BiggerPockets Daily Insurance Costs Keep Rising—Here's How You Can Address Them
Jan 29, 2025
Insurance premiums are skyrocketing, leaving landlords reeling. Some are facing costs that have increased sixfold or losing coverage entirely. The discussion dives into the reasons behind these rising costs, from natural disasters to inflation. Practical strategies for property owners include bundling policies and negotiating with managers to protect investments. The challenge is not just for individual investors but also for maintaining affordable housing, which is under threat due to these soaring expenses.
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Rising Insurance Costs
- Insurance costs are rising rapidly for real estate investors, sometimes increasing by six times.
- This is due to factors like natural disaster risk, labor shortages, inflation, higher reinsurance costs, and increased building expenses.
New Orleans Example
- In New Orleans, a $500,000 property could face $8,000 in annual insurance costs plus $2,000 for flood insurance.
- This demonstrates how high holding costs can be even in traditionally "affordable" markets.
Daytona Beach Example
- Matt Muir's uncle in Daytona Beach, Florida, saw his property insurance triple in just a few years.
- His monthly holding costs now exceed his mortgage payment, highlighting the widespread nature of this problem.