What will I need for my first rental? Insurance, banks, PM, etc

New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.

1) Do I need landlord insurance? Or is just the home insurance fine?

2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.

3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

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Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

@Gina Coleman congrats! Hope you consider Detroit in the future if you buy more:)

1) Yes, you'll need a landlord policy or landlord rider. It will have coverage for tenants displaced by accidents that force them to temp relocate. Just be sure to ask WHAT HAPPENS IF PROPERTY VACANT FOR MORE THAN 30 DAYS!

2) Stessa is software for DIY landlords. Since your PMC will collect rents, pay vendors and then disburse balance to you, you only need a separate business account. You should pay property taxes and insurance plus any other business expenses from this. Speak with a tax professional.

3) Many investors get an LLC because they read about it or someone advised it, but don't set it up or use it correctly. If you have enough insurance, you don't need LLC protection. You may want to somewhat hide your identity from tenants though, which if set up correctly, an LLC can do.

You didn't ask, but... you should ask your PMC a LOT of questions about HOW they will execute their services and how they will communicate with you. There are a ton of posts here on BP from investors unhappy with the service of their PMC - most can be traced back to not understanding how their PMC actually operates! Ask a lot of questions about maintenance as that's where a lot of expectations are not met.

Good luck!

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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Gina Coleman congrats! Hope you consider Detroit in the future if you buy more:)
1) Yes, you'll need a landlord policy or landlord rider. It will have coverage for tenants displaced by accidents that force them to temp relocate. Just be sure to ask WHAT HAPPENS IF PROPERTY VACANT FOR MORE THAN 30 DAYS!
2) Stessa is software for DIY landlords. Since your PMC will collect rents, pay vendors and then disburse balance to you, you only need a separate business account. You should pay property taxes and insurance plus any other business expenses from this. Speak with a tax professional.
3) Many investors get an LLC because they read about it or someone advised it, but don't set it up or use it correctly. If you have enough insurance, you don't need LLC protection. You may want to somewhat hide your identity from tenants though, which if set up correctly, an LLC can do.
You didn't ask, but... you should ask your PMC a LOT of questions about HOW they will execute their services and how they will communicate with you. There are a ton of posts here on BP from investors unhappy with the service of their PMC - most can be traced back to not understanding how their PMC actually operates! Ask a lot of questions about maintenance as that's where a lot of expectations are not met.
Good luck!
Logical Property Management4.9457 Reviews
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Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Michael Smythe:

@Gina Coleman congrats! Hope you consider Detroit in the future if you buy more:)
1) Yes, you'll need a landlord policy or landlord rider. It will have coverage for tenants displaced by accidents that force them to temp relocate. Just be sure to ask WHAT HAPPENS IF PROPERTY VACANT FOR MORE THAN 30 DAYS!
2) Stessa is software for DIY landlords. Since your PMC will collect rents, pay vendors and then disburse balance to you, you only need a separate business account. You should pay property taxes and insurance plus any other business expenses from this. Speak with a tax professional.
3) Many investors get an LLC because they read about it or someone advised it, but don't set it up or use it correctly. If you have enough insurance, you don't need LLC protection. You may want to somewhat hide your identity from tenants though, which if set up correctly, an LLC can do.
You didn't ask, but... you should ask your PMC a LOT of questions about HOW they will execute their services and how they will communicate with you. There are a ton of posts here on BP from investors unhappy with the service of their PMC - most can be traced back to not understanding how their PMC actually operates! Ask a lot of questions about maintenance as that's where a lot of expectations are not met.
Good luck!
Those are great questions to ask! Also, Detroit sounds like a good second place to start!

Thank you so much for the help! Definitely clears things up a bit! I will definitely take note and ask lots of questions! I appreciate it Michael!
0 Reply
Owen RosenBusiness Member
Professional · Clinton Township, MI · Member since 2015 · 708 posts · 267 votes
2y
Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

You'll need insurance that is specific to non-owner occupied properties. What that's called might vary from company to company.
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Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Owen Rosen:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

You'll need insurance that is specific to non-owner occupied properties. What that's called might vary from company to company.

Oh interesting! That's good to know! I'll have to make sure I find the right kind then. Thanks for the info!
0 Reply
John Mocker
Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
2y
Gina,
The most form used to insure 1-4 family rental properties is a "Dwelling Fire" policy. Some companies will use other names for it (ie. Landlord policy). If the duplexes and the single family are all on separate parcels you can insure them on separate policies. Some companies may offer to combine them on one policy. Look at both options. Sometimes, one company may be better on the single family and another better on the duplex.
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Gary Mascitis
Member since 2024 · 53 posts · 11 votes
2y
Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi Gina,
How are you purchasing these properties? Most lenders will require the properties to be purchased under an LLC. Even if you are purchasing using your own capital, I would suggest creating separate LLC's for each property! Happy to answer any other questions you may have. Feel free to reach out!
Best,
0 Reply
Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @John Mocker:

Gina,
The most form used to insure 1-4 family rental properties is a "Dwelling Fire" policy. Some companies will use other names for it (ie. Landlord policy). If the duplexes and the single family are all on separate parcels you can insure them on separate policies. Some companies may offer to combine them on one policy. Look at both options. Sometimes, one company may be better on the single family and another better on the duplex.

Sounds like having them all on one policy might be easier, but I will have to ask when I shop around for insurance. This is extremely helpful!
0 Reply
Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Gary Mascitis:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi Gina,
How are you purchasing these properties? Most lenders will require the properties to be purchased under an LLC. Even if you are purchasing using your own capital, I would suggest creating separate LLC's for each property! Happy to answer any other questions you may have. Feel free to reach out!
Best,

I'm looking into a bridge loan at the moment, and figured I'd move them to an LLC later. What's the reason for having a separate one for each property? Is it better protection? I'm completely new to this so I did not know about doing that.
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

YES you 100% need PM. ( I know most happy to recommend) YES you need insurance. I have been doing biz out there for year, 100s and 100s and 100s of deals. I am happy to recommend, Contractors and PM. I closed last week on a SF just under 20% net cap, buying two more next week with similar numbers. Best part I live in FL,
Good luck
0 Reply
Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

YES you 100% need PM. ( I know most happy to recommend) YES you need insurance. I have been doing biz out there for year, 100s and 100s and 100s of deals. I am happy to recommend, Contractors and PM. I closed last week on a SF just under 20% net cap, buying two more next week with similar numbers. Best part I live in FL,
Good luck

Thanks! I appreciate that!
0 Reply
Hamidou KeitaPro Member
Member since 2024 · 47 posts · 16 votes
2y
Hi, I am planning to invest in real estate in Detroit or Cleveland. Could anyone suggest helpful tips to get my first property? Also do you have any preference between the two cities I mentioned and why?
0 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
2y
@Hamidou Keita Detroit is one of the best cities in the Midwest for investors, see chart below:
Regarding, your first property, we've helped many OOS investors get started in Detroit with our logical approach to invest wisely and avoid critical mistakes. PM us for more info, but in the meantime read more advice below:
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

PM us if you’d like to discuss this logical approach in greater detail!
[email protected]248-209-6824
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?
0 Reply
Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?

I ended up closing on a different property. That one did not work out.
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?

I ended up closing on a different property. That one did not work out.

Where did you close in Cleveland ?
0 Reply
Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Bob S.:

Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?

I ended up closing on a different property. That one did not work out.

Where did you close in Cleveland ?

Yes sir!
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?

I ended up closing on a different property. That one did not work out.

Where did you close in Cleveland ?

Yes sir!

Great , if you need anything feel free to reach out.
0 Reply
Account Closed
Realtor · Cleveland, OH · Member since 2023 · 340 posts · 215 votes
2y
Hi, yes, I always recommend to all of my clients/everyone to shop around and do your own homework for all your real estate needs. Yes, you can receive referrals but, still make sure you do your due diligence regarding your investments. You got this and best wishes and good luck!
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?

I ended up closing on a different property. That one did not work out.

Where did you close in Cleveland ?

Yes sir!

where and how much did you pay ?
0 Reply
Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Bob S.:

Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?

I ended up closing on a different property. That one did not work out.

Where did you close in Cleveland ?

Yes sir!

where and how much did you pay ?
A block away from the Cleveland clinic. Paid 40k cash
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Quote from @Bob S.:

Quote from @Gina Coleman:

Made an offer on an off-market portfolio consisting of 2 duplexes and 1 SF. I’m planning on getting a Property Management company as I live out of State in CA. Just a few questions I’m hoping someone can help me with.
1) Do I need landlord insurance? Or is just the home insurance fine?
2) If I plan on using a PM for my properties, would landlord friendly companies like Stessa benefit me? Im wanting to open a separate bank account for each property and saw a lot of people recommending Stessa for bank services.
3) Do most use an LLC when having multiple rentals? Is this something I should look into?

Thanks in advance!

Hi did you close and if so how's it going ?

I ended up closing on a different property. That one did not work out.

Where did you close in Cleveland ?

Yes sir!

where and how much did you pay ?
A block away from the Cleveland clinic. Paid 40k cash

Of you need anything feel free to reach out,
All the best
0 Reply
Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
2y
@Gina Coleman Check with a few independent insurance companies about your policy options. My company allows me to place more than one property together on one policy which saves me a lot of money.
If the buildings are all on one lot this won’t apply.
I have one property with multiple buildings and it took a little more creativity to write its insurance policy.
0 Reply
Gina ColemanPro Member
OP
New to Real Estate · Nuevo, CA · Member since 2023 · 14 posts · 4 votes
2y
Quote from @Alecia Loveless:

@Gina Coleman Check with a few independent insurance companies about your policy options. My company allows me to place more than one property together on one policy which saves me a lot of money.
If the buildings are all on one lot this won’t apply.
I have one property with multiple buildings and it took a little more creativity to write its insurance policy.
Good to know! Thanks for the info!
0 Reply
Tanner Lewis
Lender · Austin, TX · Member since 2021 · 448 posts · 441 votes
2y
Hey Gina -
1. Even if not required, I suggest getting rental loss coverage on your deals. 6 months is suggested. Normally your lender will let you know their requirements.
2. I would ask your realtor for local property management referrals, they will be the best source of the top local players in your market
3. Yes I suggest using an LLC to protect your investments!
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