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Homeowners’ insurance isn’t enough if you’re a landlord

If you're new to the landlord business, make

If you're new to the landlord business, make sure to protect yourself with liability insurance, cash reserves and good record-keeping, experts say. Credit: Getty Images/iStockphoto / xeni4ka

Whether by choice or necessity, many folks find themselves acting as landlords. The extra income goes a long way, but the path to profits can be riddled with costly hiccups if you’re not careful.

  • Protect yourself: Turning your existing home into a long-term rental? “Your homeowners’ insurance won’t cut it when it’s no longer your primary residence. Standard policies only apply to owner-occupied properties, so don’t risk having a claim that may not be covered,” says Laura Adams, senior insurance analyst for Liability coverage is key. “Getting sued for damages or medical injuries is your biggest financial risk as a landlord. Purchase at least $1 million in landlord liability coverage to stay safe,” she says.
  • Know the laws: “Many landlords gloss over housing discrimination laws. They assume as long as they’re not racist or sexist they needn’t worry about fair housing violations. But housing issues can arise in many ways, such as when it comes to decorating a property for the holiday season and making accommodations for people with disabilities,” says Ron Leshnower, a real estate attorney in Dix Hills.
  • Be proactive: “Set aside at least $100 per month per unit for unexpected repairs,” says Brandon Turner, author of “The Book on Managing Rental Properties.”
  • Keep records: Keep track of every dollar spent on your property, says Manhattan lawyer Adam Stone. Categorize expenses and “keep contracts showing specifications for work done, bills, receipts, etc. so they can be easily accessed in the future — for the accountant each year and for keeping track of capital gains when the property is sold,” he says.


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