Why is the insurance so high for my 4-plex?!

10 Replies

I'm closing on a 4-plex in Dallas and just got a sticker shock for the homeowners insurance. My broker quoted me $6800 per year! Even the current owner is paying $5700! So I asked my broker to shop around more. Is that the norm? Why is it so high?! Now my COC is only 5% :(

Here's some info on the property:

Purchasing Price $298K, 4-plex, 2 bed 2 bath each all in one building. Built in the 1980's. Location: North Dallas 


@Fay Chen undefined

Not sure how much it affects your insurance costs, but I believe that the number of claims that the building has had in the past even with previous owners will make your premium go up.


Be sure to get an actual insurance quote BEFORE to make an offer next time.

Best of success!

@Johann Kleisch, I definitely learned my lesson! The things they don't teach you in school...

@Adam Drummond , I don't see any previous claims, at least in the last 5 years of record provided by the seller. But thanks for the input, I hadn't thought of that.

If those prices are right on insurance, get out of this deal before your stuck with it

Originally posted by @Randy E. :

@Fay Chen , try American Modern Insurance.  After years of paying too much, I finally looked around and found them.  After I searched around BP, I discovered others here already knew about AMI.


Yes. AMI is a good value, by what I hear from others. We insure with Safeco and have been happy with them as well.  USAA is also another good option if you have a military connection. Some insurance brokers have connections with too few companies. Make sure your broker offers a wide variety of options, if not, find a new insurance broker. You can also by direct if you want to forgo the broker service.

@Fay Chen

If you put your property in an LLC then the rate might go crazy. I ran into that same problem. Or if the property is in the "storm zone" nobody will not sell it for cheap either. That's why i always call my instance agent and make her quote 1st before moving into any deal.

Good luck!

@Fay Chen

In your profile you list investing in "Student and Rooming houses".  Both of these are considered high risk.  So if this is that type of property, then that is proabably the answer.

Secondary reasons...  

Storm area as @Huy N. references. 

Also, if your Broker is based in SoCal, they may not have access to all the TX insurance carriers.  Brokers still need to have a contract with a specific insurance carrier in order to provide quotes from them.  The average agent has 10 options, but there are 2200 insurance carriers in the US.  I am sure some BP members based in Dallas can refer you to their local insurance broker.

@Randy E. @Marcia Maynard , I called an AMI agent in Dallas since the property is in Dallas. They said they are no longer creating new policies...What does that even mean : / 

@Huy N. , this one will be a traditional rental. I plan to keep the whole student house thing in CA, close to home. I just called a few local brokers this morning. One of them actually lives a few blocks away. She said it is in the storm zone but that area doesn't get much flood.

This insurance thing is definitely making me reconsider. While it's still not too late to walk away, I still want to do more research before I quit. Thanks for everyone's help!

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