If I want to rent my former primary residence, what should I consider about insurance?
Dustin Edwards • May 1, 2020
Take Time to Consider Your Insurance Needs
One of the ways that many people get into rental property ownership is by keeping their primary residence when they move. We have seen it time and time again. At times people move out of the state and want to keep their asset to allow them to move back. Other times people have stayed in their homes for 10 years and are ready to move to a different local neighborhood and figure others just would love to rent in a nice area that they too have enjoyed.
While we aren’t licensed insurance agents we wanted to share our tips for ensuring you are prepared when it comes to covering your rental property.
Landlord Insurance
This is the equivalent insurance to your homeowners insurance when you start renting your home. This would cover your property in an event such as a fire or other covered catastrophe. When you are looking at landlord insurance compared to your traditional homeowners insurance some of the key differences to consider are the following:
- Loss of Rents - In the event of a covered catastrophe how long will your loss of rents be covered for? Especially as this is not your primary residence this is a key factor to understand as insurance can then help you pay your mortgage while it is under repair. Many policies will list this as an option, just make sure to ask how long you are covered for in the event a covered incident occurs.
- Liability Coverage - On your primary residence you may not have given this much thought as after all you and your family are the primary ones on the premises. With your rental property in Long Beach you will want to understand how much coverage you have for liability protection. We recommend speaking with your insurance agent to understand how much is appropriate given your specific scenario.
- Personal Property - You might be thinking...but it’s a rental, not my property, what would I have there? Especially in Long Beach you might have provided such items as a lawn mower, washer/dryer, or even a refrigerator and these could be covered under the personal property provision. Outline to your insurance agent the items of personal property you have on premises and determine if they are covered.
Umbrella Policy
As an individual property owner you may or may not have an umbrella policy. In simple terms an umbrella policy is additional coverage that can be used when a specific policy (i.e. home, auto) hits a policy limit. Umbrella policies are very common and even if you don’t have a rental property we would suggest that you investigate this type of policy to see if it is right for your situation.
It is generally recommended to have an umbrella policy with a rental property as the aspect of dealing with the unknown on a regular basis can necessitate having an additional layer of insurance protection.
Renters Insurance
Renters insurance is not a policy that you as a rental property owner get; however, understanding that it is available for your tenants can save you awkward conversations. Renters insurance can help your tenants replace items in the event of incidents such as theft. We recommend sharing with your prospective tenants, as part of your welcome packet, that you recommend renters insurance to help them have the best possible experience while they rent from you.
When it comes to insurance there are many aspects to consider as these are just a few of them.
To help you understand more about your options we invite you to call us today at (562) 888-0247 and we will be happy to share our resources for insurance. Or if you prefer a complete evaluation of your property we invite you to fill out our Free Rental Analysis.
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ADUs are a great to expend your current rental property and increase unit count for rent, find out the different ways to convert existing structures into ADUs
There's value in keeping tenants happy. Discover 4 reasons keeping tenants happy is good for your property.
With the real estate market as competitive as it is, many landlords are looking into building an Accessory Dwelling Unit (ADU) or Jr. ADU to improve their bottom line with additional monthly income. While this is a great way to earn more, you need to be sure you’re investing in the right upgrade to your property. Below are some of the key differences between ADUs and Jr. ADUs; this way, you can make the right decision for your property. Differences between Junior ADUs and ADUs On the surface, the primary difference between an ADU and a Jr. ADU is the square footage. However, there are many considerations for each type of ADU , significant differences include costs and build limitations. ADUs are generally seen as a larger and more versatile build when compared to a Jr. ADU. They can be built detached from the main home, converting an existing structure, most commonly the garage. In Long Beach, an ADU can be up to 800 square feet or 50% of the gross floor area of the primary dwelling, whichever is smaller. For reference, an 800 sqft living space can be arranged as a 2-bedroom 1-bath home, though with creative use of the space, many investors have been able to fit 2 bedrooms and 2 bathrooms comfortably. If listing the ADU for rent is the goal, this can produce a higher yield, though at the cost of a higher initial investment. Jr. ADU, on the other hand, can only be a maximum of 500 sqft and must be built attached to the existing single-family home. While you can build an entire new addition to accommodate the Jr. ADU, it's not uncommon for homeowners whose homes are bigger than they need to convert a bedroom into a Jr. ADU in order to have additional income . A Jr. ADU does still require an efficient kitchen. Bathrooms can be shared with the main house, though this can deter some prospective tenants. Additionally, the utilities are oftentimes shared with the main house, which can simplify installation, though it can complicate utility costs with your tenant. When an ADU is Right Being able to build a full ADU provides an entirely separate and private living space, which is more desirable to prospecting tenants. This is the preferred choice for most investors, especially those who have unused space in their property. By being built apart from the main house, an ADU may cause less disturbance to those living in the main house, whether that be yourself or another tenant. In Long Beach, CA. ADUs can’t be listed as short-term rentals on apps like Airbnb; that being said, an ADU can command more in rent because of the aforementioned features. If you’re looking for a long-term investment, ADUs increase your property’s value while generating a consistent cash flow. Finally, if you ever plan on selling your rental property, the additional ADU can improve the appeal of your property to future buyers. When a Jr. ADU is Right While a Jr. ADU doesn’t have the same potential as a full-sized ADU, Jr. ADUs are far more budget-friendly. These are a great option for investors who have limited funds. Since Jr. ADUs generally require less work to be done in less time, allowing you to begin making a return sooner. Finally, if your property doesn’t qualify for a full-sized ADU permit due to the size of the property lot, a Jr. ADU can be built primarily through interior work, which may only require reconfiguring existing interior space. Whether you choose a full-sized ADU or a Jr. ADU, the decision depends on more than just the size of the structure, you’ll have to manage filling the vacancy and managing the new tenant. If you need help choosing which ADU is right for you or you need help managing your Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
