Posted by Taiyo on April 04, 2004 at 16:44:57:
Another thought. The first phone call I make after I close a deal is to my insurance agent to get a insurance binder on my new investment.
What insurance to use during refurb or renting? - Posted by John in NC
Posted by John in NC on April 04, 2004 at 11:23:14:
I’m in the process of closing on an REO house that I plan to lease (or possibly sell if someone makes me an offer). I got an estimate for the homeowners insurance that I would need for the time during which it would be refurbished (and/or sitting vacant before renting). And the price seems expensive.
What does everyone here do for temporary (a few months from purchase to sale), or long term (if renting) insurance??
This seems like an important topic that impacts everyone, but haven’t seen it on the board yet.
Thanks much,
John in NC
Re: What insurance to use during refurb - Posted by David MS
Posted by David MS on April 07, 2004 at 22:23:00:
It may depend on how much work you are doing. If you are updating elecrical, plumbing, etc you probably need builders risk.
If it is a mostly cosmetic rehab and you plan to rent, you might can use a landlord’s policy. In this case they may give you 30 days to get it fixed to rentable shape. I am doing this now and State Farm is letting me get a landlord policy. I have 8-9k of work to do but nothing major. (no electrical, plumbing, HVAC, etc)
Call your insurance guy and ask for details of when you go from using a landlord policy to the point of having to get a builders risk policy. Assuming you are renting and not selling it.
Re: What insurance during refurb or renting? - Posted by gary
Posted by gary on April 07, 2004 at 20:24:44:
John,
Insurance after the purchase and during the rehab…we use (along with several investors we know) builders risk. Check w/ Zurich
Insurance after the rehab and for long-term rental (hold) properties…we use a landlords policy. Most companies have these. Be sure to get competitive bids.
We would never get a homeowners policy for either of the above. If the property is ever vacant…this will normally void the homeowners policy. If the property is rented out…the homeowners policy is too costly. In other words never use a homeowners policy.
Just the way we see it.
HTH
gary
Landlord policy may not be correct - Posted by rehab4life
Posted by rehab4life on April 04, 2004 at 17:40:03:
I just closed on a rehab I was working on for the past few months (nice payday) and while I was working on the property a landlord policy is not what you want. You may get it and snow the insurance company by lying to them, and you may even collect on a claim, but you have to include the vacant rider on the policy while the work is being done.
I have State Farm and once I told them vacant they told me they dont insure vacant properties anymore. I imagine that most are the same. I called several trying to trim costs but it was no use. I had to use a boutique place that didnt pro-rate any unused portion and the premium was quite steep.
I had to pay 350 for 3 months for a 125k policy with a 250 buck deductible.
I would rather be up front with the agency and tell them you need a vacant clause than to try and cut costs and not tell them it is vacant. The downside is that if you get caught they can sue you. Not worth the risk to me.
Once it is occupied then you get the landlord policy with no vacancy clause.
Hope that helped. Search the archives and you will see that what I am saying is the way it works.
Re: What insurance - Posted by Taiyo
Posted by Taiyo on April 04, 2004 at 15:27:20:
I get Landlord’s Insurance. I am only insuring the structure plus fixed fixtures.
Re: Landlord policy may not be correct - Posted by Rick M
Posted by Rick M on April 13, 2004 at 11:34:24:
Dear Rehab4Life,
What insurance company do you use? What is their name and phone number? I’m closing on a house 4/15/04 and I can’t find a place to cover me while I flip the property.
Thanks
Re: Landlord policy may not be correct - Posted by Taiyo
Posted by Taiyo on April 04, 2004 at 19:38:49:
I am not a rehabber. I am a wholesaler or flipper Therefore, I would agree with rehab4life
Re: What insurance - Posted by John in NC
Posted by John in NC on April 04, 2004 at 16:09:06:
I’m referring to home owners insurance. I have homeowners insurance on my personal home, although it appears that the insurance is much higher on a vacant investment property. Granted, I want to get someone into the property asap, but when first purchasing a vacant house, what kind of insurance do I need?
Thanks,
John in NC
Re: What insurance - Posted by Taiyo
Posted by Taiyo on April 04, 2004 at 16:26:34:
Landlord’s Insurance is similar to Homeowners. It is the exact opposite of Renter’s Insurance. Renter’s insurance is for their possessions. Landlord’s Insurance is coverage on everything but possessions. It is also cheaper because of the coverage. I pay approximately $350/6 months (Allstate). FMV is $225,000.