Investment Property Insurance

[tqf258]

I own a small rental house, that was part of the purchase of my house, but is on a different deed. When I purchased the properties I had a relative living in the rental. When I called Liberty Mutual I was told since it was a relative living in the house I could purchase a seperate homeowners policy. So I did this and have one homeowners policy on my house and a seperate homeowners policy on the rental. Since then my relative has moved out and I am renting the house. I still have the policy in place but what happens if something happens to the house and its not my relative renting from me? Will Liberty still honor the policy? Also I would like to purchase another propery or 2 how do you go about getting insurance coverage on these properties? Is there a ballon policy that would cover them all?

[theduc]

You should call Liberty Mutual and let them know of the change just to verify but there shouldn't be much of a change in your policy. You need to make sure you have Landlord Insurance for that property.

[97guns]

i am w/liberty and have rentals. i have fire policy only on the rentals and homeowners on the primary, the homeowners covers liability for all the rentals

[tqf258]

i am w/liberty and have rentals. i have fire policy only on the rentals and homeowners on the primary, the homeowners covers liability for all the rentals

Thanks 97guns. I guess I will have to call Liberty and see about changing the policy. Can you have a Fire Policy on the rental even if it is mortgaged? Seems like this is why I got the homeowners policy in the first place? And what liability coverage would you recommend on my homeowners? I think I currentyly have 300K.

I was also thinking of selling the rental. I only bought it because it was part of the deal in buying my house, as they are on basically the same property. I gave 15K for it 5-6 years ago. I pay the utilities, taxes and insurance and make about $400 per month, was less rent when renting to relative. It is a very old house. So I have gotten all of my initial investment back even after doing some repairs. Another relative asked about purchasing the property. So I threw out 30K and he seemed like he was still intrested. So after paying for the place with the rent money, I would then get double my money in the sale. I lose the 400 a month but make 30K. So it would take over 6 years for me to break even if I kept the house. I am torn because I havent had any major issues, but the house is very old so I can see some possible repairs down the line. So would you sell it or keep it?

[97guns]

yes they will write a fire policy only with a mortgage, i have 2 properties w/mortgages and both have fire only.

i love monthly income so i am in the camp of keeping the property, $400 a month cash flow on a 15K investment is very good, around 30% annual return on your investment, that will be impossible to replace.

[97guns]

oh yeah, forgot to mention the enormous tax shelter that you'll be throwing away

[tqf258]

yes they will write a fire policy only with a mortgage, i have 2 properties w/mortgages and both have fire only.

i love monthly income so i am in the camp of keeping the property, $400 a month cash flow on a 15K investment is very good, around 30% annual return on your investment, that will be impossible to replace.

Thanks for the response again, I will call Liberty and work out a fire policy. How do they work? Can I get a set amount like 50K coverage, or does it work like a homeowners where the policy and coverages change year to year? Any suggestions on how much liability to carry on my homeowners, i currently have 300K i think. Should I raise that and how much?

I really like the monthly income also. And my renters are very good, never late and if something small breaks or quits working they usually fix it themselves not to bother me, I work away every other month and things never break when I am home!

I actually still have a mortgage on this property as I took out some money against it for some upgrades on my home. I took out a 10 yr mortgage but currently put the whole $650 monthly rent on the note(this will pay it off in less than 5 years), and pay the bills out of my budget. So when he offered to buy it I thought well I can pay off the mortgage, make a few grand and save some money each month on the bills, and running those numbers it would take me 6.5 years at the current rates to get the same 30K he is offering today. But now the way you explain it I think that I probably should keep it!

[97guns]

they will write the fire for the estimated value to replace the structure, my premium has been going up around $20 a year per property

i'm carrying 500K liability, you can go more or less

[Jerry91]

It will be better if you could update Liberty Mutual about the change of the renter. Once they update it in their systems, things will be fine for you.

[homefundingnow]

Homeowners policy will still be active. Contact any expert legal adviser or real estate attorney to advise you. What other documents of your relative are there with you?