Insurance advice on flipped houses.

[Blindsquirrel]

  My insurance co has gone flat thievish on new houses we buy ie $1700 a year on a house we bought for 42K as it is not occupied and  1500 a year on a 20K house. WTH?   Anyone have any decent insurance folks on this, please reply. Thanks!
 

[waltworks]

Cincinnati has been good for me. Assuming you live in the US and in one of the states they serve. Those rates sound like highway robbery!

-W

  My insurance co has gone flat thievish on new houses we buy ie $1700 a year on a house we bought for 42K as it is not occupied and  1500 a year on a 20K house. WTH?   Anyone have any decent insurance folks on this, please reply. Thanks!

[exstrax]

I buy similar priced houses. When they are occupied we pay between $500 and $800 per year. But when they are vacant the insurance company charges close to double. The good news if you're flipping is that you won't need to pay for the entire year and they'll reimburse for prepaid insurance. I haven't found a way to get around this except lying about being vacant and I wouldn't suggest that.

[merula]

The issue is the vacancy. Empty houses are more prone to every type of loss, but in particular insurance carriers have been dealing with "human termite" claims given the spike in metal prices. It's not uncommon to see $20,000 claims from damage done by thieves who got $500 worth of copper.

Do you flip the houses in your own name, or do you have an LLC? Find a good independent insurance agent* and talk to them about how you might structure the policies to best fit your situation. One thing that might work, depending on ownership and everything, would be to get a Business Owners Policy (BOP, pronounced "bop" rather than bee-oh-pea) that has a "Newly acquired or constructed property" clause, if your bank will accept that.

*i.e., not your friend's brother-in-law just because he's been cold-calling you for years. Interview them, give them your info if you feel comfortable after the first meeting and see what they can do for you. If you're small, you'll get the best service from a small agency, and it doesn't sound like your risk is unique enough to need the services of someone larger.

[Cheddar Stacker]

What is the downside to carrying no insurance? Not trying to be an ass, just thinking from a different angle. At worst you lose the full $20K you put down I guess, but that would be very rare.

For the active flippers, how often have you filed an insurance claim during ownership?
For the active renters, same question?
Maybe you'd come out ahead with no insurance over 20 properties and 2-3 years?

I have my foot in the door in the rental arena, no flips yet, so I'm interested in the answers to how often claims are filed.

[merula]

Cheddar, you're absolutely right that self-insurance makes a lot of sense in this case. The issue is likely that mortgage companies require insurance.

If there's no mortgage, my vote would be for self-insurance. Buying insurance for something you can afford to replace is essentially just lining insurance carriers' pockets.

[SpicyMcHaggus]

When flipping the house I sold this summer, I moved into it. All it takes is a few boxes of clothes, and a single mattress on the floor. I slept in every room of the house and rotated as we remodeled other rooms. The only time I was not there (and at my apartment) was when the bathroom was torn up (approx 1.5 weeks).

I am single, like camping, and would frequently work until 2am. YMMV.

[Cheddar Stacker]

When flipping the house I sold this summer, I moved into it. All it takes is a few boxes of clothes, and a single mattress on the floor. I slept in every room of the house and rotated as we remodeled other rooms. The only time I was not there (and at my apartment) was when the bathroom was torn up (approx 1.5 weeks).

I am single, like camping, and would frequently work until 2am. YMMV.

This is badass. If I were single, I could see doing this as well.

[usmarine1975]

When flipping the house I sold this summer, I moved into it. All it takes is a few boxes of clothes, and a single mattress on the floor. I slept in every room of the house and rotated as we remodeled other rooms. The only time I was not there (and at my apartment) was when the bathroom was torn up (approx 1.5 weeks).

I am single, like camping, and would frequently work until 2am. YMMV.

This is badass. If I were single, I could see doing this as well.

Yea I don't think my wife would go for this at all.  Although I am not much for flipping homes anyway.  I think your lucky the insurance company is even given you the option to get insurance.  But would agree with others your best bet might be to self insure.

[SpicyMcHaggus]

When flipping the house I sold this summer, I moved into it. All it takes is a few boxes of clothes, and a single mattress on the floor. I slept in every room of the house and rotated as we remodeled other rooms. The only time I was not there (and at my apartment) was when the bathroom was torn up (approx 1.5 weeks).

I am single, like camping, and would frequently work until 2am. YMMV.

This is badass. If I were single, I could see doing this as well.

Yea I don't think my wife would go for this at all.  Although I am not much for flipping homes anyway.  I think your lucky the insurance company is even given you the option to get insurance.  But would agree with others your best bet might be to self insure.

Maybe it's time to consider a new wife.   Just kidding.

I will concede that the girls I had over weren't really impressed by having to put on shoes to get to the bathroom for fear of nails.  You can always live there 4 days a week and call it "occupied", spending the other 3 at home.  Unless this is a 2 year renovation project.

Think of it as the ultimate man-cave. Your buddies can come over, drink beer, and swing hammers.

[usmarine1975]

Maybe it's time to consider a new wife.   Just kidding.

I will concede that the girls I had over weren't really impressed by having to put on shoes to get to the bathroom for fear of nails.  You can always live there 4 days a week and call it "occupied", spending the other 3 at home.  Unless this is a 2 year renovation project.

Think of it as the ultimate man-cave. Your buddies can come over, drink beer, and swing hammers.
[/quote]

With a 2 year old and a baby expected in the next week or two considering a new wife would be quite expensive and would probably put me in the hole for the rest of my life.  Not to mention I rather fancy the current wife and kids and as stated really am not much of a flipper when it comes to homes.  I prefer the buy and hold long term purchase.  But that's just me.  I just had the buddies over to help carry out some very Heavy radiators.  Now I gotta get them to the powder coating facility and unload them.  Glad they have a forklift.  I got it good in so many ways in the wife department wouldn't ever want to change that no matter what.

[arebelspy]

  My insurance co has gone flat thievish on new houses we buy ie $1700 a year on a house we bought for 42K as it is not occupied and  1500 a year on a 20K house. WTH?   Anyone have any decent insurance folks on this, please reply. Thanks!

Jesus.  What size houses and locations?  I'd expect prices more like 300-400.

What company are you using?

[Blindsquirrel]

 had been using cincinnati insurance, house is 1850 sq ft 4/2.

[zinethstache]

We just closed on a multi at the end of June. "someone" at our insurance did a drive by, determined it was vacant and cancelled us without warning because of it. Luckily it had 3 of 4 units occupied and they quickly reinstated us /whew. It is nice that your insurance just doubles and doesn't cancel! We have financing and actually were not aware of the vacancy insurance issue. Our previous purchase was vacant and we had no insurance problems, we used State Farm for that property and they never asked about occupancy. It took us 6 weeks in total to rehab and get folks in. I never knew that there was a difference, its a big lesson learned! Unfortunately our region's home prices are in the $200-$400k or more range so paying cash and self insuring is not an option.