Insuring Your Investment Property
One of the most important things to arrange just before, or when closing, is the property's insurance. This will covers the house's improvement
value, the total value minus the land cost. Basically the cost to rebuild it.
One of the most popular insurance companies is AllState, who will cover properties held in your own name. If your property is held
under your LLC, then I have found State Farm will cover you. They will only cover your property for 30 days if it is vacant though.
The premium that you pay is based on the improvement value and location and a typical amount is $500-$1000 per year. Obviously if your
property is in a hurricane area, then the premiums will be higher. You can lower your premiums by choosing to have a higher deductible (excess),
although if you make a claim it will cost you more.
If you buy a below market value property, the improvement value will be higher than what you paid. So if your house burns down, you could get more
back than you paid for it.
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Please Note - The information contained in this section is only my opinion and should not be regarded as legal or tax advice