Buying a “Cheap” Rental Property: What 99% of Rookies Miss (Rookie Reply)
Summary
This BiggerPockets podcast episode discusses essential topics for real estate investors, including the need for umbrella insurance and the implications of using FHA loans. Hosts should consider umbrella insurance for extra liability protection and be aware of potential disadvantages when using FHA loans, such as challenges with sellers.
Key Insights
- •The umbrella policy is an additional layer of liability protection that covers shortfalls from landlord insurance, potentially covering claims exceeding the insurance limit.
- •FHA loans may make offers less competitive because of the FHA inspection requirements and potential hurdles.
Action Items
- ✓Consider getting an umbrella policy to protect your personal assets, especially if you have an LLC or partnership, to cover potential liabilities.Effort: lowImpact: medium
- ✓If using an FHA loan, be prepared to potentially offer a higher purchase price, a larger earnest money deposit, or be prepared to address the seller's specific motivations to make your offer more competitive.Effort: mediumImpact: medium
Tools & Resources
- →Real Estate Rookie podcast: The Real Estate Rookie podcast
Watch Out For
- ⚠A common mistake is not having an umbrella policy on top of an LLC, which could leave you personally exposed to liabilities.
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