On a rental property, should you add the home insurance to your residential home insurance portfolio to get a better rate? Or separate them?
Hi Account Closed,
I recommend talking to an insurance broker who can look at the rates in front of them. I like brokers because they can shop 30+ companies for the rate that suits your and your property's needs. From my personal point of view, I keep my policies separate because my personal property is in my name, and my rental properties are in an LLC. It's a write off and further distances me from liability.
Boom! I think @Tom Parris hits it right on the head. Thanks.
If you have the rental property in an LLC you will have to keep the insurance separate. However if you have already bought the rental property in your personal name then you might as well. In that case what I would suggest is to get both properties insured by the same company. Find a company that will allow you to "stack" your liability coverage. The stacking allows the liability coverage from both properties to cover a loss at either property. I have explained it better in other posts, search me or look at my old posts from my profile and you should be able to find it. Then get another umbrella policy on top of that. With the rental in your own name you want a little extra security.
It is still a write of if it is in your personal name because it is a business expense on your rental property. Not quite as clean as being in the business name but talk to your accountant and they should have no problem.
@Michael Badin you brought up an interesting topic that alluded me. I was going to set up an LLC after the fact with a tax accountant. But I guess that's probably not the way to go. Should I get started on an LLC account first?
Yes, If you find a deal you can always get it locked up first in your personal name. Then setup the llc and assign the deal to the LLC that you setup before you close. That way you close with the LLC. If you do it after the fact you have to pay to transfer the title. Depending on your local costs that can be a few thousand bucks.
@Michael Badin I'm in the process of buying a property. It sounds like you want to structure an LLC first before write down the ownership party on the deed.
Setting up an LLC is very quick and easy. It does not take long. Get the deal locked up, set up your LLC and then assign the deal to your LLC before your close. Good Luck!
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