Property taxes and insurance have exploded (72% rise since 2019)

Summary — Business implications and actionable tactics

Key facts and metrics

• U.S. property taxes reported up ~72% since 2019 (presenter’s figure).
• That implies roughly 12–12.5% annual compound increase in property taxes since 2019.
• Hiring a property-tax appeal specialist can cut a bill by 10–15%, typically paying for the service.

Speaker anecdote: hiring someone to fight property taxes was described as “like a job” — achieving 10–15% reductions which can justify the cost of the service.

Business implications (real estate investors, operators, landlords)

• Rapid tax inflation materially compresses NOI, returns, cap rates and cash-on-cash yields unless landlords can pass costs through or raise revenue.
• Owners have limited protection from tax increases — taxes apply even to cash-owned properties and unpaid taxes risk loss of asset.
• Rising insurance costs compound operating expense pressure and increase volatility.

Frameworks, playbooks and processes to apply

Underwriting and scenario planning

• Re-run underwriting with sensitivity analysis: model property tax and insurance growth at base, upside, and stress scenarios (e.g., 5%, 10%, 12%+ annually).
• Include tax and insurance growth as explicit line items and stress-test DSCR, cash-on-cash, and IRR.

Expense-risk playbook

• Build a contingency/reserve policy for tax and insurance shocks (expressed as months of NOI or a % of revenue).
• Define trigger thresholds to re-price leases or implement cost pass-throughs.

Tax-appeal playbook

• Systematically audit assessment notices, calendar appeal deadlines, and engage specialists where ROI is positive.

Portfolio allocation/playbook

• Diversify geographically to reduce concentration risk in high-tax jurisdictions.
• Consider lease structures (NNN, pass-throughs) where possible to shift tax/insurance burdens to tenants.

Operational playbook

• Track operating expense ratios and tax as a % of gross income on a monthly/quarterly basis.
• Renegotiate insurance policies, bundle policies across the portfolio, or examine captive/self-insurance where scale permits.

KPIs and metrics to track

• Property tax growth rate (annual % and rolling 3–5 year average).
• Property tax as % of gross potential rent and as % of NOI.
• Insurance expense growth and insurance as % of NOI.
• Operating expense ratio (OpEx / Effective Gross Income).
• DSCR and break-even occupancy/rent needed to absorb tax/insurance increases.
• Savings from appeals (absolute $ and % reduction) and payback period for appeal costs.

Concrete, actionable recommendations

• Immediately re-run cash flow models for existing assets using 10–12% tax escalation scenarios; update acquisition criteria accordingly.
• Audit current tax bills and hire an appeal/assessment specialist where expected savings exceed fees (typical savings ~10–15%).
• Increase reserves and update investor reporting to highlight tax and insurance volatility.
• When leasing, prefer structures that allow tax/insurance pass-throughs (triple-net or modified gross with explicit escalators).
• Explore insurance cost mitigations: higher deductibles, portfolio-level placements, and loss-prevention programs.
• On acquisitions, require seller disclosure of recent assessment trends and include tax-escalation covenants in pricing.
• Consider geographic and asset-class diversification to mitigate regional tax policy risk.

Concrete example from the transcript

• The presenter described hiring a property-tax appeal specialist as “like a job,” reporting 10–15% reductions that justify the service cost.

High-level risk and strategy note

Persistent, high tax and insurance inflation is a structural headwind for real estate returns. Treat it as an operational risk requiring updated underwriting, reserves, contract strategy, and active cost-containment processes.

Source / presenter

• YouTube video titled: “Property taxes and insurance have exploded (72% rise since 2019)” — presenter not identified in the provided subtitles.