The Insurance Wake-Up Call: Don’t Let the Unexpected Destroy Your Budget

By Mark Kenney | Think Multifamily

Let’s talk about one of the biggest financial landmines in multifamily investing right now: insurance.

Not long ago, it was a line item. Now? It’s a full-blown risk factor that’s catching operators off guard.

At Think Multifamily, we’ve seen insurance renewals spike 50%, 100%, even 600% in a single year.

We’ve reviewed deals that seemed solid... until the insurance renewal came back, and suddenly, the numbers no longer worked.

When premiums explode, lenders respond fast. We’ve seen them:

• Demand major escrow increases
  

• Push operators to raise capital
  

• Slash distributions
  

• Or force sales under pressure
  

It’s not that the underwriting was bad. The insurance landscape just changed. Fast.

What’s the takeaway?

Insurance is no longer a “set-it-and-forget-it” expense.

You must:

• Budget for steep increases: even in year one
  

• Shop aggressively before renewal
  

• Look into master policies
  

• Stress-test your numbers against worst-case premium hikes
  

Real-World Advice:

✅ Use current quotes: don’t rely on outdated rules of thumb

✅ Budget for annual increases

✅ Add buffer reserves for surprise hikes

Bottom line:
Insurance volatility is one of the biggest threats to cash flow right now.

If you ignore it, your deal could unravel.
If you plan for it, you’ll be positioned to win while others scramble.

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