The most valuable asset in our financial portfolio is most often our home. Owning multiple properties usually means renting out the spare to offset mortgage costs. But you may be struggling with some paralyzing fears if you’re newly considering becoming a landlord.
Renting your property comes with many legitimate concerns. But perhaps the greatest worry you face is what kind of condition you’ll find your home in when the lease finally expires. Though landord insurance can offer a variety of benefits, perhaps the most important is that it can carry you over from one renter to the next if the previous renter has left your property in ruins.
Consider the very real story of Marcus and Carol, two very real people whose names have been changed. This couple had their dream home built with the intent of retiring there for good someday. They continued their busy careers in the meantime and largely absorbed the expense by renting the property out.
All was well for the first 6 months. There were no demands for maintenance thanks to the property being newly built. As such, interaction between Marcus and Carol and their renters was minimal. It seemed a perfect match until the 7th month when the rent check failed to come that the problems began.
In a series of not entirely unpredictable events the rent continued not to show and the phone calls became more and more tense until our desperate couple had no choice but to pursue legal efforts to evict the deadbeats flopping in their dream home. What might not be so predictable is the condition of the home couple finally discovered once the tenants were removed.
What Marcus and Carol discovered was spray paint graffiti, excrement smeared on the walls, whole sections of drywall ripped down, cabinets ripped off the walls, a toilet smashed apart in the bathroom and the inevitable water damage you’d expect from such violence. Their shock at the havoc inflicted on their dream home was only the beginning of the pain they’d endure.
Fortunately Marcus and Carol did have home owner’s insurance to absorb the lion’s share of the expense to repair the damage. But the real difficulty came from their inability to collect rent on the property while it was being repaired. Clearly they couldn’t rent it out to even the most tolerant of tenants until the major damage was taken care of. With several months of work ahead, they were left paying out of pocket from their humble income for months.
The choice to purchase landord insurance is no more difficult than the consideration you go through with any kind of insurance. You weigh the risks and make an informed choice based on what you feel you can tolerate. But where other forms of insurance protect you against risks you can largely mitigate through cautious living such as eating a healthy diet or driving defensively, landlord insurance protects you from one variable you have absolutely no control over; the complete stranger living in your house.
