Would you rule out an entire market because of the insurance quote?

Question

New survey out this week says about 71% of investors now weigh insurance when deciding whether to buy, and half of them have lost a purchase or a sale because of it.

So I want a straight answer, not a hedge. Is there a market you have crossed off entirely because of insurance? Or do you believe every market has a price and you just underwrite it honestly and move on?

Pick a side, then give me the specifics: the market, the annual premium, and what the quote did to your numbers. If you walked, tell me what the number would have had to be for you to stay.

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Garth Huxtable · Answer

For those of us still figuring out how to underwrite deals, when do you typically obtain a real insurance quote instead of relying solely on an estimate? Do you review this before making an offer, during due diligence, or only once you're further into the financing process?

Mark Johnson · Answer

My home insurance for Boise, Idaho increased from $450 a year to $1500 a year in 5 years. Rental properties in the region were expected to increase the same, I requested a quote for Valley County, Idaho in a more mountainous region and they said it would ballpark around $1300 for a 4 bedroom house. When I pressed for the actual address, two companies declined due to the location (near a mountain in a clearing where there are forest fires), and the type of construction (new manufactured), and expected STR use. Insurance is getting to the point where it is cheaper to self-insure, however loan companies require the insurance, and damage that is not insured would lead to financial ruin. So definitely one reason for not investing.

Garrett Brown · Answer

I think I would gather around 3 estimates when underwriting the offer to have a very solid estimate of where you land. 100% would get real quotes once you enter into a contract. The sooner the better though and finding a good insurance broker could help get more solid estimates before ever offering

Would you rule out an entire market because of the insurance quote?

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