Builder's risk is a policy that covers a building while it's being renovated and usually while nobody lives in it. A standard landlord policy assumes an occupied, finished house, and most carriers limit or exclude coverage once the property sits vacant and torn open, which is why the lender wants the binder before releasing draw money. When the work is done and a tenant moves in, you swap to a landlord policy. Your agent handles the switch, and coverage rules and pricing vary by state and carrier, so get the quotes side by side.
Rough costs people pay on a small single-family cycle: builder's risk somewhere from a few hundred to around $2,000 for the rehab period, landlord policy in a similar annual range afterward, an ARV appraisal $600 to $1,000 because the appraiser values the house as if finished, lender points often 1 to 2 percent of the loan, and a property manager at 8 to 10 percent of collected rent plus a placement fee of half a month to a full month.
On licensing, you don't need one to own rentals, but many states set a dollar threshold above which permitted work has to be done by a licensed contractor, and plenty of cities require a rental registration or inspection before you can lease. Both are local, so check your state and city before you scope the work.
The cost that surprises people isn't on any invoice. At current rates the cash-out refinance often returns less than you put in, so plan on some money staying in each house, plus a repair reserve per property once the tenant is in.
