Insurance for a Cheap Rental in Cincinnati

6 Replies

I just bought two very cheap houses in one deal for $26,000.  They are decent sized for the price, but they're not worth much more than the purchase price.  Maybe $20,000 each.

When it comes to insurance, I talked to my broker about it, and he could only come up with a $50k minimum policy, which is $90/mo for each property.  That's about as much as I pay for my homeowners insurance on the home I live in.  I can't help but think there has to be a better value than that.  

What other options are there?  This is my first super cheap house, but I'm sure there has to be a better option.

Thanks,

Attached is an article regarding insured cost of a home compared to its market value, see: Insurance analysis

It's more common and intuitive when talking about auto insurance. You could have an accident, the blue book value is $3,000 and it cost you $5000.00 to repair. I no longer carry collision insurance on my car for this reason as the premiums make no sense. The money I save should enable me to buy any car.  It's like self insuring.

Are you suggesting that it's worth it at my current cost?  Or that I should self insure?  Not sure what you're saying...

Originally posted by @Paul Gwilliam :

Are you suggesting that it's worth it at my current cost?  Or that I should self insure?  Not sure what you're saying...

Years ago, I was investing in the NYC area, and cheap houses were worth what the land value it, or less. One option is just pay for liability, if the house burns down, you can still just sell the land.

Out where you are, I don't know what the land value is, and I don't know the insurance quoted is the full replacement cost. Yes, to draw a picture, self insure is an option if the premiums are ridiculous, and you can't cash flow. Your call.

I'm cashflowing, but I was hoping there was a better option.  Liability only sounds like one of those options.

Thanks for the tip.

@Paul Gwilliam ,

Are the properties vacant or occupied?  If occupied, a lot of times an actual cash value policy (which it sounds like you have now) can be just as expensive or more than a replacement cost policy.  If vacant, $90 a month does sound a bit high for $50K in coverage.  Either way, there are always other options, it just depends on the vacant/occupied factor.

They are occupied.  Do you have something specific in mind?

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