Renting to insurance companies?

Question

My rental is currently available, thought I had a tenant lined up but they just backed out which really stinks since we're now in a new month.

I had an insurance adjuster company reach out and ask if I'd be interested in a short term lease for their client who is currently displaced from their home.  My rental cost me $1,000 a month but rents for $1,700.  My understanding is these insurance companies pay a premium for the short term nature so maybe I could even get $2,000.

It would be for only 3 months with a month to month option.  I'd of course screen the tenants like I normally do, but this sounds very interesting.  Anything else I should be aware of?

Susan Patino · Answer

How do you start the process of renting to insurance companies? We have several properties in FL and these would make great temporary housing during hurricane season. I have spoken with several insurance companies, and no one seems to know how to start this process, get on the available rental list, etc.

Any guidance would be greatly appreciated.

Scott M. · Answer

Make sure you know what the deposit is and who pays for damages.  This has been the biggest issue we have had with insurance companies.  Tenants tend to treat them like hotels, because, well, it is a hotel to them and they can be rough.  This is, in my opinion, why insurance co's pay a premium.  So just be sure you are covered on the deposit and the "what if's".  Also be aware of when the lease will end and determine if that is a great time for you to be leasing.  In places that get snow and rents get depressed you may or may not want to have your home be renting at that time VS a prime time to lock in a year or 2 lease.  Just something to consider.

Might also want to ask what happened to the home they are coming from and where it is, if they will tell you.  That may give you some insight into the tenant.

Jared Hottle · Answer

This sounds like a great situation! If I were you I would try to make a good relationship with them and see if they would have others needing short term leases if all goes well. Only thing I can think is it would be great to get the lease to be up in March-July as those are prime times to find a new tenant. If it ends in December it may sit vacant for awhile. Maybe even offering a discount to extend the lease would be ideal.

Bjorn Ahlblad · Answer

Screen the heck out of the insurance company too and examine their feedback-some are scumbags and others fine. Put them on the lease as being responsible for payment however long the tenants occupy the property regardless of circumstance.

Curt Smith · Answer

I've done this 2x, not by design but just a normal turn over.  In a tight rental market families who've had a fire, a tree fall on their house etc etc are in very bad situation.  Want to keep kids in same school blabla very hard on the families dealing with a house to fix, AND where to live.

I was and still am skeptical but it worked 2x.  Here's my views.

At $1700 normal rent, I'd set my min rent at $2500.  You will get this easy!!!   Also $3400 deposit.  You don't care where it comes from just you get it up front.   You'll get this too.

I found the families where easier on the house because they didn't move all their furniture in, no pictures on the walls etc, it was temporary.  I got back a good shape house.  After all these are HOME OWNERs in a bad situation, they are thankful for you taking them in!   Home owners are better folks in general then renters.  Although we love our tenants and all are great folks, everyone paid all last year... But owners put out due to a fire are in my 2x experiences great tenants.

It will be twice to 3x longer then 3 mo.  They all say 3 mo, its their std thing to say.  Fixing a house these days takes 2x longer.  Expect 6 mo at 2500 or more.  AND you really won't know the final day till a few weeks prior.  Just they way fixing a house goes.   Write in you get 60 day notice and rent paid through the end of 60 days notice.

Erin Dreher · Answer

The lease should be in the tenants name that are going to be living in the house. You need make sure they are ultimately responsible for any damage done to the house even though they are not paying the rent. @Olivia McBride

Nathan Gesner · Answer

When an insurance company pays the bill, you know the money is good. What you don't know is how the tenant will treat the property. In fact, the risk is higher because Tenants tend to neglect/abuse things they aren't financially responsible for.

In my office, I have a policy of charging a double deposit and a mandatory cleaning fee to mitigate against the increased risk.

Olivia McBride · Answer

Does anyone have experience on what to put on the lease for these types of rentals? Do the insurance company become the tenant or the broker that looks for the property? We have a situation where a broker who works with the insurance company looks for the property for the displaced. We don't talk to the insurance company directly but with the broker. Our first renter's lease is about to expire and what I came to find out from that experience is 1) they brought in more people than was on the lease. 2) neighbors complained of illegal activity. 3) Easier to include utilities with the rent amount.  For this upcoming renter, I want to know what to include on the lease so that all my bases are covered and any damages will be compensated for.

Renting to insurance companies?

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