Your Success Club > Articles > Residential Property Investment - Barriers > What if My Property Gets Destroyed by My Tenant?

Residential Property Investing – What if My Property Gets Destroyed by My Tenant?

By Yong-Long Lai

I find it very funny when I hear people asking, “what if my property gets destroyed by my tenant?”. What’s even more funny is when it's on TV and you see the property with holes in walls, missing doors and windows etc. The only reason why a person would worry or have troubles sleeping at night is if they don’t have the appropriate insurance or are under insured (if you can’t get a good night sleep because of your investment properties, buying the right type and amount of insurance may solve your problems). If one of my investment property were damaged I wouldn’t be sad, I would be happy I get something repaired and replaced which might also lead to increase depreciation.

There are two main types of insurance with residential property investment

Landlord insurance covers the building, it is exactly the same as building insurance in a normal house that you live in except it covers you when your tenant damages your property. Landlord insurance cost about the same as a normal house insurance (so it depends on the value insured)

Rental Cover/Rental Protection Insurance covers you for:

Sometimes I think people don’t know that both landlord insurance and rental cover/rental protection are not expensive (no more than 1-2 weeks rent). Remember that residential property investment is a business, you would think that most business owners will buy the appropriate insurance to cover themselves, and I suggest you do so too!

Remember, most people would never drive a brand new car out of the dealership without buying car insurance. Why wouldn't you buy landlord insurance and rental cover/rental protection? Your car is guaranteed to depreciate in time, whereas your investment property has a much higher chance of appreciating through time.

So to answer the question, “What if My Property Gets Destroyed by My Tenant?”
Answer: Call your insurance company and let them know what has happened and they will sort you out. If you don’t have insurance, go buy some! More importantly, make sure you insure your investment properties for the right amount with the appropriate cover.

True story: an investor friend of mine recently had one of their investment property maliciously damaged by their tenant (the burnt his property down). Because he was well insured with both landlord and rental insurance he was paid the rebuild value and loss of rent as the property was not leasable for obvious reasons. He was pretty happy with the final result because it allowed him to subdivide and build two properties on his land (one of the house was free because of the insurance payout - talk about buy one get one free)

 

Your Success Club > Articles > Residential Property Investment - Barriers > What if My Property Gets Destroyed by My Tenant?

 

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