A recent news story in the Tucson Citizen reports…
In the Valley’s most popular communities, desperate renters are submitting applications for multiple single-family homes to secure a place to live. Some would-be renters are dedicating as much as 20 hours a week to finding a new home. And when they find the right place, some feel pressure to offer much higher than the listed rent.
If you’re a homeowner in Arizona, make sure you have the right insurance on your home before you decide to rent it out.
Phoenix Rental Market on Upward Swing
Here’s what the numbers indicate:
- June and July were big months for rental contracts, with more signed than in any other month in the past decade
- 32% of single-family home purchases in July were bought to be rented out
- In July, the average rental home was empty for only 38 days, one of the shortest periods in the past 12 years
- The vacancy rate for apartment complexes hit a six-year low as of June 30
If you are interested in becoming a homeowner, make sure you’ll make a good property owner. For tips on the steps you should take before you rent out your home, check out this MSN article, “How to rent out your house”.
Make Sure You Have Good Insurance Coverage
Before you whip your home into tip-top shape and begin the tenant interview process, talk to your insurance agent. She may tell you to replace your homeowners insurance policy with rental-home insurance. She also may tell you there are differences in coverage.
|Homeowners Insurance Coverage||Rental Property Coverage|
|Dwelling coverage to replace your home||Dwelling coverage to replace your home|
|Liability coverage to protect your assets from a judgment against you||Liability coverage is the biggest expense for a landlord because of greater exposure should a tenant or anyone they invite on the property suffer a physical injury|
|Personal property coverage to replace your possessions||Personal property coverage is minimal, unless you are offering the rental furnished; however, ensure your tenant has renters insurance to protect their personal property|
|Loss of use coverage to rent a similar residence should the home be damaged or destroyed||Loss of income coverage to cover mortgage should the residence be damaged or destroyed|
|Coverage on separate structures||Coverage on separate structures|
Regardless of whether you are considering homeowners insurance or a property owner policy, consider making your personal property, loss of use, and separate structure coverage a percentage of the total dwelling amount.
Keep in mind that insuring your home as a property owner rather than a homeowner may cost you more. Some people find this surprising. However, because tenants may not show the pride of ownership that the homeowner would, insurance carriers undertake a higher risk.
All mortgage lenders require their homeowners maintain specified levels of homeowners insurance on their homes. Mortgage companies along with local landlord-tenant laws may require rental property insurance as well. Before you decide now is the time to rent out your home, make sure you have the right insurance coverage, by contacting your insurance agent and reviewing your policy.