One SFR rental...need insurance advice.

4 Replies

Hello BP'ers...i am a new investor and have purchased my first SFR. My head is starting to spin regarding insurance options. Any advice e is appreciated.

Here are the facts:

- house is in our LLC (per our CPA's advice)

- paid $70M and put $1M in rehab...paid cash/no mortgage

What insurance do I need and how much?

Any referrals to a good agent?

I am in the Dallas Texas area.

Thanks in advance.

Bob:

I use CNC out of Dallas for a few rentals.  Otherwise I use NREIG which can write contracts nationally.  I recommend getting replacement cost, not cash value insurance.   I've replaced 3 DFW roofs with insurance monies after hail storms.  Cash value won't get you those.   How much your deductible is and liability coverage is a matter of preference.

Insurance aside, consider getting a mortgage so you can buy three more properties like that. Paid-in-full properties are lawsuit target. While they give better cash flow, they are terrible for ROI. After-tax returns are even worse. Do the math or have our CPA do it.

BTW, your CPA should have told you that instead of giving you legal advice. The CPA should only be telling you that the LLC can be a pass-through entity so you don't get double taxed, so is better than a C corp, but taxed the same as if you held in your own name. It may be time to get a new CPA.

So rather than starting a new thread for insurance questions I hope it’s ok to piggy back on this one- similar questions. 

How much are people paying for insurance? I'm in contract for a duplex and am shocked st the quotes I'm getting. Paying 81k for duplex. 11k closing costs (including re taxes, lawyers, title and survey) and figure I'll be putting in about 20k in rehab...ARV about 140k.

Full replacement policy with 500k liability quote from no-name company through agent - $1200 per year. 

Same coverage quote from Allstate $1350 per year. OUCH!! This is about double what I was expecting!! Location Western NY- Niagara County. 

Is this about right?   Also is it worth more to go with a name-brand company?