Hello Bigger Pockets community! Other than my newbie intro, this is my first official post on the boards: of course it involves a question, but first a little background:
I currently have a rental home in Florida (my first house), and I live in Texas. I bought this house on the peak of the "great bubble", was ordered overseas on military duty, and am now retired in Texas. Needless to say to this crowd, the bubble popped (more like shattered on that market) and the house has since been upside down in value. My shining light has been: a) I was able to weather the storm and hold onto the property, b) have managed to keep it occupied 85% (conservatively) of the time since 2007, c) the property has almost always cash flowed—albeit just barely above break-even in 07 and 08—and d) is currently cash flowing anywhere between $100 to $150 monthly now depending on maintenance expenses. However, in my eyes the biggest bonus of this venture has been the fact that since I purchased it in late 2006, less than 30 monthly mortgage payments have been made from my money…my various tenants over the years have paid for it! Incidentally, this fact is the primary reason that I am now seriously diving into real estate to secure my retirement years.
So, as a real estate investing "newbie," my 1st goal with this home is to maximize my positive monthly cash flow. My second goal is to rescue this capsized ship and turn it right-side up as quickly as possible. I have evaluated my numbers and the only real solution that I can come up with is to decrease expenses (without refinancing) and pump as much extra cash into principle; yes, I fully realize by simply breaking even I no longer have an asset.
To decrease expenses, I can't raise rent, at least until my current tenant’s lease expires in Feb 2017. I also can't reasonably expect to fire my property manager (and all the accompanying maintenance expenses associated) since I'm some 1100 miles away and too much of a newbie at this point to take it on myself. I definitely can't do a whole lot regarding taxes other than annual protests. So the only expense I see left to attack, which happens to be everyone’s favorite topic, is insurance.
I am not schooled [yet] on the ins-and-outs of property insurance, and I realize the following questions are pretty much opened-ended and every situation is different, but any practical advice or rules-of-thumb will be greatly appreciated!
So my question to all the landlords out there in the trenches is how do you approach insurance on rentals? I know, as @Brandon Turner says, this is not an area you want to skimp on, but how much should we conservatively carry on a SFR? I know various policies carry certain bells and whistles, and they all vary from state-to-state, but are there any general rules-of-thumb out there that dictate what we should carry?
As an added bonus, I don't just want to take [advice] without adding value. As such, in this newbies opinion, the Fort Walton Beach, Shalimar, Destin, Crestview (et.al.) areas of the Florida Panhandle are all excellent buy-and-hold investment opportunities due to the very large movement of military personnel (both large and small families) in and out of the area while they serve at one of the many large military installations; i.e. Eglin Air Force Base, Hurlburt Field, Duke Field, etc.
Coincidentally, this area just happens to be one of my target markets as I know the area very well for anyone interested in more? I bring capital, excellent credit, an MBA (for what that’s worth in this industry), and that all important newbie passion to the table!
Thanks for any and all advice,
Brett Crisp
