totally unprepared; when rental property catches on fire

Rental Property Investor · Tupelo, MS · Member since 2018 · 132 posts · 61 votes

I've been adding units so fast that I don't know what to do when a rental property catches on fire. I have a house that has caught on fire and could use some moral support and some steps to take starting now. total loss.

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Call insurance. If you are insured properly, you'll have a much nicer property when it's all said and done.

I have some properties that I would literally dance a jig and take a trip to Hawaii to celebrate them burning down!!!

Assuming everyone was safe, of course.

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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
8y
Call your insurance company
1 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
8y
Get the insurance claim started. Then it depends on what type insurance you have. If you have replacement cost then you can easily rebuild if you choose to.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
8y
Call insurance. If you are insured properly, you'll have a much nicer property when it's all said and done.
I have some properties that I would literally dance a jig and take a trip to Hawaii to celebrate them burning down!!!
Assuming everyone was safe, of course.
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Johnoson Crutchfield
OP
Rental Property Investor · Tupelo, MS · Member since 2018 · 132 posts · 61 votes
8y
Everyone was safe. It’s insured. My tenants is ok staying in another apartment I have that is empty, and tomorrow I’ll file an insurance claim.
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Johnoson Crutchfield
OP
Rental Property Investor · Tupelo, MS · Member since 2018 · 132 posts · 61 votes
7y
Following up to this. Insurance company paid within 2 weeks of the incident. I sold the property for 8k to another guy who wanted to fix it up and rent it out. Learned alot and I won't be so freaked out if this ever happens again. Added this chapter to my book I'm working. When property catches on fire.
5 Reply
Steven Stohlman
Investor · Cleveland, OH · Member since 2017 · 29 posts · 25 votes
7y
@Johnoson Crutchfield that’s a great outcome! My property insurance includes lost rent on the property due to a fire etc. Glad to hear you came out of this well.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
7y
Look on the bright side.
With the right insurance coverage a fire can be a major plus. Good idea that we all check to make sure we have adequate coverage. When we do have that inevitablefire we just turn it over to the insurancecompany and reap the rewards.
0 Reply
Mark Fries
Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
7y
@Johnoson Crutchfield Sounds to me like a free rehab and 6 months of rent paid by the carrier...
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Johnoson Crutchfield
OP
Rental Property Investor · Tupelo, MS · Member since 2018 · 132 posts · 61 votes
7y
That’s exactly what happened. didn’t feel good in the moment but feels a lot better now.
1 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @Johnoson Crutchfield:
I've been adding units so fast that I don't know what to do when a rental property catches on fire. I have a house that has caught on fire and could use some moral support and some steps to take starting now. total loss.
No biggie. Just call the insurance company & file a claim. I just had one of my houses catch on fire a few months ago.
It's really not as bad as it looks. Assuming that the fire wasn't caused by anything you did such as providing housing with sub standard electrical systems having an insurance policy is the most important thing that matters in these situations. In the above example my tenants left some weed & a bowl on the porch which ended up catching one of those hanging baskets on fire. It happens, part of the biz.
It's funny, one of the landlord jokes you always hear people say is "don't call me unless the house is on fire!"
Dude don't call me if the house is on fire. Call the fire department, What am I going to do? I don't own a fire truck.
2 Reply
Kristopher HanksPro Member
Rental Property Investor · Davenport, FL · Member since 2016 · 593 posts · 382 votes
7y
@James Wise
Go to Home Depot and buy some of those orange, 5 gallon Homer Buckets. You will be prepared next time a tenant decides to call you instead of the fire department.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
One thing to remember now that you have experienced this.. do have a sit down with your insurance agent
and ask them what happens when one of your properties is vacant for any length of time.. IE 2 to 3 months.
if this ever is the case.
this is the gotcha that can bite an investor many times insurance will not provide fire coverage if the home sat vacant for more than 60 to 90 days.. you need to order a special rider for vacant home .
@James Wise Jim I had a contact that this happened to in your fair city.. busy doctor paid cash for home..
sat vacant over 90 days.. Fire happened full loss.. insurance denied.. expensive lesson.
although when I had my big portfolios I toyed with dropping fire altogether and just have liability.
if I looked at all the homes we have owned over the years and that's greater than 500.. SFRs in the mid west.
I think I have had 2 maybe 3 fires.. and when you get up to paying 30 to 40k a month in insurance .. and the assets in these areas are only worth about that much.. you can really self insure yourself and be money ahead vis a vi FIRE only.
I wonder if the big hedge funds only carry liability.. ? you know the ones that own hundreds or thousands of homes.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @Jay Hinrichs:
One thing to remember now that you have experienced this.. do have a sit down with your insurance agent
and ask them what happens when one of your properties is vacant for any length of time.. IE 2 to 3 months.
if this ever is the case.
this is the gotcha that can bite an investor many times insurance will not provide fire coverage if the home sat vacant for more than 60 to 90 days.. you need to order a special rider for vacant home .
@James Wise Jim I had a contact that this happened to in your fair city.. busy doctor paid cash for home..
sat vacant over 90 days.. Fire happened full loss.. insurance denied.. expensive lesson.
although when I had my big portfolios I toyed with dropping fire altogether and just have liability.
if I looked at all the homes we have owned over the years and that's greater than 500.. SFRs in the mid west.
I think I have had 2 maybe 3 fires.. and when you get up to paying 30 to 40k a month in insurance .. and the assets in these areas are only worth about that much.. you can really self insure yourself and be money ahead vis a vi FIRE only.
I wonder if the big hedge funds only carry liability.. ? you know the ones that own hundreds or thousands of homes.
Yes I also subscribe to the self insurance route when the portfolio size hits a certain point. However what i'd like to make clear to all of those reading this is that the caveat to that is one needs to own a ton of properties & most importantly these properties need to be free & clear for the thought of self insuring to come into play. Lenders will not allow investors to go without certain coverage. I'd venture to guess that 99% of the BP audience would not be in the camp where self insuring the portfolio is doable or financially beneficial.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @James Wise:

Originally posted by @Jay Hinrichs:

One thing to remember now that you have experienced this.. do have a sit down with your insurance agent
and ask them what happens when one of your properties is vacant for any length of time.. IE 2 to 3 months.
if this ever is the case.
this is the gotcha that can bite an investor many times insurance will not provide fire coverage if the home sat vacant for more than 60 to 90 days.. you need to order a special rider for vacant home .
@James Wise Jim I had a contact that this happened to in your fair city.. busy doctor paid cash for home..
sat vacant over 90 days.. Fire happened full loss.. insurance denied.. expensive lesson.
although when I had my big portfolios I toyed with dropping fire altogether and just have liability.
if I looked at all the homes we have owned over the years and that's greater than 500.. SFRs in the mid west.
I think I have had 2 maybe 3 fires.. and when you get up to paying 30 to 40k a month in insurance .. and the assets in these areas are only worth about that much.. you can really self insure yourself and be money ahead vis a vi FIRE only.
I wonder if the big hedge funds only carry liability.. ? you know the ones that own hundreds or thousands of homes.
Yes I also subscribe to the self insurance route when the portfolio size hits a certain point. However what i'd like to make clear to all of those reading this is that the caveat to that is one needs to own a ton of properties & most importantly these properties need to be free & clear for the thought of self insuring to come into play. Lenders will not allow investors to go without certain coverage. I'd venture to guess that 99% of the BP audience would not be in the camp where self insuring the portfolio is doable or financially beneficial.
correct only works when you have no third party debt requirements for fire insurance.. vacant homes and insurance being denied is real though for sure.. and everyone should be aware of this..
when I had one fire loss that was the first thing the adjuster did asked me when the tenant left then they went and knocked doors.. trying to deny.
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Johnoson Crutchfield
OP
Rental Property Investor · Tupelo, MS · Member since 2018 · 132 posts · 61 votes
7y
I pay about 2k a month in insurance for 22 properties right now. I never ever think of self-insuring as I am heavily leveraged. My worse fear in this was that the insurance wouldn't pay and I'd have to pay a loan back that wasn't even bringing in income anymore. Like I said, this ended up being a +15k event for me and even more valuable because of the knowledge I now have.
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