Current tenants running assisted living business out of duplex
I was looking at putting an offer in on a duplex, but am getting mixed information on the insurance needed - that could make or break the deal.
The current tenants are running an assisted living business out of the duplex. The nurses stay upstairs during their 24 hour shifts, and the 3 bedrooms on the first floor unit are used for assisted living patients.
They have been doing this for 3-4 years and their rent is currently below market rate. Current landlord has owned the property for 40 years and shrugged his shoulders about extra insurance. Said he never told his insurance company about the business they were running
.
I’m talking with other investors, they mentioned insurance is more, but they pass the premium on through to their renters.
I called my contact at State Farm and they told me no extra insurance is needed, and that the business is responsible for holding insurance.
I called another insurance contact, and they said that assisted living facilities have extremely high risk therefor high insurance premiums that they have to run through as commercial. He quotes $10,000/ year.
Obviously this is a huge discrepancy that could make or break this deal.
Anyone with experience in this area??