Insurance coverage and flipping... To insure or not to insure? Why the question? The answer is so obvious.
Countless times throughout my career I’m told of horrible stories where an investor acquired a property by paying cash for it…jumped into the rehab so they can quickly get to the sale and profit. Twice in twenty years, I heard stories of homes burning to the ground. More than I can count, I’ve heard of theft and vandalism since no one usually lives in flipped property until it’s sold.
Usually, cash acquisitions close quicker due in part to the ability to get a better purchase price based on a quick uncomplicated closing. Insuring flip property can be tricky because of its usual vacancy factor or sometimes its age. Simply forgetting insurance coverage is really understood when excitement kicks in as a beginner. However, it’s truly unforgivable to the seasoned investor. Although it can be difficult to find insurance for vacant homes, it can be secured if you search for a good agent to supply it. Insurance coverage usually has to come from a broker for vacant homes.
As a seasoned flip investor you may or may not follow this simple safe guard on all your property purchases. Why would any investor do such a thing? Mostly because they simply forget….Why forget? Because it’s a cash acquisition and no one is there to remind them. When a purchase is made and financed, the bank will always demand a proper home owner’s insurance policy be placed on the property prior to funding and close of escrow.
This post is written by (me) Don Gilmartin in order to inspire the DIY, design & flipping community. As CEO and founder of Fliptechs I have over 20 years of design, construction, and real estate, experience to share.