Paying for home owners insurance in Florida

[*WDW*Groupie*]

We had to have Citizens Ins when we bought our house (during hurricane season). The coverage they offered was not good (like at all). I replaced them as soon as we could.

I dread having to replace our insurance company again. Our first insurance company (12 yrs ago) required a wind mitigation test on the roof -- that was when our roof was 'mid-life'. It is now near end-of-life and the cost to replace it would be in the very high 5 figures, obv an expense are not looking forward to.

 

[DLgal]

How renting can be cheaper just doesn't make sense to me. Your rent check has to cover your landlord's mortgage, insurance, upkeep and profit. How can the rent be less than those costs without bankrupting the landlord?

The same way you can continue to afford your house payment. Simple math.

She bought this house new in 2015 for $787,000. From what she told me, she pays 50% down on all her rental homes in cash and gets interest only mortgages on the remainder. She usually does 5/1 ARMs. So, she refinanced the loan balance in 2020, probably at a super low rate. Her monthly mortgage payment is probably like $1500?

Taxes on this house are about $12,000/year. So that is another $1000 per month. So now we are at $2500/month.

Insurance on a rental property is low. She probably pays like $1500/year for that. So let's say $125/month. HOA fee is $135/month. She pays the trash/sewer fee which is around $50/month. So we are at $2810.

Maintenance has been basically nonexistent since it is a well built newer home. She has had to outlay, I'd say, $2500 over the last 8 years in total on various issues that have come up. I know because I pay for the repairs initially and she reimburses me.

So let's round it off to $3000/month.

Initially, our rent was $3250 in 2015. It is now $4200 starting next month.

She is still turning a profit. She was always turning a profit. But she isn't using these houses to generate profit NOW, she buys them low and sells them high. In 2015, she bought this house AND an identical one a few blocks over. Each is now worth $1.3 million dollars. She could sell them right now and realize a $1M return on her initial $800k cash investment. That's her end game. She has 7 residential properties and 2 commercial properties. She lives in Boston and has these properties spread around Boston and Southern CA. Once they skyrocket in value, she sells them and uses the cash to buy the next one. She mostly only buys high end new construction and sells them before they start needing extensive repair work. She has been doing this for 30 years.

 

[tvguy]

The same way you can continue to afford your house payment. Simple math.

She bought this house new in 2015 for $787,000. From what she told me, she pays 50% down on all her rental homes in cash and gets interest only mortgages on the remainder. She usually does 5/1 ARMs. So, she refinanced the loan balance in 2020, probably at a super low rate. Her monthly mortgage payment is probably like $1500?

Taxes on this house are about $12,000/year. So that is another $1000 per month. So now we are at $2500/month.

Insurance on a rental property is low. She probably pays like $1500/year for that. So let's say $125/month. HOA fee is $135/month. She pays the trash/sewer fee which is around $50/month. So we are at $2810.

Maintenance has been basically nonexistent since it is a well built newer home. She has had to outlay, I'd say, $2500 over the last 8 years in total on various issues that have come up. I know because I pay for the repairs initially and she reimburses me.

So let's round it off to $3000/month.

Initially, our rent was $3250 in 2015. It is now $4200 starting next month.

She is still turning a profit. She was always turning a profit. But she isn't using these houses to generate profit NOW, she buys them low and sells them high. In 2015, she bought this house AND an identical one a few blocks over. Each is now worth $1.3 million dollars. She could sell them right now and realize a $1M return on her initial $800k cash investment. That's her end game. She has 7 residential properties and 2 commercial properties. She lives in Boston and has these properties spread around Boston and Southern CA. Once they skyrocket in value, she sells them and uses the cash to buy the next one. She mostly only buys high end new construction and sells them before they start needing extensive repair work. She has been doing this for 30 years.

 

[tvguy]

The same way you can continue to afford your house payment. Simple math.

She bought this house new in 2015 for $787,000. From what she told me, she pays 50% down on all her rental homes in cash and gets interest only mortgages on the remainder. She usually does 5/1 ARMs. So, she refinanced the loan balance in 2020, probably at a super low rate. Her monthly mortgage payment is probably like $1500?

Taxes on this house are about $12,000/year. So that is another $1000 per month. So now we are at $2500/month.

Insurance on a rental property is low. She probably pays like $1500/year for that. So let's say $125/month. HOA fee is $135/month. She pays the trash/sewer fee which is around $50/month. So we are at $2810.

Maintenance has been basically nonexistent since it is a well built newer home. She has had to outlay, I'd say, $2500 over the last 8 years in total on various issues that have come up. I know because I pay for the repairs initially and she reimburses me.

So let's round it off to $3000/month.

Initially, our rent was $3250 in 2015. It is now $4200 starting next month.

She is still turning a profit. She was always turning a profit. But she isn't using these houses to generate profit NOW, she buys them low and sells them high. In 2015, she bought this house AND an identical one a few blocks over. Each is now worth $1.3 million dollars. She could sell them right now and realize a $1M return on her initial $800k cash investment. That's her end game. She has 7 residential properties and 2 commercial properties. She lives in Boston and has these properties spread around Boston and Southern CA. Once they skyrocket in value, she sells them and uses the cash to buy the next one. She mostly only buys high end new construction and sells them before they start needing extensive repair work. She has been doing this for 30 years.

So I think you just made my point. You'd be spending $1,200 a month less if you owned it.

 

[Clarkson U]

It's funny, we lived in Jacksonville from 2018 - 2020. My homeowners on a 3 year old house was $1200 a year with a decent deductible. Car insurance about $100/month for 2 cars. Understand that would have gone up over the last 3 years... but I consider that extremely reasonable. In 2020 we moved to Texas, NOWHERE NEAR THE COAST! My homewoners is $4200 a year (and climbing), car insurance more than double the previous cost. Same cars. Never had a homeowners claim in 3 houses, only car claim was for a windshield (and I'll pay OOP next time that happens....)

Cost of insurance is going through the roof and unless government regulations stop it somehow, it will only get worse.

Let me tell you I live in Jacksonville still and did in 2018-2020 also. My HO has tripled in the last two years and my car insurance doubled in the same time period.

It’s bad here currently

 

[DLgal]

So I think you just made my point. You'd be spending $1,200 a month less if you owned it.

How?

We didn't have a $400,000 cash down-payment in 2015. We still don't.

In 2015, we didn’t make enough money to qualify for a $787,000 mortgage. If we had, our payment then would have been $4972, including taxes, HOA, insurance and assuming the average interest rate at the time, 3.85%. We had nothing to put down. One income. We could have used a VA loan (the numbers above reflect that). $4972 was not a doable monthly payment back then, but $3250 was. It was cheaper to rent then and it still is.

If we had bought in 2015, our payments now would be higher since insurance and taxes have gone up since then.

 

[tvguy]

How?

We didn't have a $400,000 cash down-payment in 2015. We still don't.

In 2015, we didn’t make enough money to qualify for a $787,000 mortgage. If we had, our payment then would have been $4972, including taxes, HOA, insurance and assuming the average interest rate at the time, 3.85%. We had nothing to put down. One income. We could have used a VA loan (the numbers above reflect that). $4972 was not a doable monthly payment back then, but $3250 was. It was cheaper to rent then and it still is.

If we had bought in 2015, our payments now would be higher since insurance and taxes have gone up since then.

Just running your numbers. But of course if you don't have the down payment you can always buy a smaller property you can afford. My daughter bought in 2019 at the VERY bottom of the market, $250,000, 5% down. She is looking at going back to school for two years out of town and renting her duplex out. Her payment , taxes and insurance are $1,000 a month. But insurance for an owner occupied property is lower here than a commercial property, that that may add $100 a month, and a $125 a month property management fee. Identical floor plans in on her street are renting for $2,100 so she should show a profit of $800 a month less any repairs that may come up, but everything is new and still under warranty so those costs should be low to none.

 

[DLgal]

Just running your numbers. But of course if you don't have the down payment you can always buy a smaller property you can afford. My daughter bought in 2019 at the VERY bottom of the market, $250,000, 5% down. She is looking at going back to school for two years out of town and renting her duplex out. Her payment , taxes and insurance are $1,000 a month. But insurance for an owner occupied property is lower here than a commercial property, that that may add $100 a month, and a $125 a month property management fee. Identical floor plans in on her street are renting for $2,100 so she should show a profit of $800 a month less any repairs that may come up, but everything is new and still under warranty so those costs should be low to none.

You didn't run MY numbers, you ran my landlord's.

There are no smaller properties we can afford here. They don't exist. The absolute bottom is $1M, and a house that price would literally be over 500sq feet smaller than the too small place we are currently in.

We won't buy a too small place in an undesireable location "just to own a house." It's not that important to us. Living where we are currently is the priority. Home ownership is not the be all, end all. There are far more efficient ways to build wealth while still having a nice home to live in.

 

[SL6827]

I know car insurance has always cost more in Florida for the longest with Florida getting so many tourist like myself, but to be able to raise that to cover home owners claims blows my mind!

 

[barkley]

And think, if, when home vaules go down, those taxes will not go back down.

in some states property taxes can and DO decrease with housing value trends. during ownership of our current home (purchased in '07) we've seen area housing values decrease at points such that our assessed values were lowered year to year and property taxes decreased accordingly-one year alone we saw a decrease of 11.4%, in another an additional 8.8%. property values have sharply increased here but b/c of property value adjustments both upward AND DOWN our property taxes have in no way (at least in my opinion) become excessive-my ASSESSED value is 125% more than what i purchased for (far lower than what it could sell it for) but my property taxes are less than 30% higher than they were in '07 (and still less than i paid on a much lower valued home in california in the early 2000's).

we are in an odd housing market right now-lots of demand/short supply but the interest rate increases are having an impact. it will be interesting to see where the county places our value next year.

 

[SL6827]

Home values drop here and they raise the mileage rate to even it out. I am beginning to wonder if it is even worth having much now?

 

[cvjw]

I know car insurance has always cost more in Florida for the longest with Florida getting so many tourist like myself, but to be able to raise that to cover home owners claims blows my mind!

Remember that Florida doesn’t have state income tax. We know a couple that moved from midtown atlanta to celebration. Said it is cheaper to live in celebration due to no state income tax.

 

[SL6827]

Remember that Florida doesn’t have state income tax. We know a couple that moved from midtown atlanta to celebration. Said it is cheaper to live in celebration due to no state income tax.

Right, but is that savings being negated now?

 

[SL6827]

I wonder if there is a major difference in prices in people's bills that live just across the Georgia and Alabama state lines? Or in South Georgia?

 

[barkley]

Remember that Florida doesn’t have state income tax. We know a couple that moved from midtown atlanta to celebration. Said it is cheaper to live in celebration due to no state income tax.

i'm in a state with no income tax as well but we pay NOWHERE near the figures i read on here for property taxes or any type of insurances as compared to florida. granted, our sales tax can vary by county so i pay 9% vs. florida's 6%, more for liquor (6.5% plus $14.25 per gallon vs. 6% plus $6.50 per gallon) and tobacco ($3.025 per pack vs. florida's $1.339) but those are things i can control my consumption/expenses on. when we sought to leave california we researched the cost of living in different states-florida's was and is just inconceivable to me.

 

[SL6827]

i'm in a state with no income tax as well but we pay NOWHERE near the figures i read on here for property taxes or any type of insurances as compared to florida. granted, our sales tax can vary by county so i pay 9% vs. florida's 6%, more for liquor (6.5% plus $14.25 per gallon vs. 6% plus $6.50 per gallon) and tobacco ($3.025 per pack vs. florida's $1.339) but those are things i can control my consumption/expenses on. when we sought to leave california we researched the cost of living in different states-florida's was and is just inconceivable to me.

Wonder if there will be a sizeable number of residents leave Florida in the future?

 

[cvjw]

Right, but is that savings being negated now?

Just told me they were saving money last month, so no.

 

[cvjw]

i'm in a state with no income tax as well but we pay NOWHERE near the figures i read on here for property taxes or any type of insurances as compared to florida. granted, our sales tax can vary by county so i pay 9% vs. florida's 6%, more for liquor (6.5% plus $14.25 per gallon vs. 6% plus $6.50 per gallon) and tobacco ($3.025 per pack vs. florida's $1.339) but those are things i can control my consumption/expenses on. when we sought to leave california we researched the cost of living in different states-florida's was and is just inconceivable to me.

We pay so much money to Georgia every year for state income taxes that we might also be better off in Florida. Just depends on how much state income tax people pay. We could take our state income tax money and pay for a lot of house insurance.

 

[SL6827]

Ya, I guess the savings would just be dependent on different numbers for everyone. Interesting.

 

[hrhdhd]

Right, but is that savings being negated now?

Not for my household.