I’m going through and providing updated valuations of properties I sold a few years ago. I already know this however, the cost of utilities and insurance is considerably higher from just the previous 1-2 years when reviewing the financials. For example the premium on the policy for one of my complexes went from $13K to $19K in just three years with no claims against it. Also, rents are not keeping up with this rate of inflation and increases to operating costs. It’s always intriguing to see real numbers fromclients and your actual investments. I believe this is one of the reasons NNNs, DSTs, or investments where you can pass through or bill back tenants are in high demand and trading for lower cap rates. This is my “captain obvious” post for the week.
Our NNN deal is outperforming expectations, definitely happy with that investment.
Confirming general knowledge with firsthand data always hits differently. Have you observed other trends in the market that might be attributed to these factors?
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4moAdrian, your analysis highlights a critical issue in the current market. The rising costs of utilities and insurance are indeed squeezing profit margins. It's interesting to see how these factors drive demand for Ns and DSTs. Have you noticed any specific strategies property owners are adopting to mitigate these rising costs?