You're Thinking of Purchasing A Rental Property Out of Your Residential State?

You're thinking about purchasing a property out of your residential state. It makes sense, right? Property prices are lower and taxes are lower, but did you consider the cost of insurance? You should.

Just this week, one of my client's policies was non-renewed because her beautiful one year old home is in the mountains - a fire zone here in Colorado. Crazy thing is, she is only 2 miles from the nearest fire department and she has a creek right in her back yard. Water is accessible; insurance is not.

This type of occurrence is happening countrywide. In Florida, insurance careers have made a mass exodus out of the state due to repeated losses. The carriers who remained have incredibly high premiums and more than likely you will be required to carry three kinds of insurance: flood, wind, and property/liability.

I spoke with a property investor last week who told me the insurance he currently has on his midsized rental home in Tampa is $7,ooo a year. Yesterday, while speaking on Clubhouse, one of the members told me her insurance in FL cost her $20,000 a year. That could put a dent in your profits. 

Want to get a bit more complicated? In my home town, Weld County and Boulder County shake hands. Once you (literally) cross the road from Boulder County to Weld County, you also cross the coverage line. Why is that a big deal? Unfortunately, some insurance companies will not cover commercial properties in Weld because of the risk of hail.

This patchy coverage availability occurs nationwide. The center of Texas is usually pretty simple to find insurance in, while getting reasonably priced coverage in Dallas can be a bit challenging. The same issue lies in California, the coastal areas are tough while other areas are not as much. Utah and Nevada are insurance friendly states, allowing premiums to be significantly lower than other states. 

What can you do to preemptively plan? You can do your research. Good old Google may save you thousands when you search: most problematic weather states.

Your next step will be finding an agent you can trust and then get a quote on your perspective property.  If you'd like help finding an agent or have more questions, feel free to reach out to me directly via the link below. 

And with that, I wish you a happy house hunting!

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