Property Insurance while investing

4 Replies

Hello BP!

We are starting a LLC that will initially focus on real estate flipping. Traditionally, taxes and home owners insurance is paid via escrow via the bank that carries the home loan (at least that has been my personal experience). With that being said, how do you approach paying taxes and home owners insurance?

Please share

They are just bills to budget for and pay.  The expenses are either built into escrow in your financing or you pay them separately.

Hey Kristen,

If you are focusing on Flipping then you are generally not getting a bank loan so there is no escrow account. With that said your insurance agent should be able to give you an annual and monthly payment option. I would pay the amount in full and then when you sell the property the insurance company will pro-rate the amount of unused insurance and mail it back to you. As for taxes I would look up on your county auditor website what the annual taxes are and then budget accordingly. The Title company can take care of that payment at the close if it is a short flip and not over 6 months long.

Good luck,

You take control more by electing to pay them yourself. If the mortgage gets sold they lost accountability quickly.

Kristen,

Even if the Insurance company does not offer installment billing, there are companies that finance the annual premiums.   Typically, they require 20-25% down and 9-10 monthly installments.  The rates are usually very reasonable.   Just ask your agent. 

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