{"id":478,"date":"2019-05-30T16:29:34","date_gmt":"2019-05-30T23:29:34","guid":{"rendered":"https:\/\/latcheldev.wpengine.com\/blog\/how-to-insure-your-rental-income-against-tenant-default\/"},"modified":"2019-08-09T11:01:23","modified_gmt":"2019-08-09T18:01:23","slug":"how-to-insure-your-rental-income-against-tenant-default","status":"publish","type":"post","link":"https:\/\/latchel.ticksites.com\/wp2\/how-to-insure-your-rental-income-against-tenant-default\/","title":{"rendered":"How to Insure Your Rental Income Against Tenant Default"},"content":{"rendered":"

Like many, Aaron and Georgeann became accidental landlords.  They bought a property planning to settle their roots when circumstances took them elsewhere.  <\/p>\n

Soon Aaron and Georgeann were relocating across the country from Denver.  Back then that market wasn’t very favorable so they decided to rent their house.  <\/p>\n

At the time, Georgeann was 8 months pregnant with their firstborn, Aaron was starting a new job and they had recently closed on a new house.  Stressful times to say the least. <\/p>\n

They hired a property manager and eventually entered into a lease with a qualified tenant…or so they thought. Five months later when their tenant\u2019s rent didn\u2019t hit their bank account they had the nagging suspicion that something was amiss.  <\/p>\n

Sure enough, they soon received a call from their property manager informing them that their tenant lost his job, his girlfriend left him, he was no longer loving the Rocky Mountain weather and was moving someplace warmer.  It sounded like the lyrics to a sad country song!<\/em>  <\/p>\n

Needless to say, they weren\u2019t getting paid.  And how would they ever find a new tenant in the middle of winter?  <\/p>\n

This unfortunate situation along with others inspired Aaron to launch Rent Rescue.  Owning an investment property – even if by accident – is a great way to plan for your future.  It shouldn\u2019t be a headache. <\/p>\n

Eliminate the Headaches With Rent Default Insurance<\/strong><\/h3>\n

The US is becoming a nation of renters and rental property ownership, with its short term returns through monthly rental income and capital appreciation on the asset, is becoming a core investment strategy for both middle class investors and Wall Street trusts. <\/p>\n

While the upside to investing in rental property is readily apparent, many would-be landlords are reluctant to get their feet wet.  Thin operating margins make the on-time collection of monthly tenant payments<\/span><\/a> crucial.  And Landlords are limited to collecting a small security deposit to guard against tenant non-pay.<\/p>\n

Lease defaults result in many landlords unexpectedly incurring court costs, attorney fees and unscheduled vacancy all while their investment property is no longer producing income.  In a number of states, tenant-friendly legislation<\/span><\/a> can make it difficult for landlords to remove and replace the defaulted tenant, and court backlogs can prolong the process of procuring a court date. <\/p>\n

So, what\u2019s a landlord to do????  Buy Rent Default Insurance<\/span><\/a> to protect their investment!<\/p>\n

Rent Default Insurance has been widely available abroad in the UK and Australia for a number of years.  In those geographies, landlords don\u2019t have to solely rely upon collecting a security deposit to mitigate their losses.  Instead, it\u2019s quite common for a landlord to purchase Rent Default Insurance soon after closing on their investment property.  <\/p>\n

Like many products or services, it\u2019s taken this type of insurance some time to make its way across the pond to the US…it\u2019s finally here.<\/p>\n

Depending on the situation, Rent Rescue\u2019s rent default insurance policy will reimburse a landlord between 3 – 6 months of lost rental income when a tenant defaults on their lease.   Skips, non-pays and evictions are covered. <\/p>\n

The policy has an additional benefit of covering up to $1,000 of the landlord’s reasonable legal expenses \u2013 a relief considering all of the other costs associated with removing the tenant and then getting the unit suitable for the next resident.<\/p>\n

Rent Rescue\u2019s coverage is really affordable with an annual premium around $300 per unit (not including taxes and fees).  The total cost can be tax deductible too; just make sure to check with your CPA or tax attorney. <\/p>\n

Many landlords elect to pass the cost of the insurance on to their tenants in their monthly rent which usually equates to a 2% – 2.5% increase – fairly nominal.     <\/p>\n

How Can a Landlord Apply for Rent Rescue?<\/strong><\/h3>\n

A landlord can apply for Rent Default Insurance on Rent Rescue\u2019s website: https:\/\/www.rentrescue.com\/<\/span><\/a>.  Once there, a landlord answers a few questions about their investment property\u2019s location, monthly rent and their tenant selection criteria.<\/p>\n

To qualify, a landlord\u2019s tenant must meet the following requirements:<\/p>\n