Quick Insurance Cost Estimates in Deal Analysis

[Joe Doran]

I'm running through deals with the Rental Calculator and it recommends talking to an insurance agent. I get that I would need to do that if the numbers are close enough on a deal to get serious about it, but are there some ballpark rules of thumb that can be used to use a budgetary number in my calculations to see if a deal is even in the ballpark before I bother an agent to get me an actual quote? Something like 1% of ARV, or something similar? I'm working in the Kansas City market.

Thanks in advance for any insight, advice, rules of thumb, etc!

[Lee Ripma]

Yes, listing have prop taxes, at least in KC. It depends on the county but yours may go up once you own the property. I would say using the 2020 taxes on the listing is good. You may want to add 2-5%. Taxes can go up more than that. If prop tax slight raise breaks your deal it’s probably not that great of a deal. So 2020 plus 2% works to underwrite.