Seeking Duplex insurance for 1st time investor (built 1910)

10 Replies

Hi BP,

So my husband & I are in escrow on our first investment property, a duplex in Indianapolis (doing the @David Greene Long Distance) and we are hoping to use the BRRR strategy (Buy, Renovate, Rent, Refi). We will be closing in a few weeks and the duplex was built 1910, No contingencies, escrow should go smoothly.

Could you help recommend us an insurance company that would insure new first time investor, who will be renovating first before renting, The current tenants will be leaving so we can renovate, but they were paying $500/mo each; we think with renovation we could get more at least $650. Any ideas on what the insurance companies are looking for? I have a general inspection (including radon and termites) and a plumber 'scope' inspection will also be performed.

Our current home owner's insurance company, Geico, will not give us a quote. I never thought that getting insurance would be difficult, but perhaps we're not asking the right company. Any recommendations for small multi-families would greatly be appreciated! 

Cheers~

Lynne  

Hi Lynne, 

Just sent you a PM - I was in a similar position and initially had a challenging time as well. Let me know if the message didn't go through - having some technical difficulties at my end, haha.

@Lynne MacFarlane you will want to start with a Vacant/Builders risk type policy until you have a renter in place. 

If you go with a traditional Rental Dwelling/Landlord policy, and you have a claim, the first thing they will ask is if it was occupied.  Most companies policies change is the building has been unoccupied for more than 30-60 days.

Once the property is occupied, then there are several companies that will insure the building.

Hi @Sunitha Rao ,

How's your rental coming along?! What's your insurance situation, do you have tenants? Are you doing a renovation on your units? Keep in touch~

Thank you @Jason Bott ,

I read what you wrote on someone else's post and now I understand there are two types of policies: 

1) Builders (for during renovation) - My renovation will be short, maybe 1month 

==> then can switch to...

2) Tenant/landlord policy

Question: What happens when one side of the duplex is still rented (not sure exactly when she'll leave...), but would like to begin renovation on the other unit. Will I have two policies? 

I just came back from Indianapolis to see the duplex, meet with the inspector (excellent), prospective contractors, a property management company, and my agent who I'm training as my "boots on the ground," its been a very hectic few days last week.

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Tangent: As a reward to myself for scheduling and accomplishing all those activities while visit Indy, I had time to try the Pacer Bike Share rentals in downtown Indy to explore the great bike trails, highly recommend it especially for long-distance investors, I had the chance to chat with locals, get their perspective and see test first-hand their infrastructure.  Trying out #Pacers #Bikeshare

@Lynne MacFarlane Always check with your particular insurance carrier as to how they can insure an occupied rental.

That being said, most companies will be comfortable with a duplex being 50% occupied with 1 side having a cosmetic remodel.

Most insurance policies Vacancy clauses consider the property vacant is occupancy is less than 30%-40%.

I had exact same problem with a 1910/1920 building... Shine insurance out of Bloomington Indiana found me a great lower cost policy (250k coverage for about 100$ a month)

We have a relationship  with an insurance company  that has a policy designed specifically  for  investors . 

A second vote for Shine Insurance! Jeremy s our go to for all things Insurance. Because he is a broker, rather than captive agent like Gieco, he has a lot more flexibility. I am glad to hear he can insure outside on the Bloomington area. A call to him would be WELL worth your time.

I had great experience with Shine.  I didn't get a policy with them, but they had a lot of options for all kinds of things, even Food truck and commercial Auto policies.   If I recall, they were also very responsive.    I can't say the same for the people who service my other commercial auto and GL policies currently. 

Hi @Lynne MacFarlane

Apologies for the delayed response - was actually in Indy over the weekend checking up on the two units in Noblesville and the quad I have under contract and have been playing catch up ever since. To answer your questions - For the two unit property, I am working with PGH Insurance. For the quad, I am working with @Jason Bott to have the property covered.

The reno was completed on both units and the units have been on market for about 3 weeks. Had a tenant move into the carriage house portion of the property within a week of the property being marketed but then he promptly moved out within a day, citing a litany of issues. None of these issues were actually taking place in the unit  as I personally checked it out during the course of me visit. Let that one go, as he likely have been a problem tenant anyway.  In all honesty - getting a little concerned about getting these units occupied as they are located in a nice area that's mostly owner occupied, the rents are below market for that area and thus should be easily rented. While I have plenty of cushion to cover a 3rd mortgage payment, doing so was certainly not in my financial projections. Also, I wanted to get the units rented in the summer months so that a premium can be charged for current and future leases. So - dealing with that, as well as some increased costs from the contractor perspective for the quad, which is making this a very busy time, haha.

Would love to hear more about your trip to Indy - perhaps we can continue this conversation offline?

-S