He can force insurance on the property and demand payment for it. It could be more that the $1000. You don’t pay then he can foreclose.
What you want to know on insurance is what it covers. Replacement cost ins. will be higher than depreciated cost. Low deductable will cost more than high deductable. ETC. Does it cover water damage? Rent replacement? liability? These are all things that can add costs to a policy and make it difficult to compare coverage.
Posted by Brad(Wa) on December 23, 2001 at 20:04:46:
I am lease-optioning a property for the original sales amount that he paid for it five years ago and I am looking to lease-option it to someone else. I recently got insurance for it and it was a real pain! I had to talk to the broker and he acted like it was an unusual occurance for someone to l/o it and turn around and l/o it for a profit. The ins. co needed $250 up front and the policy cost a little over $1000 for a year. Does this sound right? I thought it was a little high. It is through Pemco and I have insurance for two other of my houses which around $300 or so.
Can anyone recomend an insurance company for doing lease/option deals? Thanks in advance! Brad.
Posted by Marcos on December 24, 2001 at 09:26:10:
Why exactly are you getting insurance?
That’s the sellers responsibility. Now, if you have equity, you might want to convince the seller to put you as a beneficiary of his insurance policy, but that’s usually a hard sell. If you were Leasing/Renting a house from your seller, you wouldn’t get Hazard insurance, right? Although you might get Renter’s insurance. As the “pickle in the middle” so to speak on a sandwich lease, there should be no reason for you to get insurance.
Posted by Brad(Wa) on December 24, 2001 at 12:52:23:
The guy that I am L/O it from has moved away and refuses to pay for anything. I am assuming that I have to have hazard insurance or I would be violating the mortgage. Am I right? I will let my tenants get rentors insurance.
Posted by Marcos on December 24, 2001 at 15:50:24:
Yes, he does have to carry hazard insurance. But, once again, that’s his responsibility it’s not yours. I don’t know what you’re going to be able to do in this instance. He doesn’t sound very cooperative. It’s not you that are violating the mortgage, he is. Are you sure he’s going to pay his taxes? I would be willing to bet if he isn’t going to pay his insurance he isn’t going to be interested in paying his property taxes. And can you really be sure he’s even going to pay his mortgage? I don’t know, this rings warning bells in my head.
Posted by Brad(Wa) on December 24, 2001 at 16:22:42:
The mortgage is for $70k. Comps show $88-90k. I am looking at getting $2000 down with $850 mo for a l/o.
The mortgage payment is $580. Taxes are $100/mo. I pay taxes and insurance. I have the tenant pay me and I make the mortgage payment. The mortgage is held privately, not by a bank, so I don’t know what he can do if I don’t get insurance.