:

Hi Jerry:

I require my tenants to carry TENANT insurance. It’ll cost the tenant around $200.00/year here in expensive NYC.

This insurance includes liabilty if someone sues the tenant, including the tenant’s LANDLORD (you). So if the tenant trashes the place, you can file a claim agaisnt HIS insurance company before filing a claim against yours.

Remember, if you file too many claims agsinst YOUR insurance company, even if its not your fault, they can drop you or raise your rates.

Frank Chin

Re: IS A “BOND” UNHEARD OF FOR A T/B? - Posted by Rob FL

Posted by Rob FL on July 24, 2002 at 22:06:05:

How about buying homeowners insurance? This should cover vandalism done by a tenant. Sounds like your trying to recreate something that’s been around for years.

Re: IS A “BOND” UNHEARD OF FOR A T/B? - Posted by Buck

Posted by Buck on July 24, 2002 at 20:17:15:

I am looking forward to hearing an answer to that one.

Thanks for the thot…

Buck

Re: IS A “BOND” UNHEARD OF FOR A T/B? - Posted by jerry

Posted by jerry on July 25, 2002 at 24:13:43:

If it’s that easy, I’m embarrassed. Are you, Rob, saying that you have tenant/buyers, and that you, as an experienced investor confidently use homeowners insurance and that it successfully covers a tenant trying to destroy every penny’s worth of his security deposit and option consideration so that you don’t make one cent off of his failure?

Well it makes sense to me. If insurance companies really pay for that, great. Just please tell me if you’re experienced at this or if you were speculating in good faith on something that makes sense, but may not be doable. Thanks.

Re: IS A “BOND” UNHEARD OF FOR A T/B? - Posted by Rob FL

Posted by Rob FL on July 25, 2002 at 09:19:56:

Between homeowners insurance, a large option deposit, proper screening, and good negotiations both upfront and when they get into trouble, yes that’s all I’ve used. I’ve only had to physically evict someone one time in the 10 years I’ve been doing this. I’ve had many tenants break their lease and tenant/buyers that did not exercise, but I’ve always been able to reasonably negotiate them into leaving peaceably except once.

One additional thing I might add is that I always label part of my tenant/buyers option money as a “security deposit.” That way even if they don’t exercise they know that they can get $500 or so back if they cooperate.

If you are really worried about this, then make the tenants get “renters insurance” and have yourself designated as a payee.

Re: IS A “BOND” UNHEARD OF FOR A T/B? - Posted by jerry

Posted by jerry on July 25, 2002 at 17:17:39:

On renters insurance, is there a deductible to the tune of their security deposit? You’d think so, no? Does this lower the premium, since the insurance company would not be out the first “X” number of dollars (representing the security deposit)?

Re: IS A “BOND” UNHEARD OF FOR A T/B? - Posted by Frank Chin

Posted by Frank Chin on July 26, 2002 at 05:16:39:

Hi Jerry:

Please note renter or tenants insurance is something your tenant buys. Its his insurance.

If your tenant did $1,000 in damages, you file a $1,000 claim against his insurance. There’s no deductable when you file a claim.

And this has nothing to do with his security.

Now if your tenant does not have the insurance, you file a claim against your own insurance, then there’s a deductable here. You can deduct this amount against his security.

Give you an example.

I had a tenant who left the windows open in a rainstorm. The carpets was ruined and the floor boards buckled. So I filed a claim against his insurance.

Then I found out he didn’t pay the insurance, and it was cancelled. So I filed the claim against my insurance that has a $250.00 deductable.

When my tenant moved, the $250 deductable was applied against his security deposit.

If his insurance was in effect, and his insurance paid the claim, there would had been no deductible.

Frank Chin