Hello, I am looking into getting a quad-plex or Tri-plex with home-owner occupancy so I can get in with a lower down payment. I was curious though about the insurance coverage I should have? I know usually a rental insurance coverage is needed if I wasn’t to live in the property but I also don’t know what a good deductible would be to start with or if $900 a month is a good rate. Any information would be great!! Thank you in advance.
Also since I would be residing in the quad-plex would I need rental insurance and home owners insurance?
It all comes down to risk tolerance and your individual situation.
It should go without saying, but insurance companies are profitable, which means in the long run they pay out less than they collect, which means that essentially you are paying them a lot of money, for only a little bit of repairs.
The caveat of course is you need enough cash on hand to cover deductibles. I think I have something like a 10k or 20k deductible on my properties, but my insurance is dirt cheap on a monthly basis and I have enough cash on hand to easily cover those deductibles if I ever actually had to. I don't need/want my insurance company to be involved in every minor defect the house goes through, I just need the insurance to cover catastrophic loss like a fire taking the entire building.
Of course I also don't live in areas that are prone to hail, flooding, tornados, or any other dramatic weather conditions.
I actually don’t know the answer. I would find a good agent and just start asking questions. I think you’re idea to house hack a four plex is a great idea as long as you want to live next to your tenants:)
It all comes down to risk tolerance and your individual situation.
It should go without saying, but insurance companies are profitable, which means in the long run they pay out less than they collect, which means that essentially you are paying them a lot of money, for only a little bit of repairs.
The caveat of course is you need enough cash on hand to cover deductibles. I think I have something like a 10k or 20k deductible on my properties, but my insurance is dirt cheap on a monthly basis and I have enough cash on hand to easily cover those deductibles if I ever actually had to. I don't need/want my insurance company to be involved in every minor defect the house goes through, I just need the insurance to cover catastrophic loss like a fire taking the entire building.
Of course I also don't live in areas that are prone to hail, flooding, tornados, or any other dramatic weather conditions.
I am ok with a little risk. I am definitely taking into account all expenses and setting aside money for anything else. I am looking for averages of what people pay for their coverages annually or monthly and what kind of deductible they choose to go with so I can make sure to make the best decision.
@Alfredo Alfaro if the property will be your primary residence, then you will need to purchase a Home Owners policy. To protect yourself from Liability claims from the tenants, you agent needs to endorse the Homeowners policy with Landlord Liability. I'd recommend $1M in limits if they offer it.
As for the deductible, I would run through some claim scenarios with your agent to determine some hypothetical out of pocket costs for different types of claims.
Many Personal Insurance Carriers will write 1-4 family owner occupied home with a homeowner policy. The loss of rents coverage is included with your Loss of Use coverage. The policy will provide Liability coverage (normally max limit is $500,000).
You can increase your liability coverage with an umbrella policy (provides coverage if the limits on your home or auto policy are exhausted in a claim). Sold in increments of $1mm normally.