10 Jan House Flipping Insurance #CREPN 27
House Flipping or single family rentals
have been the starting point for many successful Commercial Real Estate Investors. When I first met one of my favorite Commercial Real Estate Investors in Portland, OR, he told me his story and showed me a picture of his first deal. In the picture, he was standing in front of his first rental house, smiling ear to ear, many years ago.
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J Darrin Gross[/caption]
Today, he owns multiple prominent commercial office buildings in downtown Portland.
Real Estate Investing is full of stories like this. The opportunity is always there for anyone with desire to jump in and repeat the story. It’s a beautiful way to create substantial wealth.
If you have a dream of creating wealth through real estate investing, it is important to think beyond the basics, monthly Rent & Mortgage payment. Do not overlook the potential for financial ruin, if you are not properly insured.
I was recently interviewed by Mark Ferguson with Investfourmore.com podcast, specifically to talk about Insurance for Flippers.
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There are two common paths real estate investors travel:
- Rentals
- Flips
RENTALS
Purchasing single family rentals to keep in rental provides a well understood path for how to insure this type of property. Start by calling your current insurance agent, and add coverage for your new investment property. Most all insurance companies that will write a home & auto policy will write a landlord policy for a single family rental.FLIPS
If you are doing house flips; purchasing fixer upper properties,fixing & selling for a quick profit, your short term profit options can be significant. Insurance for this is not so easy. The following are some good first steps: Contract: A good first question to answer: will you be doing the work yourself, or hiring a contractor. If you are hiring a contractor, the best practice is to have a contract in place with the contractor specifying Insurance requirements the contractor must meet in addition to many additional common contract protection provisions in favor of you the investor. Additionally, you will want to receive proof of insurance naming you as a certificate holder, and an Additional Insured whenever possible. This will extend coverage from the contractor’s policy to you should there be any liability claims from the work of the contractor. Insurance carriers look at a flip as a significantly greater risk than a regular rental due to many issues;- vacancy
- attractive nuisance
- work site
- completed operations
- Premises Liability is the basic trip and fall coverage should anyone get hurt at the premises described on the policy. This is a must, and very reasonably priced.
- Completed Operations is the best option for coverage, especially if you are performing major renovations including the envelope of the building that could result in future damage to the structure.
