Tactics to Prevent Real Estate Insurance Premiums from Increasing

 Top 4 Tactics to Stop Your Real Estate Insurance Premiums From Ballooning

Real estate property owners are faced with unavoidable expenses, such as the cost of real estate insurance. Real estate insurance acts as a security blanket for property owners. The price of real estate insurance is rising, and you may be wondering how to stop the high premiums. 

 

The good news is that you can use tactics to stop your real estate insurance premiums from inflating. Below are the top tips to reduce and halt your insurance premiums from ballooning. 

 

SHOPPING AROUND

 

It might take some time, but it will save you considerable cash. Check the Yellow Pages or contact your local insurance department. The National Association of Insurance Commissioners website also has valuable data that can assist you in picking the best insurer near you.  

 

Insurance agents, consumer guides, online insurance services, and companies can help you know the approximate price ranges. This will help you shortlist companies that offer the lowest prices. 

 

FIND AND COMPARE RATES BASED ON YOUR CURRENT PORTFOLIO

 

Your current portfolio can help you find and compare rates that have more affordable per-unit pricing. Real estate investors invest in properties that earn higher returns or are below replacement expenses. Real estate investors are interested in how much a home seller asks for per unit. 

 

INCREASE YOUR DEDUCTIBLE

 

Before the insurer pays a claim per your policy's terms, the amount you use towards a repair is deductible. Raising the deductibles can stop your real estate insurance premiums from ballooning. You can save more on premiums by taking care of possible repairs that may result in filing a claim. The Insurance Information Institute reveals that increasing your premium by $500 to $1000 could save an investor as much as 25% on premiums.

 

WORK WITH PROPERTY MANAGERS TO REDUCE INSURANCE-RELATED RISKS

 

Irrespective of your real estate portfolio size, a property manager is liable for property damage. There's little a property manager can do to prevent insurance-related risks, such as an exterior breakdown. Working hand-in-hand with your property manager and exploiting risk control options can help reduce insurance-related risks. Conducting regular inspections can help you identify and deal with minor physical damages.

 

Ballooning real estate insurance premiums can be contributed by policy changes, hardening market, and inflation, but you can take the above measures to reduce it. Leaf Management is a corporation that provides private financing for real estate investors. Contact us for more information. 

BRRRR Investing in 2023

 Will the BRRRR Method of Real Estate Investing Still Work in 2023?

If you're interested in residential real estate investing, you have probably heard of the Buy, Rehab, Rent, Refinance, Repeat (BRRRR) method. Like house-flipping, the BRRRR investment method focuses on buying properties that are not in good shape and fixing them up. But rather than reselling the renovated property for a one-time gain, you rent it out, getting income while building equity for your next purchase. 

There is both good news and bad news about the BRRRR investment method. The good news is that the method does work, while the bad news is that both properties and the materials to fix them have become a bit expensive. This will affect the strategy's purchase and repair by eating into your profits. Continue reading to learn more about how the method work in 2022 and what to expect in 2023. 

Common BRRRR Approach

BRRRR investors find properties that are not in good shape and try not to pay more than 70% of the ARV (After Repair Value) of the house minus the renovation cost. The approach will work like this, based on a $300,000 asking price of the property, you discover you need to invest $35,000 for rehab. After rehab, the property will now be valued at $375,000, which is its After Repair Value. This means that you invested $35,000 to add $75,000 in property value. 

A New Approach

It's impossible to buy a property in the current market at 70% After Repair Value. Hence, you will need to figure out if purchasing a property at a higher price will still be profitable. Again, labor and material will likely cost not less than 25% in today's inflationary times.

So, Will the BRRRR Method Still Work in 2023?

Yes, because there are some factors to consider, the refinance and rent part of the BRRRR. Rent across the United States has skyrocketed over the years, with some cities experiencing up to a 40% average price increase. You just need to research the rents for areas where properties cost around $375,000. Chances are you'll get $3,000 per month in rent from a property you bought for $344,000, which is a good deal. 

Conclusion

The BRRR real estate investing approach will be profitable over the years and will still be in 2023. You just need to know your onion. 

Neighborhood Considerations for Rental Properties

 3 Neighborhood Factors to Consider Before Buying Your Next Investment Home

One of the factors you have to consider when buying an investment home is the location. Finding the right neighborhood is key to getting good returns on your investment property. You need to do thorough research on neighborhoods to get the best one. 
When you find a good neighborhood, you'll have an easier time managing your property, and get the right rental pricing, and the right initial purchase price on your investment. Here are three neighborhood factors that you should consider. 

1. HOA Restriction on Rentals

Buying a property that is part of the Homeowners Association (HOA) comes with its challenges. Do your research first to find out if there are any restrictions on rentals. Go through the rules, to review their conditions and restrictions before investing. Remember the rules can't change after you buy the property. 

2. Proximity to Amenities

A good neighborhood should have amenities such as good schools, shops, grocery stores, gyms, medical facilities, and restaurants. Areas with such amenities appeal to renters because of convenience. Therefore, choose a neighborhood with quality amenities to boost your investment's potential. 

3. Number of "for rent" signs

When doing the neighborhood evaluation, you should also look for the number of rental or for sale signs. If there is a high number of for rent signs, it is an indication that the properties have a low demand. It could also be that there are too many rental properties. It is ideal to invest in an up-and-coming neighborhood since they have a low vacancy and high rentals demand. 

Location is a vital factor in real estate investing. When you buy an investment property in a bad neighborhood, you will have lower returns. It, therefore, is important to research the neighborhood to make an informed choice. The neighborhood should have good schools, low crime rates, and quality amenities. A neighborhood with desirable characteristics will ensure your property increases in value with time. 

Outdoor Living Trends

 Four Outdoor Living Space Trends Worth the ROI for Rental Property Owners

There's no doubt about it – outdoor living spaces are popular. According to a study by the National Association of Home Builders, nearly three-quarters of homeowners want an outdoor space that they can use all year round. And for rental property owners, that's good news!

A well-designed and well-maintained outdoor living space can add value to your property and may even increase demand from potential tenants. Let us look at the top trends in outdoor living spaces and whether they're worth the investment for rental property owners.

- Decks and patios

Decks and patios are a great way to add value to your rental property. Not only do they provide tenants with additional living space, but they can also be used for entertaining or simply relaxing outdoors. If you're considering adding a deck or patio to your rental property, be sure to choose materials that are durable and easy to maintain.

- Pergolas

Pergolas are a popular trend in outdoor living spaces. They provide shade and can be used to create an intimate outdoor space for entertaining or relaxing. However, pergolas can be expensive to install and maintain, so they may not be the best option for every rental property owner.

- Fire pits

Fire pits are another popular trend in outdoor living spaces. They can be used for entertaining or simply for relaxing outdoors. However, fire pits can be expensive to install and maintain, and they may also increase your insurance premiums. So, before you add a fire pit to your rental property, be sure to weigh the costs and benefits carefully.

- Outdoor kitchens

Outdoor kitchens are a great way to add value to your rental property. They provide tenants with additional living space and can be used for entertaining or simply relaxing outdoors. However, outdoor kitchens can be expensive to install and maintain, so they may not be the best option for every rental property owner.

As you can see, there are many trends in outdoor living spaces that can add value to your rental property. But, as with any investment, it's important to weigh the costs and benefits carefully before you make a decision.

What to do if you Purchase a Home at too High of a Price

 How to Protect Your Finances If You Purchase a Home at Too High a Price

One of the most significant risks involved in purchasing a second home or an investment property is overspending on the property. It often happens during market peaks when buyers become caught up in the excitement and buy a property for more than it is worth. Such a mistake can have serious ramifications both in the short term and long term.

Potential Ramifications

Examples of likely ramifications include

1. You may be unable to sell the property for a high profit 
2. You may lose equity
3. You may lose cash flow if rental prices decrease 

Countermeasures to protect your financial interests

If you find yourself in such a situation where you worry that you may have purchased the property at too high of a price, there are measures you can put in place to protect your short-term and long-term financial interests. These include

1. Talk to a financial advisor. 

Always talk to your financial adviser as the first step in taking any monetary action. They can help you develop a plan to weather the market downturn and protect your financial interests. 

2. Understand the market conditions. 

Take the time to research recent sales in the area and compare them to the asking prices of comparable properties. This approach will give you a good idea of how much the property is worth and what your next step should be. 

3. Turn to your Insurance plan.

Having the right insurance policy in place can help protect you from any financial loss if the property value does decrease. Therefore, it is essential to review your insurance policy and ensure you have the right coverage in place. 

4. Shop around for a new loan. 

If you are worried about being unable to make your mortgage payments, talk to your lender. They may be able to work with you to develop a plan that can help you stay afloat financially. If not, you can also try and find a new lender. Even if you have a prepayment penalty, you may find a lender willing to give you a better rate.

5. Consider renting out the property. 

One way to offset any potential loss in value is to rent out the property. Renting can provide a steady income stream that can help offset any likely loss in value. 

 

Purchasing a home is a big decision. Therefore, it is always important to be aware of the risks involved. If you're worried that you may have purchased a home at too high of a price, take action to protect your financial interests. By following the tips above, you can help minimize the impact of a market downturn and keep your finances on track.