Investor · Union City, NJ · Member since 2019 · 32 posts · 7 votes
I'm shopping my first property and have financing in a row, current owner gave me rental rates and fixed monthly expenses, I've found a property manager, but I'm a little confused about insurance.
It's a 3-family home with a studio, 1-bedroom, and 2-bedroom apartments. I may live in one unit, but there's a higher probability I will not. I am having trouble finding insurance quotes for a 3-fam that is not owner-occupied. Because I'm doing FHA, 5% down this deal is appealing from a COC-ROI standpoint, but cash-flow is weak (Not Brandon Turner's recommended >$100/unit metric) given lower rents in this neighborhood, so insurance costs could turn this deal sour quickly. Only clearing ~$250 cash-flow total for all units @ 7% vacancy, 10% R&M, 10% CapEx, & 8% Property Mgr. Thoughts on deal?
Anybody have any recommendations? Any insurance partners in the area?
Real Estate Agent · Freehold, NJ · Member since 2018 · 115 posts · 49 votes
7y
@Alejandro Tirso
Going local is usually a great bet as the insurance agents there usually know the area well enough to explain what coverage you should need. I’m located in central Jersey and you should be able to find better deals that do cash flow for MF. Let me know if you’re interested!
Health Care Administration · Philadelphia, PA · Member since 2015 · 65 posts · 65 votes
7y
@Alejandro Tirso - I would call as many insurance companies as you can. If you call 10 or 15 different insurance companies, you will probably find that the premiums differ depending on the company and how they underwrite the property. If you can find a company offering a lower premium, it may improve the cash flow at least a little.
You also mentioned that you are doing FHA financing. Keep in mind if you are doing FHA financing the property legally has to be owner occupied.
Rental Property Investor · Teaneck, NJ · Member since 2016 · 567 posts · 291 votes
7y
@Alejandro Tirso I believe FHA loans only given to owner-occupied properties. Please double check before buying so you will not be faced with a surprise later on.