What kind of insurance do I need when flipping houses and rehabbing properties?

Remember that video I made where a house got burned down and the investor was NOT covered and lost about $20,000?  Don’t let that happen to you, in this video we’ll go over what kind of insurance you need need when you are buying and holding and flipping houses.

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Now for today’s class on insurance for flipping houses…

Insurance for house flipping BigReia.com

How to get insurance for a flip house?  Do you have to have insurance for a flip?  What insurance needed for a rehab and how it is different from regular home owner’s insurance?

So recently we came across a situation where two of the investors we were working with didn’t realize that they would need to have a form of insurance different from that of their type of coverage on their personal home. Ironically enough, this same week we had another investor who was actually going to purchase with cash and not carry insurance on a flip deal.

Needless to say, both investors needed some help. Here’s what they came to us with; “Why do I need insurance, no one lives there?” – I’ll get to that. Secondly, “Why does the insurance have to be different from what I’ve already got for my own house?”- I’ll get to this too.

You can download the above in a .pdf HERE.

Now, annually there are over 240,000 water main breaks in the US alone.

That is not accounting for gas and electric lines. Combine this with the risks of fire, weather, and other damage and ti say a home is a risky thing is reasonable. If we factor in the higher risk of vacant and in need of serious remodel properties- you can see where it goes from a ‘risky’ thing into an immediate high risk situation.  Also check out the other class I made about a rehab we were doing and it burned down and the insurance refused to cover it, so it is important to take the right steps when you are flipping houses or doing buy and hold or even if you are buying on terms – you NEED the right insurance coverage.

https://citizens.utilityshield.com/

Indy Anna explains:
-Types of insurance for flips
– Why coverage is necessary
– Where to get the best coverage

We’ll cover what is general liability insurance, what is a builder’s risk policy, and what does dwelling insurance cover…

Okay, so let me get into question number one here.

“Why do I need insurance?”

Technically, if you’re paying cash, you don’t HAVE to have it, but you should. Between Q1 and Q3 of this year alone, I’ve come across just less than a dozen deals that were fire damaged. All of these were post or mid flip properties, and included from the MLS and off market both.

Now, here’s the kicker; these were purchased with cash, and we can tell that insurance wasn’t used as there would have been the old, ‘demo and sell the lot/rebuild’ plan going on with insurance money.

Now this means, as the investor you’ve now lost:
– acquisition costs
– rehab costs up to this point
– holding costs up to this point

And let me be clear, I get asked a lot, “Is it legally required?” -and fair enough, from out of country investors trying to cut margins, and no, it’s not legally required- but it’s senseless not to have it. Even if you can afford to bulldoze down and rebuild from out of pocket- wouldn’t a less than $2K/year premium to pay for all losses just be smarter? It seems so, at least in my book. I’ve met about 10 or so investors in the last several weeks who had to sell their rehab because of fire damage or something similar and they weren’t covered. 

So I spoke to some of the folks at our People Page:

https://www.BigReia.com/People

This and  here’s what they had to say about coverage;

Now this doesn’t even begin to cover other mishaps like;
Liability
Storm damage
Theft
A LOT of other things

Let me get on to the second question here; “Why is this coverage different from my regular homeowners policy? Well this falls under the nature of the beast in terms of quality of product. Specifically, the quality of the product being insured. Being a ‘high risk’ property will mean most flips fall into three different areas of coverage;

Dwelling Insurance

This means that basically if it burns down or anything and all things that can be stripped from it in theft are covered.

Builder’s Risk Policy

Structures or items that belong to the insured may be covered in direct conjunction with the construction  to the dwelling being insured. That $10K diamond tip stone cutter shorts out due to faulty wiring- it may be covered here

General Liability insurance

Here we are covering mishaps and others non -ideals. Jimmy trespasser slips and breaks his ankle on your property and sues for damages, well here is where you’d be covered.

Now this isn’t always the most inexpensive insurance to obtain, and it’s due to being ‘high risk’. Now one place you can go for quotes, is of course my page of Indy real estate professionals:

https://www.BigReia.com/People

An update here- we were able to get coverage from one of our folks at the People Page page in less than 48 hours – so if need be, we can move quickly.  If you need more help just text me and I’ll do what I can to make it happen for you.

Now this is going to generally come down to basic form or special form in terms of what’s covered and how you’ll be reimbursed if something does happen. These details can be pretty provider/policy specific, but for now just think of what you’re asking to be covered to make sure you’re neither over or under covered.

One secret here to let everyone in on;
Do NOT wait until the last minute to get coverage quotes. I did just say how expeditious one of the rockstars we work with was on getting us a quote in less than 48 hours- but this was too close for comfort. As soon as you’re under contract, get on the phone for quotes.

In addition to this secret- I’m going to give you a heads up on another one to save you time and make sure you know all that you need upfront. If you’re using a HML (we’ve made numerous other videos on this, check them out after this class for more help), be sure to see if there’s a specific binder they need on the insurance policy at it’s issue.

So in summary, here’s what we covered;
-Types of insurance for flips
– Why coverage is necessary
– Where to get coverage fast and cheap

So remember you can use our People Page to get help if you need something specific in terms of insurance for a flip or anything else just text me and if I don’t know the answer I’ll find it out.

Upcoming previews of our BigREIA friends and DL, but for now…
Make sure to go to BigREIA.com…

And make the universe SMILE = )

~Indy Anna
Love (at) BigReia.com
317-969-5619 (Plz text me first as this is my real number lol)

Want more (brilliantly) EPIC posts of real estate investing and bidness badasssery...?

There is a great post and class on the 38 Ways to Buy Apartment Buildings Zero Down with Pet Policies, and here are some other helpful and EPIC posts... for starters as a real estate investor if you ever want to build a business that makes you 30 grand a month then you MUST do this...

Wanna Create Generational Passive Income Buying Real Estate and Small Businesses?

Here's a class on exactly how to make $30,000 in passive income as an out of state Indy landlord.  Exactly how many Indiana rental properties do you need to make 30 grand a month.  Anna can you help me invest in Indianapolis turnkey real estate investment properties?

There's also a great class Azam did on how anybody can retire in the next 1-2 years with $30,000 a month in passive income by buying and selling businesses zero down.  What about Micro Flipping?  We have a great class on how to start micro-flipping real estate zero down from your house and make $500/day, speed wholesaling 101.

There’s also another great class on how to buy apartment buildings zero down that you can check out as well.  This relates directly to growing income on rental properties.  Speaking of which make sure to check out our epic page on 14 ways to avoid tenants from hell.  Also we have a great post on how to make build a "six figure a month" real estate wholesaling business.

Also here is a post on how I did this and I flipped a house off Zillow for 30.  Also you can check out the post on five steps to flip a house right off Zillow for 40 grand.  You can also check out our other epic post on 57 ways to make money with vacant land.

Here’s another post on how a Hero flipped a house off Zillow and made 40k in a few weeks while he was learning to read.  Also you want to check our post on the EPIC $25 million letter and the copy writing lessons for real estate investors, you'll love it.  Also you can see how ONE letter is making me $9,000 a month.  Also you can check out the post on 101 FREE places to advertise your houses.

Also check out the "SA" class and your REAL chances of create social mobility and income ascension with your real estate business.  Brilliant stuff.  Also there is a great post on the ONLY way you'll ever make 30 grand a month as a real estate investor and/or business builder.  Another brilliant class with a free downloadable Investor Guide is about 19 Ways to Make $10,000 a Month by Helping Tired Landlords.

Plus make sure you check out Azam's post on how to hire a realtor that makes you $10,000 a month... while you sit back with your shoes kicked up on your desk and fingers folded behind your head.  Also there is a great post on how to make five grand a week from putting out signs.

Also we have some great posts on 30 ways to buy real estate with no money down.  That is a two part series so make sure to watch the second part on the 30 ways to buy real estate zero down and with no loans or credit.  I also get questions about our "Epic Flipping" and how to turn $1 into over $25,000 by flipping ordinary items for exponentially high ROI.

And don’t forget our EPIC page on 100 FREE ways to find motivated sellers, we are making the number one page in the world on FREE ways of finding motivated sellers.  Also check out how I find motivated sellers from code violation properties, and also how I make over $1,500 a week giving investors access to that list

Speaking of lists, for a list of the "Good People" and My Indy Anna Homeys - this is a FREE list of EVERY possible contact that you'll ever need to build a real estate business in the Indianapolis or the Midwest.

You can also get a LONG list of every contract, piece of paperwork and legal document that you'll EVER need for your real estate business all FREE to download.

Also perhaps the most important class Azam has done is on the "Frequency of Thought" and how to use the laws of quantum physics to rewire your brain, attract brilliance like a lightning rod and be the best version of yourself.  Check out this epic 3-hour class on Quantum Real Estate.

When I first go started I thought wouldn't it be great if somebody put together ONE list of every possible contact that I would ever need to build a passive income with Indiana real estate - or any Midwest real estate?  Well that's exaclty what I did with our “People Page” here it is:

A totally FREE list of every possible real estate professional contact you’ll ever need to do unlimited deals, start and scale your real estate business and create generational passive income with real estate anywhere Indiana or the Midwest.

Stay here at BigReia.com and you’ll become allergic to being an LC and addicted to improving the world and creating Income Ascension and Social Mobility for you and yours… 

Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
(YES that's my actual Direct Line and I really do answer lol, so please text me first Thx!)

Free Comic Book Reveals:

100 FREE ways to find motivated sellers.