I am in the process of acquiring my first rehab (closing in about 30 days). The property is in bad condition from the inside and needs about $50k of work.
What type of insurance should I get for the time I own the property, ie, while it’s getting rehabbed and before I flip it?
When I was renovating my house the bank required builders insurance. It covered vandalism, fire and anything else that can occur to a property that is vacant and under construction. I hope this helps.
Agreed. Builders Risk Insurance is the way to go.
It only makes sense to get coverage for the amount of replacing a new structure. So if the land has significant value, take the land value out of the amount of insurance coverage needed. This will lower your premium costs.
we use builders risk during rehab, and then switch to a basic landlord’s policy once it’s ready for move-in. We get builder’s risk through the company that provides our homeowners policy (Nationwide). they don’t ‘write’ it themselves, but contract it out to another company and handle all the paperwork for us. I think the actual insurer is Scottsdale Casualty.
Builders risk insurance around here is very expensive. But I think it depends on the number of homes you build or rehab or remodel per year. I may be thinking of a different insurance though. I’ve never heard of Builders Risk insurance against a house as you are building it. We as generals have builder’s insurance, but that insures US for liabiity - not fire or anything.
What we tell our clients to get while their house is being built is what is called “course of construction” insurance. It is fairly inexpensive and insures against fire and theft.
If you are hiring contractors, they should have their own insurance. Make sure they do. HTH a bit.