Rental Property Investor · New York City, NY · Member since 2018 · 41 posts · 11 votes
Closing on a BRRRR deal in two weeks and I was wondering if I will need insurance during the rehab phase of the deal. Is it ok to wait until I refinance?
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
Your lender is not requiring insurance? In any case, if you're doing work to the property get insurance. The cost is swamped by the potential of loss on the property.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Jeff Plotkin How much risk are you comfortable with. How would it affect you if the place burned down during construction. What is a contractor gets hurt. Rehabbing is a very risky business. Yes you should have insurance.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
Your lender is not requiring insurance? In any case, if you're doing work to the property get insurance. The cost is swamped by the potential of loss on the property.
Your lender is not requiring insurance? In any case, if you're doing work to the property get insurance. The cost is swamped by the potential of loss on the property.
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
6y
If you purchase with cash (not hard money), you do not need insurance. But I think 99% of people would advise against not getting insurance. It can be as cheap as $40/$50 a month. Not worth the risk as others have stated above.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
6y
@Jeff Plotkin
If it’s vacant, a Builders Risk policy would be prudent. It’s insurance. Just in case something happens. Also, in a rehab, one could consider the risk of a fire or injury to be higher since it’s a construction zone. Maybe you are overhauling the electric but there is an electrical fire, for whatever reason. May you are NOT overhauling the electric, but there is an electrical fire because you should have overhauled the electric. The list goes on, but I hope you get the idea
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
We don't insure properties during rehab but we also don't have anyone working on them (other than us). I'm a minimalist when it comes to insurance. eg, we dropped the collision insurance on our car when it was 2 years old, etc. I'm not too concerned with a property burning down, mostly concerned about liability.
Insurance Agent · Bloomington, IN · Member since 2019 · 41 posts · 17 votes
6y
Most of what folks have said makes sense.
1. ALWAYS carry liability coverage. It's super cheap and covers you from bad things that happen to other people because of you. Really, don't ever go without this.
2. Whether to insure the building is a question of protecting your investment. If you paid $50,000 cash, is $80/month in insurance worth protecting that. Totally your call.