Today’s REI Classroom Lesson
Get solid advice over insuring the proper entity from our expert, Tim Norris.
REI Classroom Summary
Entities and insurance can get confusing. Listen in as Tim Norris goes over the importance of insuring the proper entity.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Tim: Good morning. My name’s Tim Norris. I’m with the National Real Estate Insurance Group, and I’m today hosting the REI Classroom.
Mike: This show was sponsored by PassiveRental.com.
Tim: Today we’re going to talk a little bit about insuring the proper entity when it comes to your investment properties.
Very often, when people are financing investment properties, whether they be fix-and-flips or long-term rentals, the advice that they’re given by their real estate insurance agent is really, sometimes, not the best. In other words, because you’ve formed an LLC or a corporation, or some sort of entity to not only protect your assets but also to potentially create tax benefits for yourself, don’t undo the work that you’ve done by insuring the wrong entity.
What I mean by that is, if an insurance agent or advisor tells you that you should, in fact, insure that property in your personal name and name the entity that you created as an additional insured, that’s not the right way to do it. At the end of the day, the insurance company’s going to pay a claim out to what is known as the first named insured on that policy or contract, or whatever the case may be. If you, personally, are that first named insured, you get the policy proceeds in the event of a covered loss.
However, unfortunately, if you’d set up that entity, you don’t want those proceeds to go to you, you want them to go to that proper entity that you’ve created for all the reasons that I’ve mentioned. So make sure, when you create those entities for all the right reasons, that you’re insuring the proper entity when it comes to your insurance coverage.
I hope that helps, and have a great day.
Mike: PassiveRental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash-flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting PassiveRental.com.
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