All Forum Posts by: Bill B.

@Jacob George Lada

Is that standard insurance range for MO?

I'm paying sub $700/year on $400k SFR rentals. About $500/year on $280k rentals. All with 300k liability in Vegas.

I’m paying sub $400/year on a $600k townhome in MN. 

Is it two different addresses? If so, get homeowner policy for your side and landlord policy for rental side. 

Get a few quotes and if the big guys (allstate, State Farm, etc,) are within 10% of the small guy you haven’t heard of I’d pry spend the money. I’ve had to make 2 x $30k claims (2 different toilet supply lines in two different houses.) with allstate and they were amazing getting water removed and repairs made with their money. 

Do yohave a lot of appreciation? If so sell and take the tax free gain. (You could rent it out for two years and then sell for the tax free gain as well, but if you’re leaving the state, take your money with you.)

@Laura Williams

Laura, you should also figure out how much debt you are paying off each year. I bet it’s more than $20k so you can still make money now, and even more once they are paid off. Because of a 15 year loan I have a rental I plan to retire in that cashflows -$10k/year on its own, but it “makes” $20k a year by paying off a total of $30k per year. If they’re making money and the negative cash flow is 4% of your gross income, who cares? If they were cashflowing positive $20k how would that affect your life? I bet not at all.

That said, if any of these houses have a lot of appreciation and you’ve lived in it 2 of the last 5 years I would sell that one and take the tax free gains that will go away in the future. There are all kinds of 1031 exchange options but unless you want to invest out of state (or at least out of California) I don’t know what good options you have. 

@Dave Foster @Nate Hansen

Dave,

Is he going to be allowed to turn rental property profits directly in to a primary residence tax free for his son with no rental period?

“we are looking to add my son as a third tenant in common who would use that as a primary residence.” or am I misreading this Nate and you plan to charge your son “market rate rent”?

Seems like you’re going to run in to weird tax situations in regards to if it’s a rental property with rental expenses or a primary residence of your son. Is he going to declare a percent of the rent collected as income to himself?

As long as you live there with the tenant it should be ok as you’re going to sign a document saying you will live there for a year. Make sure all the utilities are in you name and all your mail is sent there, get your drivers license changed as well to avoid jail time and or fines for mortgage fraud. 

Can you even imagine the leverage a renter would have over you if you tried to rent it to just them in the first year? Why would they even pay rent? You obviously can’t evict them because you obviously arent renting it to them after telling the mortgage company it was going to be your home. 

@Garrett Tierney

Hey Garret,

Before you get a million liability on just the rental, ask how much more the premium is from $250k to a million.  Then ask how much a million $ umbrella runs. You might be more likely to get In a bad car accident and be sued for your rental property than the million $ lawsuit for something that happens at your rental. But with the umbrella you cover both. If you don’t have a million on your home I don’t honk I’d get it on the rental. 

Ps. Something that should have been asked a few posts ago. What are you worth?  All this talk can be ignored if the only thing you own is $100k or less worth of equity in your home and rental property and have a five figure income. All my points are mostly if not only valid if you’re worth at least a few hundred thousand or make well over $100k year. (If you have $300k worth of insurance and are only worth $100k, they’ll take the insurance money. Unless you do something very negligent.)

I assume anything less than 100k/100k is wasted money. I run 300/300k as it’s required for my umbrella policy, the premium change is tiny. Ps. I also run $2500 to $5,000 deductibles as you don’t want to make any claims befow $10-$20k anyway. 

Building insurance is not meant for $2,500 or $5,000 claims. Especially as you gather more and more properties. A clean claims history saves money. I’ve made 2 x $30,000 claims in 15 years on 12 properties. (Both were toilet supply line leaks of the knights armor/snakeskin looking type steel lines rather the modern  braided type.) neither caused my premiums to increase. 

If you put your addendum in writing make sure you’re willing to lose the deal over it. When your addendum says something will be fixed before I buy or I’m not buying the sellers then ave the ability to sell to someone else.

If it’s a great deal and it’s a $200 problem take the deal, if it’s a good deal and a $1,000 problem, use your best judgement. Etc...etc...

Landlord insurance should be cheaper and is required if you want to be covered on property you are renting out. Landlord policies don’t cover any personal belongings inside the building (hence the reason they are cheaper and you should require tenants to get renters insurance.) they are meant as liability shields and sometimes lost rent will be covered. Ps. You also have to mention to most insurance companies any time a unit is empty more than 30 days. 

Wrong policy is like no policy. Have a loss and they’ll say wow, you shoulda had landlord policy the homeowners policy doesn’t cover this. 

How about raising the rent the amount of your desired late fee? If they aren’t willing to pay on time to avoid an extra $50/mo they most likely aren’t willing to move to avoid it.