On the other hand, an advantage of rural properties is that it’s often possible to obtain a loan with the USDA loan program. Fortunately, there are a multitude of great programs for rural properties in the USDA program. Additionally, there are insurance companies that specialize in insurance on rural properties. It’s a niche, but the companies who focus on rural property insurance usually do a great job at it. With that in mind, if your borrower is going to be getting a loan for a rural property, make sure they are working with somebody who knows about those kinds of options. Again, I am licensed to work with many of these insurance companies. Hard-to-Insure Properties: Rural properties are not the only assets that are hard to insure. Houses in a designated flood zone will need special flood insurance. It’s more expensive to own a house in a flood zone compared to a house that is not in a flood zone. Homes with an old roof may raise issues with insurers. If the roof has a very limited useful life left — say under two years — it is more difficult to get insurance. Often, the insurance companies will require that the roof be replaced before they’ll approve the insurance for the property. Vacation properties or properties planned for use as short-term rentals ( think Airbnb properties ) can be more challenging to insure. This is because different people will likely be staying in the home, which raises the chances of something going wrong. Homes in desperate need of repairs are also obviously difficult to insure. While the idea of buying a “ fixer-upper ” might be appealing to some buyers, the cost of insuring a house that is falling apart can sometimes be too off-putting for lenders to handle.
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