Insurance and Taxes Are the New Rate Shock

Direct answer

In BiggerPockets’ Q3 Pulse, rising expenses—insurance, taxes, maintenance—sit near the top of investor challenges, roughly tied with capital access. National foreclosure filings climbed sharply into early 2026, and analysts keep pointing to layered payment shock: principal and interest plus reassessed taxes and renewing premiums. For landlords, insurance is no longer a line item. It is a deal killer.

Why it matters

A property can look fine at 6.5% and still fail when the insurance renewal adds $150–$300 a month. That drop hits cash flow and DSCR at the same time. Florida, coastal Texas, parts of California, and surprise markets like Colorado have all shown how fast premiums can reprice. Oklahoma City’s weak rent-to-payment story is largely an insurance story dressed up as a “cheap house” story.

Frank’s take

Stop underwriting with “national average insurance.” Run the deal the way capital will:

• Quote landlord/DP3 coverage before you write the offer when the asset is in a hard market.
• Stress taxes after reassessment—purchase price often resets the bill.
• Build reserves for year-two premium jumps, not just closing costs.
• If the deal only works on last year’s premium, it does not work.

Practical filters for your buy box

1. Reject markets where insurance is structurally unstable unless the discount is large enough to absorb a second shock.

2. Prefer asset types and locations where rent still covers full PITI after a 15–20% insurance stress.

3. When financing, assume the lender will use the higher of your quote or their escrow estimate—plan liquidity accordingly.

4. Track renewals like loan maturities. Holding-cost risk is ongoing, not a closing event.

Bottom line

Rates got the headlines. Insurance and taxes are taking the cash flow. The investors who survive this cycle will be the ones who underwrite holding costs with the same seriousness they once reserved for interest rates.