There are several things to consider when deciding to purchase a rental property. You need to have money or the ability to obtain financing to purchase it. You’ll need to able to accurately project your rental income and expenses to ensure that you aren’t losing money on your investment. You also need to purchase insurance to protect your investment. While insurance may not be the first thing that you think of when deciding to purchase, it should not be the last. There is information an insurance company wants to review before deciding to offer a quote. The list below includes some of the questions that you may be asked:
- What type of tenants are occupants? (for commercial buildings)
- Are there are student occupants or subsidized housing? (for residential dwellings or apartments)
- What type of wiring/circuit protection is present?
- Is there any fire protection (sprinkler) and what type of smoke detector is used?
- Are grills permitted on balconies, porches, or decks?
- Who is responsible for maintenance and upkeep?
- How are tenants screened?
- How many means of egress?
This is not a comprehensive list, but they are the most common questions. All of this information, in addition to basic building information and an estimate of gross rental revenue will help an underwriter determine if they can offer a quote, and the premium that can be offered. Providing the information in advance will allow us to obtain the most competitive option, so be sure that your insurance agent isn’t the last person on your “to-do” list when making a purchase!