Insurance for AirBnB/STR

20 Replies

Hi guys,

I have a duplex (3/2 and 1/1) where I own this property in it's own LLC and do LTR on both. However, I'd like to use the 3/2 as an airbnb. I have a normal commercial real estate policy on this with an umbrella policy as well. I know airbnb has it's own 1 million liability, but I'd like to have my own coverage as well. My real estate agent was just getting ready to leave on vacation (of course), but said my normal policy would not cover the airbnb STR. What do others do in these situations? For now, I'd like to keep the 1/1 as a LTR, so it would be "mixed use" of sorts so I assume i need to keep my current policy and either add or modify. I don't believe my agent has experience in this. Is there a specific add-on insurance I should purchase? Would my umbrella cover me in addition to the airbnb?

Thanks,

Ramzi

Originally posted by @Ramzi Nuseibeh :

Hi guys,

I have a duplex (3/2 and 1/1) where I own this property in it's own LLC and do LTR on both. However, I'd like to use the 3/2 as an airbnb. I have a normal commercial real estate policy on this with an umbrella policy as well. I know airbnb has it's own 1 million liability, but I'd like to have my own coverage as well. My real estate agent was just getting ready to leave on vacation (of course), but said my normal policy would not cover the airbnb STR. What do others do in these situations? For now, I'd like to keep the 1/1 as a LTR, so it would be "mixed use" of sorts so I assume i need to keep my current policy and either add or modify. I don't believe my agent has experience in this. Is there a specific add-on insurance I should purchase? Would my umbrella cover me in addition to the airbnb?

Thanks,

Ramzi

You need a commercial homeowners policy geared towards STR. No big deal. Call current carrier and see if they can do it. If not call foremost and proper and cbiz.

Insurance is just the tip of the ice burg of questions you’ll have. TONS of info already on this forum 

Also.... your real estate agent gets vacations too. It’s spring break. Give them a break :) 

@Lucas Carl Its my insurance agent who is on vacation, he takes too many! :)

Thanks, I’ve been reading through but have not really found clarity on the insurance answer. Would it be in place of what I have now or in addition to? Do you have any idea how that works? I also haven’t decided if I’m going to use Management or not... so many decisions!

By the way, just heard your wife on the BiggerPockets podcast, she was great!

Thanks again!

Originally posted by @Ramzi Nuseibeh :

@Lucas Carl Its my insurance agent who is on vacation, he takes too many! :)

Thanks, I’ve been reading through but have not really found clarity on the insurance answer. Would it be in place of what I have now or in addition to? Do you have any idea how that works? I also haven’t decided if I’m going to use Management or not... so many decisions!

By the way, just heard your wife on the BiggerPockets podcast, she was great!

Thanks again!

 Thank you :) 


It would be a different policy not in auditions to. Proper and foremost don't do anything but STR but they will be more expensive than your current carrier IF your current carrier can offer commercial.

If you're going to use a manager you'll likely end up going back to LTR. Very difficult to find anyone that can manage a STR worth a damn. And they're going to charge a ton. I'm happy to teach you how to do it. I self manage 26 doors. LTR & STR. With a day job and a family.

@Lucas Carl Thank you, I really appreciate the offer. Would love any tips you have, this one is in Cincinnati. Full story...My current tenant is actually running it as an Airbnb right now, And they manage remotely. They are talking with me about purchasing the furniture and the set up with future bookings and running it as a cohost with them for now. I've got several years of long-term rental experience but no short term.

Originally posted by @Ramzi Nuseibeh :

@Lucas Carl Thank you, I really appreciate the offer. Would love any tips you have, this one is in Cincinnati. Full story...My current tenant is actually running it as an Airbnb right now, And they manage remotely. They are talking with me about purchasing the furniture and the set up with future bookings and running it as a cohost with them for now. I’ve got several years of long-term rental experience but no short term.

Don’t do this. Just boot them and do it yourself  

@Lucas Carl Why? It will cost me several thousand dollars to furnish it and I’ll lose at least a month of income I would think. They want $11,000 for all of the furniture and such, bookings, and to cohost for a while. Are you saying that doesn’t make sense to do?

Originally posted by @Ramzi Nuseibeh :

@Lucas Carl Why? It will cost me several thousand dollars to furnish it and I’ll lose at least a month of income I would think. They want $11,000 for all of the furniture and such, bookings, and to cohost for a while. Are you saying that doesn’t make sense to do?

You’re basically talking about going into business with this person. Which is asking for trouble. I’m happy to teach you how to manage you don’t need to pay them. Their future bookings are worthless you can get your own. As for furnishing I just did a 3100 sq foot 4/5 luxury joint for way less than 11k

 

@Lucas Carl kind of, just having them cohost in the background so I can keep the reviews for now. That said, how much do you think to furnish a three bedroom, two bath like I have? I am getting $2250 in passive rent right now for them to run their thing, if I lose one or two months of that suddenly I’m out $4500 so I dont want to risk. 

@Lucas Carl And I’m asking all these questions as pure questions because you obviously know much more about this than me. I haven’t bought new furniture in over a decade LOL

@Ramzi Nuseibeh

Agreed w Lucas here. We operate 20+ units. Going to partner w someone on one unit that you own isn’t likely to be worth the time or effort. Would just do it yourself and earn the $ with having a partner.

For insurance, I use Proper for STR insurance. Rates are competitive and they are easy to work with.

Originally posted by @Ramzi Nuseibeh :

@Lucas Carl kind of, just having them cohost in the background so I can keep the reviews for now. That said, how much do you think to furnish a three bedroom, two bath like I have? I am getting $2250 in passive rent right now for them to run their thing, if I lose one or two months of that suddenly I’m out $4500 so I dont want to risk. 

I can’t help you with numbers. Forget about cohost and reviews. You can’t keep their reviews when you take over so just take over now. Wayfair for furniture. You’ve made me say the same thing 4 different ways now 😂 

@Lucas Carl lol sorry about that just making sure all the facts are out there on my end. Throw the cohosting thing out and how much does a three bedroom two bath cost to furnish? Because if I pay say seven and lose two months of rent I’m breaking even. I just don’t know what furniture costs on that end with nice mattresses and everything like what’s currently there. I guess I can load up a shopping cart on Wayfair and try to get an idea? Basically my biggest worry is losing out on rents for a time while I convert it.

All that said, do you know anything about the rumor I’m hearing of the ability to transfer the full listing to another name? That is what really intrigues me because the reviews are quite good and there’s a decent amount of them.



@Ramzi Nuseibeh And of course all that said I could just sit back and collect my monthly checks from them and stay hands off for now. That’s kind of the easiest thing.

First of all, you need to find a real estate agent that doesn't take vacations... that is an outrage. Kidding aside, you should really be asking your insurance agent this question. The reason for having a full team for your investing business, is that each member is actually an expert in their area. I would never rely on an insurance question answered by a real estate agent. There are nuances to every aspect of this business, and you should have a team member for each. I know there are plenty of agents that will give you there opinion on everything from insurance, to lending, to repairs, and management. I think it's irresponsible, except when answering the most basic level of questions in each of these arenas.

Originally posted by @Ramzi Nuseibeh :

@Joseph Cacciapaglia when I said “agent” it was in regards to my insurance agent, not my real estate agent, don’t worry. :)

 I'm glad that's what you meant, because you actually wrote "real estate agent", and that did make me worry. A lot of people rely on their real estate agent for things that they shouldn't. I'm glad that's not you.