Tucson, AZ · Member since 2015 · 56 posts · 15 votes
I am looking at two 4-plex's in Palm Bay which gross about $58k a year in rent. The owner is looking for $400k.
The problem is that the current owner has them free and clear and does not carry any insurance on the structure. Im going to need a mortgage and based on the Sq ft replacement cost I'm bring told by insurance agents I need to insure them for $800k combined, which will be $8-$10k a year and that really eats into my cash flow forcast from these.
Anyone have any idea of a how to get the insurance costs down to a number that would let this deal work out for me?
Insurance Agent · Member since 2015 · 191 posts · 124 votes
10y
I am not an expert in Florida insurance pricing but $8-$10k a year seems very high. That is almost double what it would cost in the St. Louis area. That being said some tips for lowering your premiums regardless of location include:
Wind Hail Deductible: Roof claims after a storm make up a substantial amount of insurance claims on habitation properties. This is because many owners neglect to do on-going roof maintenance and basically wait for insurance to pay for a new roof after decades of wear and tear. If you maintain your roof adequately you can increase your deductible just for wind/hail related claims which will substantially lower your premiums.
Don't Over Insure: Your insurance limit should be based on the cost to replace the dwelling not the market value. This means you should not be including land in the limit.
Take Advantage of Discounts: Many insurance companies offer discounts for things like property manager being within 10 miles of the property, having safety features like central alarms, screening tenants, having good credit quality, etc.
Get Multiple Quotes: If your property is a brand new and cookie cutter building carriers like State Farm or Farmers will likely provide the most competitive quotes. However, if you have an older building or past claims history you may be better off with a specialty insurance company.
Investor · St. Louis, MO · Member since 2015 · 87 posts · 41 votes
10y
I had the exact same issue with my 4-plex. This may sound funny, but my agent asked me if there was any way I could physically separate the units? If they were 2-plexes, the cost would be a lot less. I wasn't able to without major renovation, but maybe you can.