New clients who enter into real estate investing often arrive by way of inheritance or an unexpected relocation away from their primary home. As a result, they don’t get the opportunity for a lengthy research and education period before jumping into the responsibility of managing real estate as rental income in San Diego.
Our colleague, Dale Walker, makes a persuasive case to pause and recognize that you’re now running a business that requires a different approach than your primary residence. Dale is from Farmers Insurance in San Diego and often advises his clients about the risks involved in managing real estate. Watch the video below to hear a few tips from Dale.
One of the common mistakes people make when they enter the real estate market is that they assume it’s just another home when they’re buying a single family home for rental income. However, once you embark on rental income be sure to understand that you’re now running a business with risk, profit and loss.
When you own a home, a single-family residence or condos, or any property you’re using for rental income, you must remember that as an owner you’re taking on a significant amount of responsibility & liability. In addition to managing the property and its residents, it’s important that you cover any situation that may arise that could cause you, your partner’s, or your family a loss or a loss of income. You need to protect you and your new clients, the residents.
A simple example is a loose floor board that a guest of a tenant trips and falls and gets injured. Who will pay for medical care and associated expenses? Most likely the homeowner is liable. The important takeaway is that this property is not owner occupied. It’s a property that you’re using as a business so be sure to understand the unique coverage(s) required. Most importantly, understand your risks and how to manage them in a way that makes sense for you.