Florida REO's - Make Sure You Have Insurance

Thanks to JMO Reader Dave Keller for making us aware of the developments in Florida.

As if Florida hasn't been punished enough...High foreclosure rate, Hurricanes etc. Now it's becoming even harder to get homeowners insurance in that state. State Farm, Florida's second largest insurer is pulling out of Florida after having their bid for a 47% rate increase rejected. Citizens Property Insurance Corp. the state created insurer and the largest insurer in the state has been trying to reduce the number of policies it insures.

What does this mean?

• premiums will go up as policies are shifted to smaller insurance companies
• concerns that the smaller companies will not be able to withstand the claims if a large-scale disaster occurs
• REO buyers can expect increased holding costs and lower bids for Florida properties.

If you or your clients are buying Florida properties for cashflow purposes, make sure you research available homeowner's insurance policies and premiums when calculating your NOI. The previous factor of .35 may no longer apply for Florida.