Rent Loss Insurance offers coverage for loss in rental income or rental value due to property damage by external hazard
Rent Loss Insurance
which therefore makes it unsuitable for habitation. The policy is often available as a part of hazard insurance on your investment/rental property.
Most of the mortgage companies require you to purchase this policy when you buy your investment property. As per the lending guidelines put forward by the Investor Company Freddie Mac, it is not optional but mandatory for borrowers to purchase rent loss insurance policy. In case of more than one investment property, the company requires insurance policies for each rental units independent of the net rental income.
The net operating loss or the amount of rent loss insurance depends on the gross monthly rental income after deducting the following items:
- Taxes
- Mortgage payments
- Insurance premiums
- Maintenance costs
- Expenses on utilities
- Vacancy factor for rental units in your area.
Hoped this helped, if you need any more answers feel free to Contact Us again
-Walter Grande
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