Insurance on multiunit apartments

8 Replies

Hello,

I've been listening to the BP podcasts for months and browsing the forums for questions, the community has been great!

I have a question regarding insurance pricing for multiunit complexes in the Houston / TX gulf coast region. I'm looking to purchase my first property and am trying to get a realistic cost estimate on my expenses. Is there a general rule of thumb of price per sq ft rented? or number of units rented within the same property? 

Is the best thing to do here really reach out to insurance companies and ask for quotes on a property that I don't even own yet? 

Thanks in advance.

Michael 

Michael, with all of the weather related insurance issues in that area, I do not recommend estimating.  The insurance market will be in flux for the next months/years.

Connect with a local independent insurance agent and have them run some quotes for you on properties you are considering.

Lastly, when looking at the sellers insurance costs, realize you will probably not be able to get to that grandfathered price. 

Originally posted by @Michael Z. :

Hello,

I've been listening to the BP podcasts for months and browsing the forums for questions, the community has been great!

I have a question regarding insurance pricing for multiunit complexes in the Houston / TX gulf coast region. I'm looking to purchase my first property and am trying to get a realistic cost estimate on my expenses. Is there a general rule of thumb of price per sq ft rented? or number of units rented within the same property? 

Is the best thing to do here really reach out to insurance companies and ask for quotes on a property that I don't even own yet? 

Thanks in advance.

Michael 

@Michael Pittman @Jason Bott

Thanks for the insight.  A few follow up questions...

What should I expect from them? Will they want to visit each site before giving a quote? Can they utilize the listing, engineering or maintenance records, roof warranties, valuation, etc at all? 

Also, what sort of documentation will I be expected to provide them? Given the region and frequency of hurricanes/flooding will I need some sort of history of how the property faired during bad weather or will they research that themselves?

Thanks again! 

@Michael Z. some companies will inspect before they provide a quote, but 4 out of 5 will inspect after the policy is started.

They will not need documentation, but you will be asked how old he roof is, age of the mechanicals, etc.

@Michael Z. I own 5 multifamilies in Houston. They will rarely come out and inspect. They want to know the roof life (ie. when was it last replaced) and the life of any other major capital improvements. Make sure you get insurance for the cash value of the property rather than the much more expensive re-build value. It's a line item expense so you don't want to over insure imo.

Before you make a purchase I wouldn't worry about this too much.

@Micheal Z.I have been able to get landlord insurance for SFHs in Katy/Cypress axis for $860-$920/yearly premium.I once got $1300 quote for a 4plex. Your best bet will be to speak to an insurance agent.

We are closing on a 25 unit class C in Houston and our price is about $440 a door. It depends on a lot of factors already mentioned but $400-$450 is a good range to use in your underwriting if evaluating class C. And this is post Harvey....