Risk is inherent when you own rental property in San Mateo. As experts providing property management services in the Peninsula, we know that there’s a lot of liability for landlords. One of our jobs is to reduce that liability and to mitigate the risk that comes with finding tenants, maintaining your property, and enforcing your lease.
This needs to be a priority; the value of protecting your rental property cannot be overstated. Not only is it essential to maintain the integrity and condition of your investment; it’s also helpful for your peace of mind.
Rental property investments have a lot of potential. They can make great money, especially when the property is well-maintained and occupied by reliable residents. The risks, however, are ever-present. You could find yourself with property damage from bad tenants, a huge financial loss because you didn’t know the roof needed to be replaced, or a lawsuit from a tenant who is disputing the amount of security deposit you withheld.
There are a couple of things you need to mitigate risk.
First, a sound insurance policy. Second, a consistent set of procedures for leasing, managing, and maintaining your investment. Finally, you need a great Peninsula property management partnership that will deliver value and protection against easy mistakes and risky decisions.
Landlord Insurance for San Mateo Rental Property Owners
When we talk about mitigating risk, the logical starting point is insurance. You need a comprehensive landlord insurance policy. Landlord insurance provides coverage against any property damage or liability claims, and also protects you from the financial loss that could result from theft, fire, or natural disasters. If a pipe bursts and damages your floors, for example, you can expect your landlord insurance to cover the cost of repairing the pipe as well as any damage that was caused by that issue.
Here is what you can expect a comprehensive landlord insurance policy to cover:
- Protecting Against Damage
Your landlord insurance will cover any repairing, replacing, or rebuilding you need to do when your rental property is damaged and it’s considered a covered loss. You’ll want to be sure you have enough coverage in place to completely rebuild your investment, if necessary. Remember that the cost of materials and labor has increased dramatically. If you have not evaluated your landlord insurance coverage amounts recently, now is a good time to do it.
Protecting yourself against liability is just as important as protecting the physical structure of your property. This coverage protects you from lawsuits related to injuries or damages that could potentially occur on your property. For example, if your tenant slips and falls on a wet floor in your building, you could be held liable for their medical bills and damages. Liability coverage can help protect you from financial loss in these situations.
- Mitigating the Risk of Lost Rental Income
Look for a landlord policy that includes loss of income coverage. In the event that your rental property becomes uninhabitable due to a covered loss, rental income loss coverage can help replace the income you would have received during the time the property is being repaired.
Landlord insurance can be a valuable investment for any landlord. Not having adequate coverage will only cost you more when something happens.
Keep in touch with your insurance agent and make sure your policy is adequate and reflects the potential recent changes in your property value. If you’re not already working with an insurance agent, get a referral from a Peninsula property management company.
Require Renter’s Insurance from San Mateo Residents
The landlord insurance you have for your investment property is a great place to start, but you need to do a bit more if you want to fully mitigate your risk. Your tenants will need their own insurance. Accidents and disasters can happen without any notice or warning, even with well-screened and highly qualified residents.
Prepare yourself and your tenants for the potential of property damage and accidents. Require renter’s insurance.
We talk to a lot of San Mateo tenants who are under the impression that a landlord’s insurance policy will cover them if something goes wrong. That’s usually not the case. If there happens to be a burst pipe or a fire at your rental property, your insurance will not cover your resident’s personal belongings. When you require them to carry renter’s insurance, you’re making sure your tenants are protected and have the coverage they need to repair or replace their personal possessions.
There’s also the matter of tenant liability. Residents can seriously damage your property, and not intentionally. How will they make it right?
If a tenant forgets to turn the water off in a bathtub, there could be extensive flooding and water damage to the property. If they leave a pot on a hot stove, there could be a fire. You should not have to pay for that. In this case, your tenant’s renter’s insurance policy would.
You’re protecting your own policy, your own finances, and your investment property. You’re also reducing your own liability. Accidents happen, and if a tenant is injured on your property, you could be liable for their medical expenses. By requiring renter’s insurance, you protect yourself from that liability. If a tenant should somehow become injured in their own home, their insurance will cover their medical expenses, rather than the cost falling back on you.
Insurance is an excellent way to protect yourself and your property. It’s necessary to mitigate your risk. Your tenants need it, too.
As you develop your risk management plan, remember that you’ll also need a solid and consistent set of processes and systems that ensure everything goes to plan. You need to know how rent will be collected, what you’ll do if tenants don’t pay rent, how you’ll receive maintenance requests, which vendors you’ll work with, and how you’ll track your accounting and financial reporting. You need a strong lease agreement.
It can be overwhelming. If you’d like some help mitigating the risk that naturally comes with real estate investing, please contact us at Bayside Management.
We lease, manage, and maintain investment properties in San Mateo and around the Peninsula, including San Carlos, Redwood City, Pacifica, San Bruno, Half Moon Bay, Daly City, Mountain View, Foster City, and Palo Alto.