Week 20: Insurance and Property Taxes

Insurance

Another cost to manage is insurance. At a minimum, you need liability insurance, in case someone is hurt on your property. This is generally very inexpensive

Some investment properties are ‘self-insured’. Carrying only liability insurance, and no other coverage on the property. If you have a mortgage, your lender will specify the minimum coverage required. Self-insurance is obviously risky, and something we would never recommend.

Property Taxes

Property taxes are a fact of life. A property owner can appeal the property tax assessment. If your property is overvalued, you may be able to have the assessed value reduced, which will reduce your property tax liability. 

What you paid for the property is considered fair value if the transaction was at arm’s length, not including ‘distressed’ sales, short sales and bank foreclosures. However, if you have a certified appraisal of the property that supports your value, or can show that current assessed values of like properties in the area are less than yours, you may be able to obtain some relief. In my experience, it is worth a try.