I'm looking for some advice from investors who own and operate 5-15 unit apartment buildings in the Kansas City Metro area. Investors who own this kind of product elsewhere in the country are also welcomed to chime in, as I'm sure everyone is experiencing these issues to some extent.

The biggest pain point I have been having with my underwriting on this asset type is insurance. Last week I got an insurance premium quote that came in at $13,100 for a 6-unit building. Per my insurance agent, this is pretty common for this unit range in this volitile insurance climate, however, it came in way higher than I was expecting. I ultimately pulled the plug on this deal due to this because I am not confident, nor do I believe there is a way, to accurately forecast and budget for your year 2 and beyond insurance premium renewals in this volitile insurance climate. It concerns me that my renewal could jump to $15,000 or $16,000, which would drastically eat away any cash flow as this increase would outpace rent growth. I assume it would also decrease the demand for these buildings, making them challenging to sell, which leads me to my second thought.

I have been seeing a consistent pattern on where these assets have been on the market for long periods of time. Could this be due to high insurance rates?

I would love to get some feedback from investors who are currently aquiring and operating these assets in the 5-15 unit range on how they are navigating the insurance climate to still make deals pencil out. It would be great to connect. Thank you!

Kansas City, Kansas

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