Successful property investment means maintaining a healthy bottom line to reach your goals. This involves many factors, from finding the ideal property investment to balancing the home management tasks and everything in between. However, other issues that affect your ROI may not be as obvious.
One thing that can impact ROI is your insurance costs. When planning operating costs for rental properties, insurance premiums must be part of your calculations. Before buying a new property, it's important to consider the current and future cost of the insurance and whether you need additional coverage beyond a basic landlord policy.
Should you consider coverage to protect against natural disasters? Unfortunately, some policy options are add-ons that many property owners may not consider (before it's too late). However, with the aid of Baltimore property management professionals, you can make the best choices to protect your investments. Here's what property owners need to know!
Insurance is a way of life for everything important we own and want to protect. It's not any different with an investment property. Owners need coverage for a rental unit in case of accidents, fires, or other damage. However, since someone is renting out the property, you need landlord insurance instead of homeowner's insurance.
Landlord insurance covers a property when the occupant is not the owner. To protect your investment appropriately, it's vital to have this coverage even if the tenant has a renter's insurance policy for their personal belongings.
So, what should rental property owners know about landlord insurance? When is a basic policy not enough to protect against damage from a natural disaster? Here's a look at a few standard coverage options for landlords.
Your property can sustain damage from an accident, fire, or vandalism. The right property damage coverage helps owners recover the costs of repairs for rental properties. If you're not sure you have proper coverage to operate rental properties legally (and safely), work with a Baltimore property manager to discuss your options.
With liability coverage, you have protection if someone gets injured on your property. This insurance protects you from costly lawsuits from tenants or guests if someone gets hurt on the property.
If an accident makes the property unlivable, this coverage protects you from the loss of rental income. For example, suppose the unthinkable occurs, and the property has a fire and needs extensive repairs. In that case, you can receive compensation for the time the home is unoccupied during repairs while your tenants can't live in the home.
Property management professionals will tell you that some properties require additional landlord insurance coverage. It's vital to know beforehand if the home you're looking at will need additional coverage since this affects your ROI.
While you can't keep natural disasters from happening or potentially damaging your property, additional insurance coverage can help you recover more easily when a disaster strikes.
Your general policy may have some limited coverage for natural disaster issues. So, it's a good idea to review the policy. However, a "general" policy may not cover some significant disasters. These disasters can include floods, hurricanes, and earthquakes. An insurance specialist and property managers can give you more specific information about the policies you need for adequate protection.
Baltimore has a moderate risk for floods, making it necessary to know the land layout before purchasing a property. With the help of a property home management specialist like Rentwell, you'll be informed about your options before you buy.
As noted above, insurance costs should be factored into your monthly expenses. When analyzing potential (or current) ROIs for rental properties, subtract the expenses from the monthly rental income to accurately show the profit generated by your rental units.
If you're weighing the costs of adequate insurance coverage vs. improving your bottom line, it could be time to adjust the rental or reduce other expenses. Choosing to forego the insurance you need to protect your real estate investments could become a more costly issue down the road if something goes wrong.
To achieve your ideal ROI when purchasing a new property, consult a Baltimore property management company to find the best properties. They can help you identify properties and neighborhoods that generate competitive rental rates. In addition, if you can avoid high-risk areas, you can often avoid hefty insurance costs.
However, what can you do to maintain ROI if you already own a property in an adverse area? Property management professionals can assist you with strategies for defraying the cost of natural disaster insurance. In addition to raising the rent (appropriately), a property manager can help you reduce maintenance costs, improve on-time rent collection, and maximize returns.
Take action to maximize your ROI by talking to the property management experts at Rentwell. We can help you find the best properties to round out your investment portfolio and recommend the best strategies to protect your investments. When you hire the right Baltimore property management company, you'll also have all the support you need to manage your properties. Get in touch with our team for more information about how we can help!