I closed the books on 2022 and got our taxes filed this past weekend, a full month early. I didn’t do too bad with the projections from last year. We only owed $400 this year. It’s the smallest check to the IRS I’ve written in quite a few years. With that, the financial merry go round never stops. It’s time to start on 2023’s projections.
Our insurance costs went up significantly this year. We just got our insurance bills for the year. Homeowner’s insurance is up 35%, auto insurance up 11%, and our umbrella policy is up 10%. Overall, insurance costs are 16% higher than last year.
The stunning increase came from our rental. Expenses for running our rental were up 27% year over year (2021 to 2022). We only raised rent by 11%, so we lost ground, making our margins smaller. We made a profit of about 7.4% on our investment. Our target is 8%, so we were a little under what we want to see.
This is being caused by increasing expenses. It’s going to be just as bad for 2023, and we only raised rent by 12%. For our rental, insurance is up by 56%, 2022 to 2023. In fact, we are seeing big increases across the board:
- Insurance is up 56%
- Pest Control up 7%
- Termite treatments up 12%
- Lawn Service up 10%
I do all repairs, and that is dependent on how many problems there are. Still, we are looking overall at a 20% increase in expenses there. That will mean another rent increase next year, and we may see a loss for 2023. That will mean a minimum of a 10% increase in rent for 2024, perhaps as high as 20%. I would love to hold it to less than 15%, but that depends on how the rest of 2023 goes.
There are regulatory filings with the state that are due in April. Required annual reports, fees paid to registered agents, those sorts of thing. Those remained unchanged from last year.
The next big expense will be coming in July when we get the TRIM notice of expected property taxes from the county. Since our largest expenses are insurance and taxes, that largely sets the rental rates for the coming year.
I imagine that many households are seeing similar increases in their budgets. I am guessing that inflation’s true number is somewhere around 15%, all things considered.
Michael · March 19, 2023 at 10:41 am
You’re a tougher man than I. After fighting city hall over laws attempting to limit rent increases and “access” for a couple of years. I sold my rental units while they still had value.
I still have my mother in law apartment and it’s rented to a long term trusted renter that helps with my homesteading as needed.
The communism is STRONG in local government.
Inflation is 15-20 percent by my observations. And will be going much higher as the Sock Puppets chimpanzee crew continue to play with the economic levers and buttons.
What’s your take on Hyperinflation Divemedic?
Divemedic · March 20, 2023 at 9:49 am
Default Sarcastic · March 19, 2023 at 3:11 pm
Putler and Emmanuel Trumpstein control the inflation with orbital lasers and balloons. (honk!)
Still laughing about the $12 weather balloon getting blasted by a $400,000 missile.
The Sack N’ Save is going crazy with prices with some stuff out of reach now but online it says that they are secretly being bailed out? (BTW-Generic grocery name)
With a loan/lien replaced furnace/AC at $8000 with tales of lower costs and they have went up, even in a mild winter.
Replacement of storm windows doors? $20,000 estimate and that is a scam as a local learned how to do it and it only cost him $2000 to replace on a one story ranch with two bedrooms.
Remember the Obama gonna pay my rent gal?
She had her own place and was doing fine.
Henry · March 19, 2023 at 6:54 pm
I agree that actual retail inflation appears to be 15-20%. An excellent website for tracking inflation (real, as well as using various historical CPI formulas) is here: http://www.shadowstats.com/alternate_data/inflation-charts
Over the past decade, our county-wide property reappraisal happened four times, with our unchanged house getting double-digit bump-ups in value each time. Most recent reappraisal was for this tax year: up 27%, and I expect the resulting property tax bill to climb by 10% or so.
Anonymous · March 19, 2023 at 11:12 pm
Hyperinflation breaks the method of tax collection, which means government can’t pay its enforcement employees. At that point there’s a debt jubilee, and all your loans disappear. The situation is no longer knights on horseback vs. disarmed peasants with no method to fight. Now everybody has guns of similar military effect, and the enforcers are outnumbered hundreds of one against. The craziest of the government supporters have concentrated themselves into big cities which do not produce food or fuel or fresh water, and if supply lines are cut they are unlivable. Hyperinflation is your enemy making the hugest, and last, mistake it will be in existence to make.
AC47Spooky · March 20, 2023 at 9:42 am
Our homeowners policy came in for 2023 – the cost was up – 100%! It had doubled so I knew something was amiss. The agent said it was the fault of an underwriter at the HQ where the policies originate. We had an inspection and a “wind mitigation” assesment and got it settled back where it should have been. Actually (amazingly) when all was said and done, it didn’t go up for this year. The inspection cost me $150.
Divemedic · March 20, 2023 at 9:48 am
A couple of things are killing insurance in the area.
1 About a year ago, a couple of roofing companies were going door to door, offering a “free roof.” All you had to do was sign an “assignment of benefits” so they could bill your insurance. About a third of the houses around here took the offer. Now all of us who DON’T have a new roof are seeing increased rates. The price of honesty, I guess.
2 The hurricane that hit south Florida. The people who live on the coast are costing the rest of the state for the replacement of their beach mansions. The cost of not living in a 2 million dollar house on the beach, I guess.
AC47Spooky · March 20, 2023 at 4:20 pm
Yes – the hurricane in September put all the insurance companies in a tailspin.
We had our roof replaced after Irma in 2017. There were several leaks – no serious damage otherwise. The adjuster checked everything and bingo – new roof (after we payed deductible, of course 🙂
Fortunately for me, there’s a very reputable roofer that we trust and I’d be very hesitant before considering anyone else to do the work.
Henry · March 20, 2023 at 1:56 pm
DM, the same roofing scam was going on here (southeastern NC) where contractors went door to door offering to repair “hail damage” by roof replacement that would be covered by homeowners insurance. I pointed out to one contractor that we hadn’t had a hail storm in the past ten years and he went away. I think we’ve got the only house on the street without a “free” new roof, courtesy of the “hail damage” insurance scam.
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