Alphabet Soup for Property Investors

Photo: Judit Klein

The path to property wealth is far from simple – but that doesn’t stop anyone from looking for easy answers in the form of catchy real estate acronyms.

Here are a few I’ve come across recently:

Tenants want SOAP – Storage, Open plan, Access and Parking.

Get SAD to increase rent – Security, Air conditioning and a Dishwasher

Property is an IDEAL investment – Income, Deductions, Equity, Appreciation and Leverage.

Some investors take a PIE approach – Population growth, Infrastructure and investment and Employment opportunity and diversity.

That can mean the difference between being POOR and RICH – Passing Over Opportunities Repeatedly. Residual Income Creates Happiness.

To be successful, be BRIEF – Better at what you do, Real, Informed, Energetic and Focused.

Unfortunately, there was no handy acronym on landlord insurance – until now!

Look for the VISA MODEL when assessing landlord insurance – Value for money, Inclusions, Service and Accidental damage. Malicious damage, Overall cover, Deliberate fire by tenants, Excess and Lease continuations.

Let’s examine each of these points in more detail as, unfortunately, many property investors don’t read their policy documents until they need to make a claim.

Value

Assessing the overall value of a landlord insurance policy means looking for more than just the cheapest premium. Unfortunately, some policies don’t live up to their glossy brochures.

Inclusions

Some policies have exclusions which could leave you holding significant costs. Read the fine print before you sign.

Service

If you need to make a claim, prompt service is important. Check out customer reviews and ask your property manager about the reputation of any landlord insurer you’re contemplating signing with.

Accidental Damage

Some policies exclude accidental damage, which is a concern, because even the best of tenants can make mistakes.

Malicious Damage

A good landlord insurance policy should include both accidental and malicious damage cover.

Overall Cover

If there are risks the policy doesn’t cover, make sure you’re willing to carry those yourself.

Deliberate Fire by Tenants

Some policies exclude this.

Excess

Different policies carry different excess amounts, so it’s worth comparing these.

Lease Continuations

Leases are often extended on a month-to-month basis at the end of the initial lease agreement; some policies don’t cover investment properties after the initial agreement ends.