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Operating Expenses

What’s going on with Home Insurance? Multi-Residential Investment Properties

If you bought a new investment property in the last 12 months or so, you may have been surprised at the insurance premiums. They are at an extremely high level at the moment, even existing investment property owners have seen higher rates pushed on them. An increase of 25% is not uncommon. There are many factors at play, ranging from higher property values to climate change related extreme weather events.
More details on those factors can be found in this article here: Why Are Insurance Premiums Going Up?

The issue for the investor when buying a property is, that you cannot rely on the amount of the premium that the current owner is paying. If their premium is $2500, be aware that yours can easily be $3500, which goes right down to your bottom line. At a Net Operating Income of $20k, this is a hefty reduction of 5%. The effect on Net Cashflow is naturally even greater, if you are planning on pulling out $5k, now it's only 4. Which some of the other costs increasing as well, this can quickly put you under water. Needless to say, important to do your due diligence for all operating costs.

When looking at insurance providers, the obvious choice would be to work with a broker. They can assist a great deal and solicit quotes from a variety of insurers. However, most brokers do not have access to all providers, they tend to work with a specified group of insurers. There are also insurance companies that only write direct and do not go through brokers. Contact those directly for quotes.
A list of them is here: Direct Writers
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