Insurance? LLC? More newbie questions for the gurus!

When you acquired your first investment property, did you do a LLC right from the beginning? Or just insurance? Do you wish you’d done something differently?

Also, how do you predict how much insurance is going to add to your property expenses? Does it vary by area? All the web info. I’m finding on is from companies that sell it, and will only provide quotes on property you already own. However, including the insurance payment in the cost analysis before making the purchase seems pretty important, and how do you estimate that with nothing to go on? Chicken? Egg? :help

The property I’m looking at is a 4 plex in the Tacoma, Washington area if that information helps.

Thanks!

Titling the property in an LLC does NOT mean you do not need insurance. I find it hard to believe you cannot get a quote unless you own the property. Every mortgage company in the world requires you have an insurance policy in effect before closing or they will not lend the money.

You might try actually calling a local insurance agent and asking for a quote. rather than relying solely on web quotes.

jmd_forest

Thanks for replying jmd_forest!

What I’m hoping for is someone can just say: the insurance for my rentals is usually X% of their value, or something along those lines.

I’m definitely in learning phase, hoping to purchase my first property in the next few months. I’m trying to figure out how to evaluate operating costs without having to call an insurance company every time there’s a property I’m interested in. Is the price of insurance on a rental comparable to insurance on a primary? Is there a reliable way to estimate it?

Also, I don’t plan on doing a LLC without insurance, just wondering if it’s preferred when starting up, or if some people wait until they’ve acquired some assets, or if some skip it entirely and what their experiences are.

I think it may not be realistic to estimate insurance costs based on market value, and especially not on purchase price as most investors are always trying to reduce the purchase price of their acquisitions. Although I am just a small time investor, 2 of my properties are very similar properties and only about 5 miles away from each other and both have the same approximate market value ($200K). One I pay $450 for insurance, the other $780 and believe me, I’ve tried to get the higher reduced several times to the point of shopping it around to other insurance brokers and carriers with no luck.

Regarding the LLC, I bought my first property in my name but started my LLC when I retired and decided to do investing “full time”; mostly to help impress sellers that I wasn’t some fly by night operator. A number of posters on this forum have stated that holding your properties in a single member LLC will not provide much liability protection, especially if you do much of the work and/or management yourself. My lawyer disagrees but I carry good insurance anyway.

jmd_forest

Wow, that’s quite a range! Thanks for helping me narrow it down; at least now I know it shouldn’t be thousands of dollars.

Also thank you for sharing your experiences with incorporating!

Insurance coverage limits should be based upon replacement cost which could be more than the market value.

if you are considering a listing, just call for a quote with all the details in hand. its easier if you use your existing agent for every your personal residence, etc. If you have or owned propoerty in the area then you probably can estimate orm old policies