Insurance costs and AI fears are reshaping how investors underwrite deals
What pushed mortgage rates down the list is a combination of rising insurance premiums, property taxes, and maintenance costs that are eating into cash flow before investors can even think about their financing terms.
Dave Meyer (pictured top), chief investment officer at BiggerPockets, said investors are growing more concerned with the rapid increase of costs outside of the loan itself.
“I think rising expenses feel a little bit out of your control,” Meyer told Mortgage Professional America. “Taxes, surely, you can forecast them a little bit with home prices. But insurance, it just feels like it’s going up and up and up, and it creates a level of uncertainty for investors that is uncomfortable.”
Finding the right deals
Meyer said the insurance problem extends well beyond the investor community, as even residential homeowners are feeling the squeeze.
“I think this is one of the big questions, not just for investors, but the housing market in general,” he said. “Even in areas you wouldn’t expect, we’re starting to see coverage decline, people moving out. How are we going to contain insurance costs? Because it’s really straining homeownership in a lot of areas of the country.”
