Insurance On 4 Units (3-flat With Coach House In Rear)
a partner and i are going to purchase a 4 unit non-owner occupied (3 units with a coach house in rear) - it will be under a separate LLC. we want the mimimun coverage to cover rbuilding cost in case of the worst scenarios. estimated costs to rebuild 3 flat @ $300,000 and coach house @ $100,000. some agencies would only pay-out 65% of these rebuilding costs because 1) the building is more than 25yrs old and 2) there have been no renovations in less than 10yrs. what kind of coverage should we get? and is rent loss insurance really needed? in other words what do i need covered and what do i not need covered?
thanks for all your advice
rob
It depends on what you would do in the event of a total loss...if you would rebuild for certain, then go with Reconstruction/Replacement cost. If you only want your "financial interest" covered, consider an Actual Cash Value (ACV), or a Market Value policy. There are companies that will insure to Replacement Cost, regardless of age, assuming updates and other underwriting qualifications are met.
Remember though, that if you insure to ACV, partial losses will be depreciated. Loss of Rents is built in to many habitational contracts, by the way. This article may help:
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=438
Best regards,
Tim