Calculating Insurance

13 Replies

I'm taking @Brandon Turner advice to heart and I plan to analyze at least 3 deals a day or 90 deals a month. I have a spread sheet that I use to plug and chug. This book gave me the knowledge and background to understand and trust my numbers. (Sorry Brandon, but I'm not upgrading to Pro just yet.) I believe all my assumptions are within bounds and I have safety margins in place. The only issue I have is estimating insurance. 

I live in Norman, Oklahoma. I am looking at properties in Norman, Moore and OKC. We are notorious for our tornadoes, thus our insurance is higher than the national average. My only reference point is the house that I'm house hacking. 

I know insurance can vary a lot base on many different factors. In fact I got quotes from 3 different companies with different options. The annual rate was from $3,434 to $1483. (My house is 1,400 sq ft and was made in 1974 in case you're wondering.) 

With the option that I went with, what I'm paying for my insurance is about the same as my tax. Is this a ballpark estimate?

I would love to know how you all estimate insurance when you run your numbers.

Would it be annoying if I called my insurance agent and have him run quotes for me if I promise to use him when I purchase a property? 

Originally posted by @Minh Lai :

I'm taking @Brandon Turner advice to heart and I plan to analyze at least 3 deals a day or 90 deals a month. I have a spread sheet that I use to plug and chug. This book gave me the knowledge and background to understand and trust my numbers. (Sorry Brandon, but I'm not upgrading to Pro just yet.) I believe all my assumptions are within bounds and I have safety margins in place. The only issue I have is estimating insurance. 

I live in Norman, Oklahoma. I am looking at properties in Norman, Moore and OKC. We are notorious for our tornadoes, thus our insurance is higher than the national average. My only reference point is the house that I'm house hacking. 

I know insurance can vary a lot base on many different factors. In fact I got quotes from 3 different companies with different options. The annual rate was from $3,434 to $1483. (My house is 1,400 sq ft and was made in 1974 in case you're wondering.) 

With the option that I went with, what I'm paying for my insurance is about the same as my tax. Is this a ballpark estimate?

I would love to know how you all estimate insurance when you run your numbers.

Would it be annoying if I called my insurance agent and have him run quotes for me if I promise to use him when I purchase a property? 

I don't think it's a bother for your agent if they know you are an investor and will likely want to get quotes for your properties or soon-to-be. I call my agent and send emails often when I'm looking at a property that is unlike the previous. Meaning, I found out about flood zones, notorious here in Florida. It was my first  property I found in  a flood zone so I called her and she educated me so now I know what an estimation would be based on parameters she told me about.

Because she and I have spoken extensively about investment properties and insurance I can estimate my insurance when I look at  properties. I  pad a little over the amount it would be so I know it's well within what it will be.

Originally posted by @Minh Lai :

I'm taking @Brandon Turner advice to heart and I plan to analyze at least 3 deals a day or 90 deals a month. I have a spread sheet that I use to plug and chug. This book gave me the knowledge and background to understand and trust my numbers. (Sorry Brandon, but I'm not upgrading to Pro just yet.) I believe all my assumptions are within bounds and I have safety margins in place. The only issue I have is estimating insurance. 

I live in Norman, Oklahoma. I am looking at properties in Norman, Moore and OKC. We are notorious for our tornadoes, thus our insurance is higher than the national average. My only reference point is the house that I'm house hacking. 

I know insurance can vary a lot base on many different factors. In fact I got quotes from 3 different companies with different options. The annual rate was from $3,434 to $1483. (My house is 1,400 sq ft and was made in 1974 in case you're wondering.) 

With the option that I went with, what I'm paying for my insurance is about the same as my tax. Is this a ballpark estimate?

I would love to know how you all estimate insurance when you run your numbers.

Would it be annoying if I called my insurance agent and have him run quotes for me if I promise to use him when I purchase a property? 

 By the way, I too have that book and have not started reading it yet. Currently, I am reading Tips and Traps for Negotiating Real Estate (3rd edition) by Robert Irwin.

@Minh Lai

I am eager to read what you are reading now. When I flipped through the pages, it was everything I was looking for in that it has all the financial metrics. 

The negotiations read is great. Its a strong suit for me only in some areas where I fall short in those that I need have my negotiation kick in. This book has been an eye opener for me. Pun intended. :)

Pick 2 or 3 houses that meet your criteria and give 3 or more companies a call and tell them you are analyzing them for purchase and want to know what a landlord policy will run on them.  A land lords policy will be different from an owner occupant, but that is what you want.

You will learn an estimated number to use in your calculations and what company you may want to go with.

Originally posted by @Minh Lai :

I'm taking @Brandon Turner advice to heart and I plan to analyze at least 3 deals a day or 90 deals a month. I have a spread sheet that I use to plug and chug. This book gave me the knowledge and background to understand and trust my numbers. (Sorry Brandon, but I'm not upgrading to Pro just yet.) I believe all my assumptions are within bounds and I have safety margins in place. The only issue I have is estimating insurance. 

I live in Norman, Oklahoma. I am looking at properties in Norman, Moore and OKC. We are notorious for our tornadoes, thus our insurance is higher than the national average. My only reference point is the house that I'm house hacking. 

I know insurance can vary a lot base on many different factors. In fact I got quotes from 3 different companies with different options. The annual rate was from $3,434 to $1483. (My house is 1,400 sq ft and was made in 1974 in case you're wondering.) 

With the option that I went with, what I'm paying for my insurance is about the same as my tax. Is this a ballpark estimate?

I would love to know how you all estimate insurance when you run your numbers.

Would it be annoying if I called my insurance agent and have him run quotes for me if I promise to use him when I purchase a property? 

First decide what coverage you want (eg Form 1 vs Form 3, cash value vs replacement cost, low deductible vs high deductible, etc). A broker should be able to give you an idea of what these will cost in terms of a rate that you can apply to the cost/value you are insuring. 

eg you might find the coverage you want can be had at a rate of $.60 / $100 plus $50 for liability coverage. Then just plug that into your spreadsheet.

Flood insurance would be case-by-case.

@Minh Lai

I forgot where I read it - probably somewhere on BP - that estimating about 1.1% of the purchase price (0.011*price) is a good rule of thumb for annual taxes and insurance Oklahoma.  I've been using it in my analysis, and it seems pretty accurate most of the time.  Note: This doesn't account for earthquake or flood insurance.

Originally posted by @Daria B. :
Originally posted by @Minh Lai:

I'm taking @Brandon Turner advice to heart and I plan to analyze at least 3 deals a day or 90 deals a month. I have a spread sheet that I use to plug and chug. This book gave me the knowledge and background to understand and trust my numbers. (Sorry Brandon, but I'm not upgrading to Pro just yet.) I believe all my assumptions are within bounds and I have safety margins in place. The only issue I have is estimating insurance. 

I live in Norman, Oklahoma. I am looking at properties in Norman, Moore and OKC. We are notorious for our tornadoes, thus our insurance is higher than the national average. My only reference point is the house that I'm house hacking. 

I know insurance can vary a lot base on many different factors. In fact I got quotes from 3 different companies with different options. The annual rate was from $3,434 to $1483. (My house is 1,400 sq ft and was made in 1974 in case you're wondering.) 

With the option that I went with, what I'm paying for my insurance is about the same as my tax. Is this a ballpark estimate?

I would love to know how you all estimate insurance when you run your numbers.

Would it be annoying if I called my insurance agent and have him run quotes for me if I promise to use him when I purchase a property? 

 By the way, I too have that book and have not started reading it yet. Currently, I am reading Tips and Traps for Negotiating Real Estate (3rd edition) by Robert Irwin.

 Somehow I totally missed what book you two were talking about...

Hi @Benjamin Cowles

I think it may be "What every real estate investor need to know about cash flow... And 36 other key financial measures by Frank Gallinelli".

I flipped through this before buying it and it was filled with a lot of metrics and explanations on use.

I just finished reading " tips and trips for negotiating real estate by Robert Irwin" and that is a great book as well.

Originally posted by @Daria B. :

Hi @Benjamin Cowles

I think it may be "What every real estate investor need to know about cash flow... And 36 other key financial measures by Frank Gallinelli".

I flipped through this before buying it and it was filled with a lot of metrics and explanations on use.

I just finished reading " tips and trips for negotiating real estate by Robert Irwin" and that is a great book as well.

 Thank you!

Welcome to Biggerpockets & OKC!

I recommend you join the local Real Estate Investors Associations (REIA) to be around like-minded individuals.

What I have seen over the years, since 2006, is that we can tell the success level of new investors by how often they show up. It's amazing what it will do for your motivation and momentum when around your peers.

For real estate investors in Oklahoma City, we have:

1st Thursday of every month www.mpmeeting.com

2nd Thursday of every month www.okcreia.com

For entrepreneurship & business in Oklahoma City, we have:

2nd Wednesday of every month "Coffee with Entrepreneurs" www.okceg.com

4th Thursday of every month www.OKCEntrepreneurGroup.com

I am a local real estate mentor and business coach so if you ever need guidance and accountability I might be a resource to you. I am always open for a cup of coffee!

Enjoy the day,

Ron Harris

The Renascent Entrepreneur