You get a call one day from the fire department, telling you, “You’ve had a house fire that’s destroyed your rental property.” What do you do first? Check on the tenants, call the insurance company, or start thinking of ways to financially recover? Your tenant has lost all their belongings; you’ve lost an investment you worked hard to acquire. If everyone is safe, what’s the next step you should take? Or, a more important question: what would you have wished you knew BEFORE this happened?
If you think the elite investors at BiggerPockets are immune to these tragedies, you’re wrong. BiggerPockets CFO Aaron Sallade was in this exact position earlier this year when he got a phone call no one wants to receive. His property was destroyed, but thankfully, his tenant walked away unscathed. He now needed to go through the next steps: submitting insurance claims, getting restoration quotes, and, if he chose to do so, selling the property.
Aaron shares the entire timeline from the rental burning down to reaching out to insurance, getting restoration quotes, and eventually deciding what to do with the property. He even dives into what he wishes he had known BEFORE this tragic event, and not hearing his advice could cost you!
In This Episode We Cover
What to do when a tenant accidentally burns down your rental property
Why you MUST require renters insurance on every property in your portfolio
Filing rental property insurance claims and how long it’ll take to get paid for the damages
Rebuilding vs. selling and whether it’s worth the time to renovate a burnt-down home
The rarely discussed “1033 exchange” that can help you during a tragic event like a house fire
The two things you NEED before you can get reimbursed from your insurance company
And So Much More!
(00:00) Intro
(01:05) First Rental Property Numbers
(03:55) "Your House Was Destroyed"
(06:49) Getting the Tenant Settled
(09:10) Working with Insurance
(13:15) Restoration Timeline and Insurance Payout
(14:47) What to Know BEFORE This Happens
(18:53) Rebuild or Sell?
(22:52) Other Options to Sell
(26:46) Final Numbers On the Rental
(28:32) Insurance Rate Changes
(30:50) Worst Case Scenario Resolved!
Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/rookie-430
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