Owning rental real estate can be an expensive endeavor, which oftentimes requires taking on a hefty mortgage and entrusting the care of your investment to tenants (who are usually perfect strangers prior to renting from you). With that in mind, it just makes sense to protect your property(ies) from potential dangers that could cost you.
While there are many different types of insurance to choose from, there are three that real estate investors should own. These include:
- Hazard Insurance – Hazard coverage is another name for a homeowner’s insurance policy that protects against structural damage that is due to storms, fires, and various other natural disasters, as well as from theft. In order to more closely “customize” a hazard insurance plan, you can typically add riders (or endorsements) to the basic policy.
- Liability Coverage – With liability insurance, you are protected financially if someone is injured on the property. In this case, the liability policy would cover legal expenses, along with damages that you may be ordered to pay the injured party.
- Loss of Income Insurance – One of a real estate investor’s worst fears is paying the carrying costs on a property that isn’t generating any income. So, if a disaster like a tornado renders a rental property uninhabitable to tenants, this coverage can help to provide at least some incoming cash flow. (Note that if a tenant leaves without paying you rent, a different type of coverage – rent guarantee insurance – allows you to avoid an interruption in your income from the property).
Is it time to contact a Property Management Team?
Rental real estate investors can have many balls in the air – especially if you own more than one property. If managing tenants and maintaining properties is becoming too time-consuming for you, it may be time to add a property management team.
So, if you own rental units in Orlando and/or the surrounding Central Florida area, contact us to learn more about how you can still generate income on your property(ies), without all the hassle.