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Buying Rental Property |
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Landlord Advice |
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Real Estate Financing Tips |
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Real Estate Investing Strategies |
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Real Estate Taxes & Insurance |
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Selling Rental Property |
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Trends & Current Events |
As an investment property owner, your top 3 costs are probably the mortgage, property taxes, and insurance. Obviously you need adequate landlord insurance consisting of building insurance, liability coverage, and ideally umbrella insurance. That said, there are some things you can do in order to reduce your overall insurance expense.
The most obvious tip is to shop around. Insurance providers can vary substantially on their prices, even for near-identical policies, so it definitely pays to get at least 3 quotes. Ask for a referral from someone you trust, or check the phone book or online to find insurers from which you can get a quote.
The second tip is to raise your deductable. Generally speaking, your deductible should be at least $2,000, but even a deductible of $1,000 will enable you to receive a nice discount.
Third, look for possible discounts. For example, some insurers will offer discounts if the property has a security system, an inter-liked fire alarm system, or other items designed to make the property safer. Also, avoid having things on the property such as fireplaces, trampolines, and dogs, because these things increase the insurer’s risk and therefore your premium will be higher. Also, many insurance companies will give you a discount if you have 2 or more policies with them, such as your car insurance and your home owner’s insurance. The bottom line: ask your insurer what specific discounts they offer.
Fourth, remember that you only need to insure the value of the house – not the land on which it sits. Depending on your location, the value of the land could equal 40% or more of the total property valuation, and since land is not prone to damage or theft you do not need to insure its value. If you do, you’ll pay a lot more than you ought to.
Finally, keep your credit rating in good condition. Whether we like it or not (and I don’t…), more and more insurance companies are utilizing credit info as part of their risk-assessment processes. For these companies, the higher your credit score, the lower your price. So stay on top of your credit at all times.