Just checking my yearly expenses as they are higher than I estimated. Turns out real estate taxes for one property are 16%!!! higher than just last year, several others up over 7% from last year, largest yearly increase since I've owned them. Looked back at my property insurance rates, one is up over 20% !!!! from last year's premium, others over 10%. I've been used to and planning on 2-4% increases in these expenses. Guess I'll be shopping for new insurance. Too bad you can't shop around for lower real estate taxes. I knew the mortgage company would be making more money than I was on these properties until I paid them off, but looks like the city and the insurance company are getting ahead of me now, too.
Yes. Higher valuations come at a price when it comes to taxes. For insurance, I"ve had good luck with an insurance broker who can easily shop plans and move things around to a less expensive policy while handling most of the paperwork.
@Jonna Weber Sorry thought I replied yesterday but it didn't post, I guess. These increases are without higher valuations. Raleigh only changes values every 8 years, so 2 more years to go before they change them, but actual taxes paid 7% higher than last year as they raised the rates. In another city, my valuation only increased 2% but real estate tax paid was up 16% over last year. This is a much higher increase in rates than I've seen before. Thanks for the tip about looking for a broker. I'll need to research insurance rates as that's too big an increase for a long-term client with no claims. I expect slight increases in expenses over the years, but this double hit, taxes and insurance up so much in one year, with market rents not growing fast enough to cover is eating into our cash flow.
Insurance companies are increasing rates (cost to insure $100 of property value) AND replacement cost values (cost per sq/ft to rebuild). There is 1 force that is driving this and that is the strengthening economy.
On the Rate side, insurance companies chased Property business hard in 2008-2011, even writing the business at a loss. Most other businesses were paying 50% less in insurance from previous years just because the economy was so bad. This competition was good for landlords as it drove the cost down. Now the rates are coming back as the underwriters look to write business at a rate they can make $ on.
On the Rebuild side, the strengthening economy is driving up the cost of product and insurance companies payment per sq/ft is going up as well.
Your best stratey to keep you costs down is to get some agents in your corner who have many insurance companies to go to.
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