You find a property or real estate investment that looks solid. The condition is ideal, and the income or living opportunity fits your need or goal. You (or your client) think you can make the mortgage, property tax, and other monthly expenses such as property management or rehab. Well, almost everything looks good.
Several natural disasters over the past couple of years have severely impacted the insurance industry. A big consequence is that some states and parts of them continue to see big increases. The below linked article details the consequences for insurance costs increasing along the west coast of Florida. An incredible stat is how Florida insurance costs are currently more than triple the national average. Insurance costs are up there and may be above annual property tax costs. Regardless of the condition of the home and mortgage rates, the impact of insurance costs is damaging the entire market.
The situation doesn’t even include the aspect of some homeowners accepting reduced coverage, which can significantly increase their risks, in order to help with the amount of their payments.
As much as we wish there was a solution, there does not appear to be any which are immediate. The point is that insurance status may need to be a more important consideration for real estate agents, investors, and other related professionals. Brokers and developers now need to address these concerns in their marketing, no matter how uncomfortable it gets. It is an example of the types of challenges to hit head on instead of sweeping under the rug. For the potential buyer, it is an unfortunate reminder that all of the costs and numbers need to be determined in order to be “first in” on a solid real estate deal.
