BRRRR Insurance: The Right Policy at Each Stage (Buy, Rehab, Rent, Refinance)
BRRRR means buy, rehab, rent, refinance, repeat. The property changes at each stage, and so does the policy that fits it. Planning the switches ahead keeps both lenders happy and the house covered the whole way.
Buy: vacant or builders risk
At purchase the house is usually empty. If work starts soon, a builders risk (renovation) policy can start at closing. If it will sit empty for a while first, a vacant dwelling policy fits. Standard policies restrict coverage after a home has been empty for 30 to 60 days.
Rehab: builders risk and liability
During the rehab, builders risk covers the existing structure plus the work and materials as they go in. Most rehab lenders ask for it. General liability protects you as the owner while contractors and visitors are on site; your contractors should carry their own.
Rent: landlord (DP3)
Once a tenant moves in, the rehab policy no longer fits. Switch to a landlord (DP3) policy with dwelling, loss of rents and liability. Do not leave a renovation or vacant policy in place on an occupied home.
Refinance: new lender, new evidence
The refinance lender will want its own mortgagee clause and loan number on the policy. That is usually an endorsement to the landlord policy, followed by a new evidence of insurance for the closing. The new lender may also have different coverage or deductible rules, so send its requirements sheet early.
Repeat
Investors with several BRRRR properties often move the rented ones onto a portfolio policy. Ask when you have a few doors.
Questions
Can I keep the builders risk policy after the tenant moves in?
No. Builders risk is written for a renovation, not an occupied rental. Switch to a landlord policy when the home is rented.
Do I need a new policy when I refinance?
Usually not. The landlord policy is updated with the new lender's clause and loan number, and a new evidence of insurance goes to the closing.
Get a quote today.
Send the address and your lender's details - we quote with several carriers at once and send the evidence of insurance to your lender. Or call 512-801-8702.