Most people in the real estate investment business hope to find that “great deal” for the right price to add to their portfolio; but many times the property that has the right price, may have a few issues that can make it a bit more challenging to purchase.  Those same issues may make the property challenging to insure.

Here are a few key buzz words:

Purchase “as is”

Some renovations required

“Vacant or lower occupancy”

Needs some TLC or the right management

While these are good teasers and may actually be a great opportunity; it does offer some challenging insurance options.  Listed below are some helpful questions that will help the insurability of the property.

1. What is the current status of the property? What is the current occupancy as compares to the neighborhood?  What are the conditions of the units?  Can you obtain a list of what renovations have been done?  What is your ability to continue the renovations? Do you need a contractor to help determine the costs and to perform the work?
2. Have there been any claims at the property? Can you obtain prior claims history? Have all damages from claims been repaired.
3. Determine the age of any repairs done during the lifetime of the property; also determine the type of wiring.
4. Why is the occupancy low? Is it due to the current ownership/management or will the local conditions and neighborhood allow you to increase occupancy to an acceptable condition or is the occupancy similar to other local properties?
5. What can you do differently to help the property? Be specific.
6. What renovations or improvements can you do to improve the property? Be specific and have a budget.
7. Have a schedule of renovations and detail when either units or buildings will come on line.
8. What new marketing will you be doing? Onsite management? Better maintenance?

Be as specific as possible with details and time lines for yourself.  This detail will help paint a much better picture for an insurance underwriter.

For more details on this subject, contact Ramey King Insurance at 800-453-9691 or drop by our office at 510 N. I35E, Denton, TX or visit our website at www.rameyking.com

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