When investing in real estate, you’re indubitably taking on all types of risks. These risks range from general market fluctuations to the reliability of the structure itself, and you must be prepared for the entire risk spectrum as a real estate investor. Additionally, insurance is something that many real estate investors forget about until the very last minute, but it deserves significantly more attention and consideration. Real estate investment insurance could be the difference between sinking or swimming, especially in today’s real estate climate.
Weed Ross offers years of experience in real estate investment insurance, as we work with over 40 different insurance carriers that offer a wide range of policies and premiums. And because we’re a local insurance agency, we compare and contrast all of these different policies and claims all the time, which gives us leverage—we know what risks to look for. Given the volatility of the real estate market and the sizable risk that a real estate investor is up against, we thought it best to provide a detailed list of what to look out for in real estate investing. This way, if you’re working with Weed Ross on your next real estate endeavor, we can make sure that, no matter what, you’re covered.
In this article, we will cover:
Market Volatility
One of the most significant risks of real estate investing is the apparent volatility of the real estate market. The value of properties seems to soar one day and sink the next, and these swings affect your investment and your well-being dramatically. Even if your property is in a fantastic location, has a beautiful, trendy design, and is in perfect condition, the market can suddenly become your arch-nemesis. Real estate investment insurance can’t really do much about the ups and downs of the market, but many coverages in a standard policy may help ease the recovery from detrimental incidents that market volatility can cause.
Property Risk
The property itself may wind up as your greatest antagonist. Even if you have the property thoroughly inspected, there are no guarantees when it comes to real estate investing. You just might run into code violations, mold, leaks, lead paint, or other hazards, and it’s important to be covered in those instances. Real estate investment insurance offers a variety of coverages —such as landlord insurance or hazard and fire insurance—that offer compensation for some of these types of occurrences. Landlord insurance, for instance, provides protection for several damages and losses that have to do with the dwelling itself.
Tenant-Related Risk
In real estate investing, a bad tenant can really rain on your parade. Some tenants may fail to report small issues, allowing them to turn into big issues. Or perhaps they struggle to pay the rent on time. Or even worse, maybe you can’t seem to find tenants at all. These types of tenant-related risks are the stuff of nightmares for real estate investors, but there are some real estate investment insurance coverages that can come to the rescue. Loss of income insurance, for example, provides compensation should your rental property become uninhabitable for an extended period of time.
Lawsuit Risk
The fact of the matter is, in real estate investing, lawsuits are sometimes unavoidable. Legal issues to look out for range from accidents that take place on the property to poor business practice claims. If a tenant or a tenant’s guest gets hurt in your investment property, they may try to sue you for negligence. The good news is, a standard real estate investment insurance policy will offer what’s called liability insurance, and this protects you in these types of scenarios. If someone gets injured in a way that requires medical attention or results in a lawsuit, liability insurance just might cover it.
Still hesitant to invest in real estate? Have more questions on the risks of real estate investing? Looking into real estate investment insurance? Whatever it is, the local insurance experts at Weed Ross are here to help. Contact us today, and let’s get those questions answered.
