Insurance messing up my deal
I was with a seller and we where hammering out the details on a L/O deal. When we got to maintenance the subject of insurance came up. I told him he would probably need to have his policy changed to a landlords policy. There was concern about the policy going up because we where making the payment just enough to cover his payment. So the seller called his insurance co to check.
Here is the problem:
His insurance co will not give him a landlord policy, furthermore, if he is not occupying the house they will cancel his policy.
I figure, no problem, I’ll call my agent and check on a new policy. He has been put on a quota and can only write landlord policies for existing clients, furthermore, he has checked with other agents and it is the same deal everywhere, he said maybe Allstate if the seller has excellent credit, no past claims and moves over his auto policies.
Q1- Has anyone else run into this problem?
Q2- How would a subject-to change this situation?
Have him change insurance agents. Unless this is some kind of war zone, the individual should be able to get a policy called Fire Dwelling. This is what I did on my leaso option house. I use an independent agent in TN who writes in 48 states. Here is the number 800.328.0293
Good Luck.
Clint
[ Edited by cmiller2 on Date 05/14/2003 ][ Edited by cmiller2 on Date 05/14/2003 ]
I am always mystified as to why I see people doing L/O on a purchase. I would think this would be backwards. If you are picking up the property either buy it below FMV or do a sub2.
L/O as I have come to understand it is really for when you are selling it to someone else after you have the deed. On a L/O the seller still owns the deed to the property and you have basically nothing except rent with option to purchase after an agreed period of time.
Please correct me if I am wrong on this.
Some sellers will not sign over there house with the loan staying in their name. But these same owners may lease option it out. I say go for it if the numbers look good. Always go for the deed first then try a lease option if that doesn't work. You can do a sandwich lease with your buyer making the same spread yo may make when doing a sub to deal. You can get option consideration money, rent spread and the great back end.
You have to make sure the owner will not change their mind after when your buyer wants to exercise their option. Having a deed in escrow could cure that.
Tom[ Edited by tbelknap on Date 05/14/2003 ]
Thank You Clint.
We may try your agent.