Look into DSCR Loans (Debt-Service Coverage Ratio)These are designed specifically for investors and don’t look at your personal income or DTI - they look at whether the property can pay for itself (i.e., does the rent cover the mortgage and expenses).

You will need to notify your current insurance provider that you are converting to an investment property so your coverage can be updated accordingly.When obtaining financing for your new primary, you shouldn't get any weird conditions around your current primary unless you've been in it for under 12 months...

Debt Service Coverage Ratio (DSCR)Definition:DSCR measures a property’s ability to cover its debt payments with its net income.Formula:DSCR = NOI ÷ Annual Debt Service (mortgage payments)Example:Let’s say your loan payments (principal + interest) total $60,000/year.DSCR = $74,000 ÷ $60,000 = 1.23A DSCR above 1.2 is generally considered healthy by lenders.

, you’ll be limited to traditional comps, which may not reflect the value of your upgrades.Permitted additions help — unpermitted rooms might not be counted at all.The more the home looks/feels like an “investment property” or boarding house, the more pushback you might get from a conventional lender.Even if the property cash flows like a beast, a standard cash-out refi will still lean heavily on what nearby homes have sold for — not on your income potential.Loan Type MattersHere’s how you can still pull equity smartly:Traditional Cash-Out Refinance:Lower interest rates, best terms.Requires the property to still “look and feel” like a typical single-family residence.May not value additional bedrooms beyond 4–5, especially if they're not in line with the neighborhood.DSCR (Debt-Service Coverage Ratio) Loan:Bases qualification on rental income, not your W-2 or tax returns.Works well for co-living setups where you're renting by the room.Less reliant on traditional comps, though the LTV caps may be lower.Portfolio or Bank Statement Loans:More flexible with layout changes and unconventional income models.Great if you’re building a co-living brand or operating as a business.Strategy TipStart thinking now about how you’ll document the income and whether your upgrades will be permitted and conforming to zoning.

If it's a premises liability matter and falls outside of general liability coverage, do you really believe the plaintiffs attorney who is likely working on a contingent fee basis cares to pursue the claim against the defendant regardless of whether there are real asset?

As said these are hard money loans; short term, high interest or Debt Service Coverage Ratio (DSCR) based on the income of the property. 

(For context, my employer pays 100% of the cost for a very nice insurance plan with $0 copay on many things and small copays on other things, and has good out of network coverage.

My group and I work with buyers in Florida and every deal is different for coverage costs.Many factors are considered such as location & proximity to coastline, construction type and materials, roof type, age / condition, home age and condition, home value and rebuilding cost. 

Markets like Citrus Springs, Ocala, Palm Bay, and parts of Lakeland still offer new builds at reasonable prices with solid rent growth potential.Let’s break down the pros and cons of your approach so you can move forward with confidence:Pros of New Construction for First-Time Investors:Low Maintenance: As you said, everything is brand new - roof, HVAC, plumbing - which means fewer surprise repairs in the first 5–10 years.Warranty Coverage: Most reputable builders offer 1-year full warranties and 10-year structural warranties, reducing risk.Strong Tenant Appeal: Tenants love new homes - clean, modern finishes = higher rent and lower turnover.Builder Incentives: Credits toward closing costs or interest rate buydowns can be great leverage.Ideal for Out-of-State or Passive Investing: If you’re not planning to be hands-on, new builds tend to be smoother operationally.Cons & Watch-Outs:Lower Cash Flow Upfront: Because new builds are usually priced at a premium, cash-on-cash returns may be modest the first few years.

Given the complexities involved, especially in the Chicago, it's so essential to understand the tools available to safeguard your assets.Umbrella insurance serves as an additional layer of liability coverage beyond your standard property insurance.