Is it going to be hard for me to obtain HO insurance on a property I am buying that is a rehab and will be vacant during renovations? I heard it may be. If it is possible which I am sure it is, am I looking at paying a much larger amount as opposed to an occupied property. Any info on this subject would be greatly appreciated.
Also, do I have to buy a full year insurance if I only plan on holding the property for a few months. Can you pay month to month or get a refund for the unused months if I buy the full year policy.
Thank You for any answers.
I'm getting weekly calls from my mortgage rep. because I'm below 50% occupancy in my fourplex (I'm also rehabbing). I keep putting him off, but they keep telling me I'm going to lose my insurance as well.
If you negotiate, you can set up a payment plan, and as for getting a refund if you sell, that is exactly what will happen. Take care.
I got insurance from a local Farmers insurance Agent. My loan was a Non Ownwer occupied loan of 90%, my insurance had to have six months worth of vacany included in it which was because my lender thinks im keeping the property. My agent told be the insurance must be prepaid for a year, then once it sold i could contact them and get 60% of the remaining premium returned to me after closing. My insurance cost me almost double what it would cost if i had lived there or had an owner occupied loan.
Yup I had that same question a while back - where do you get insurance on non-occupied rehabs?
Well, it's hard. It IS doable but be prepared to pay a high cost.
My husband and I own 3 houses in MO (we live in CA though) that are not occupied. The insurance on 2 of them was $1100 for 6 months on 1, 3 months on the other. Yeah, not a happy thought.
I'm certainly going to be involved in the insurance issue on the next set of houses (my sister-in-law and husband are overseeing this rehab business while I work a day job and harp on business and tax issues).
BTW if anyone in MO wants to chat about investing there I'd be interested. Although my time here is spotty due to wildy varying work hours.
Some good links can be found here:
I just went through this a few months back. It really wasn't a big deal. I went through AmFam, although the policy was actually backed by another insurance company (don't remember off hand who it was). In any case, I was able to get a 3 month policy for around $65 a month. With an occupant, the price is around $50 a month.
Make sure you change your policy to "builder's risk" while you are working on it.
You need to find an agent that specializes in vacant homes and/or landlord insurance. Most captive carriers like State Farm and Allstate don't have a market because it is not a risk the underwriters want to take on. We get a lot of referrals from other agents because it is such a niche policy.
Just worked through this issue last week as a rookie investor doing my first rehab project, a multi-family apartment building in Cincinnati, OH. Not being experienced in this type of transaction, and living across the Ohio border in Kentucky, I was unprepared for the difficulty in finding insurance. I ran across this forum, read the above posts and found the above link http://www.mylandlordinsurance.com which looked to offer what I needed. However, after filling out and submitting the contact form late in the evening and receiving no response, a follow-up phone call was made later the following day. I was told the person who handled the type of insurance I needed was busy and would get back to me. No one responded. The closing date was looming and no options were available for coverage. Continued to do research and made more queries on Thursday night, the night before closing. Two good responses promptly arrived, which provided the exact coverage I needed and at a reasonable price. Both agents were friendly, knowledgeable, and explained the various options available to help me obtain the coverage I needed.
By purchasing coverage for a year, monthly payments were available, the necessary time for rehab is available, and the policy can be cancelled once the apartments are occupied or can be converted to a landlord policy.
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