totally unprepared; when rental property catches on fire

15 Replies

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.

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.

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.

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. 

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.

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.

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. 

tenant catches house on fire

tenants catch landlords house on fire

rental property fire damage

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.

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.

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.

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. 

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.