Investor · Orlando, FL · Member since 2016 · 14 posts · 4 votes
Hello Guys,
I am about to close my house in Chicago, it is a single family divided in 2 units. The price is 92K. The lender wants me to insure the house for Replacement cost which is 361K... The insurance policy raises from 1200 a year to 1800... How normal is it to insure Replacement cost when the house is 100 years old and in the area which is not so desirable? We originally planned to insure the house for 135K. I am not sure if I want to pay 70 USD per unit per month when the main purpose of this house is to have monthly cashflow.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Tereza Dyerova I run into this issue all the time in Chicago due to the high quality of a lot of the construction of the homes and the high cost to re-build them if they were to be a total loss. My four unit in Lyons was purchased for $195,000, but I have to insure it for a replacement cost of just over $400,000 due to the fact that it is brick, etc.
On a sfr, you might try getting the lender to drop the replacement cost, or you might get several different quotes to find someone who will drop the replacement cost as low as you want it. You also might look at raising the deductible. On my nine unit here in Berwyn, we raised the deductible several thousand dollars and that made a huge difference.