An investment property is a worthy financial venture. At the same time, it requires adequate protection against risks such as lawsuits and physical damages. You can protect yourself and your investment property with the following strategies:
Get an Insurance Policy
Insurance has been the standard way of protecting your real estate properties. MD Investment Property Insurance can address your need to preserve these properties.
Coverage depends on the type of property you wish you protect. A policy may include coverage for a flood, hazard, fire, and more. You can also buy separate insurance policies for your residential and commercial properties.
Make Your Business an LLC
We know how risky business can be. So, it would help if you had the necessary protection from these business risks.
Registration as LLC is a way of protecting your personal assets. Creditors can’t go after your personal properties when business dissolution occurs as they are limited to your company assets.
Ensure Safety in Your Rental Properties
Lawsuits are risks you don’t want to experience. They cause stress and drain your working capital.
To avoid lawsuits, ensure that safety precautions are in place within your property. Safety precautions may include maintenance of HVAC systems, repairs on damages, and check-ups on the property.
When tenants complain about a leak or anything that seems a threat, you should immediately act on these complaints. Because if you don’t, your tenants can sue you for negligence that results in injury.
Prepare for Emergencies
Natural disasters happen all time. At any time, an earthquake, hurricane, or fire can strike and damage your properties. These disasters can put the life of your tenants in danger.
On top of general safety measures, provide an emergency plan for your tenants. Provide them with an evacuation plan should a disaster occur, and give your tenants details on shut-off valves for fire disasters. During a power outage, your tenants should have access to an emergency power source.
Most importantly, keep a water and fire-resistant safe at an off-site facility. Store your important files, such as contracts and mortgage documents in this place. Always back-up your computer files related to your investment on a cloud or similar service regularly.
Fairness helps you avoid lawsuits on civil rights. You can’t turn down a tenant just because you don’t like how they answered your questions. Otherwise, they can sue you for discrimination.
In short, choose tenants based on valid reasons such as credit scores, capacity to pay rent, and references. It’s recommended that you provide a written policy on selecting your tenants, so they know why you chose or rejected them.
Also, implement consistent tenancy rules and policies. Always have agreements in writing from new tenancy to extension of stay.
Some tenants have disabilities and impairments, while others may become disabled due to accidents during their stay in your rental properties. While the accident didn’t happen in your property, you need to accommodate disabled and impaired tenants.
According to the Fair Housing Act, you must design and construct your rental properties with disabled tenants in mind. If you have disabled tenants, be reasonable and flexible. Grant them special privileges such as a guard dog even if you have a “no pet” policy.
Inspect Property Conditions
Wear-and-tear damage is typical on rental properties. Sometimes, tenants damage one or two pieces of furniture during their stay.
To establish certainty on undamaged/damaged properties, inspect the rental units’ condition before a tenant moves in. Take a picture, create a list, and show these pictures and lists to the tenant.
Discuss with the tenants that whatever damage sustained in the unit, the tenants will be responsible for repairing or replacing. When a tenant leaves, inspect the property again for possible damages.
An investment property requires enormous capital. So, you have to ensure you’re protecting it at all costs. Get insurance to adequately protect it since you’re at risk of damages either from tenants or natural disasters. If you have to hire a property consultant and other experts, make sure you’re doing it right.
About Moody Insurance Worldwide
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.