Investing in real estate in New Orleans can be profitable for many but the cost of rental property insurance can put a dent in your profits.
If you are House flipping or going to renovate a property and put in a tenant, either way you go, one thing that may complicate your wallet and ultimately determine if your real estate venture will be profitable and that is the cost of rental property insurance.
RENTAL DWELLING INSURANCE rates have gone down.
Depending on the type of property you like to invest in will determine the amount of insurance you pay.
Rule #1 in real estate investing in New Orleans is check to see how much is flood insurance.
Ask your real estate agent or the seller how much they pay and get a copy of the actual flood policy cover page or declarations page “dec page”.
If neither works, you may want to get an elevation certificate from a land surveyor to determine where the property is in reference to the base flood elevation in the area to properly rate the flood insurance.
No insurance agent or real estate agent can guess how much flood insurance will be on a property.
If the seller has an active flood insurance policy, you can assume the policy at closing into your name.
You will not be able to assume the hazard property policy.
Only the flood insurance policy.
One to Four Family Rental dwellings
Singles, doubles, tri plexes and four plexes.
If these are the type of properties you like to invest in,
Finding a competitive policy should not be a problem.
What factors determine the Rental property insurance premium?
Many factors but not limited to
- Age of dwelling
- Updates to Roof, electrical, plumbing, heating and ac
- Square feet
- Brick or Frame
- One or Two story
- Your credit worthiness
- Shape of roof (hip or gable)
What if I put the rental property in an LLC?
Most companies will write the policy but not offer any liability on the policy.
You would have to purchase a stand alone liability policy.
If you purchase a 1 or 2 family rental dwelling,
we do have a company that will write the property and liability on one policy.
Consult an attorney and an accountant to determine if you should put the property in an LLC.
Its not as clear as you think.
Some investors believe that they are personally shielded from any liability.
As an insurance advisor,
I would recommend one LLC and a 5,000,000 Excess liability policy.
On the Excess liability policy, you can list all your rental properties owned in the LLC.
This could keep things simple for you when you file your taxes.
The Liability Game Plan as a Real Estate Investor in New Orleans
Properties in an LLC
5,000,000 minimum limit on Excess Liability policy
300,000 Liability limit on your homeowners policy
250,000/500,000 liability limit on your auto insurance
1,000,000 Personal Umbrella liability
But after talking with your attorney and accountant,
they recommend a separate LLC for each property,
just make sure you have liability on each policy.
Your New Orleans Homeowners policy will not extend liability to a rental property owned in an LLC and most homeowners policies don’t automatically extend liability to rental property.
Vacant Land is automatically covered for liability from your homeowners policy.
What’s this all about?
Using your well deserved hard earned money into rental property can pay off for you,
but it only takes one claim from a tenant to try to take every thing you worked so hard to accomplish.
Protect yourself with the proper liability protection.
Give us a call at 504.348.3131 so we can help your with your rental dwelling insurance needs.
Here are two resources to reach out to if you need them as a real estate investor.
Attorney Justin Alsterberg 504.522.5607
Accountant Terry Tully 504.433.5122