Insurance Killing My Deal

15 Replies

Hey All,

I have a 4 unit deal under contract. It's two duplexes on one lot. purchase price $219,000 taxes $2500 and net rents 2250 a month. It is what I feel is an OK deal. But what is really making this deal look sour is the insurance policy. Because the units are separated it requires two different policy's making the insurance anywhere from 2500-3000 a year. I thought I was in the right ball park by running the numbers as $1600 for insurance but apparently I was not right. 

Any one have any thoughts on this? 

Could you connect the 2 units with a garage with covered path to both.  Its just an idea, but that would technically make it a single structure.  You might want to consult the zoning/taxing county offices to see how to re-designate the property as a single address with units a,b,c, and d instead of individual numbers (if that's the case).

That's ridiculous. So if you buy a 30 unit apartment building, you would need 30 insurance policies? No chance, there's plenty more agents to holler at. 

(727) 475-0107

@Tariq Bahay I just ran into this with an 8 unit I am closing on Wednesday. It is 4 duplexes and each one is its own tax ID. They had to run it as 4 separate policies wrapped together, couldn't find an option around it. Luckily I shopped and got it down to $500 a dueplex but it is disaster insurance so I have a $10k deductible(although all my policies are structured with the highest deductible so its no different then I do on my other three properties). Its all wrapped together though so it wont be a $10k deductible on each building if a tornado comes through and wipes them all out. Prior to I was getting quotes of $1200 a building though so it took calling around to a number of places.

@Nick C. The issue is the number of structures. From my experience they will write in each structure(in this case two buildings) and then typically they can pull them into one policy(depending on if they are the same or separate parcels and how the agency is allowed to structure it). Ultimately though, you are correct, shop it shop it shop it. On every deal I have done I have gotten my insurance rates cut in at least half when compared to the previous owner. This is saving me about $6k a year compared to the previous owners. I go high deductibles since I dont want to ever use my insurance except in a disaster. But with the savings, over a 10 year period, I will have put $60k in my pocket because I am ok with paying $10k as deductible as opposed to the $2k the other guys wanted to have. 

@Clint LeClair that's what I was considering something similar but I'm not sure it would work. Their thing is well it has to different addresses so we have to do each separate. One company would not do it simply because their LLC cap was one. As in one property in an LLC -_-

@Nick C. I know right I'm not there yet so that I have no idea on. 

@Joel M. that's wild that is quite the difference in prices! I got discouraged in shopping around because all the agencies I spoke to were in the same ball park of each other. 

Have you only been calling GEICO, etc?

There’s a reason your local independent insurance brokers exist. They have more flexibility and can do the deals the major carriers aren’t interested in.

Think of it like a local bank w/ a portfolio lending arm vs. going to Chase for a mortgage. If you’re an investor you should have a good relationship with a local independent.

This post has been removed.

Condos have a master policy and the owners get a different policy for their contents . Something to look into 

@Jim S. unfortunately the local brokers are the only people I have tried, I stopped going to the "big guys" long ago but i appreciate the idea. I'll just keep trying more local brokers. 

@Matthew Paul  how's the weather out there, I don't miss the weather there but I sure do miss the RE market! How would  your idea work in this situation? I would love more details.  

@Tariq Bahay try REI Guard. I've found them to be far more investor friendly than typical providers, and less expensive in my experience. I wouldn't be surprised if your premium were cut in half. Check them out and let me know what you think.

***I'm not in any way affiliated with REI Guard. Just a happy customer.

@Tariq Bahay Get a few more quotes from insurance agents. Also, you may want to connect with some folks at your local real estate investment association and/or apartment association for referrals. Good luck! 

Originally posted by @Tariq Bahay :

@Jim S. unfortunately the local brokers are the only people I have tried, I stopped going to the "big guys" long ago but i appreciate the idea. I'll just keep trying more local brokers. 

@Matthew Paul  how's the weather out there, I don't miss the weather there but I sure do miss the RE market! How would  your idea work in this situation? I would love more details.  

Weather is great , and deals are hard to find .  As far as the insurance , the only details I can give you is there is a community of what appears to be single family homes , but they were sold as condos . There is a Master Policy and the owners get something like renters insurance for contents 

Hey everyone,

So I woke up to an irritating text from the sellers broker. As I let them know I would have to walk from the deal if I can't get the insurance down. He said "There is no 4-unit in america that will be insured for less than 3K." I couldn't help ask myself....how many 4-units have you tried to insure in your life?

Needless to say I was determined, so I called around, ended the business day pretty beat up, call after call. But it was not for nothing! Thankfully I found a broker who appears to be very good and we worked on the policy trying to find ways to bring it down. Long story short, should the 4-point inspection check out and the wind mitigation inspection check out the policy will be down to $700 a building, which was under budget! Thanks everyone for the positive vibes. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.