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Welcome to the May edition of the Investor Newsletter! This month, the rental market is proving that strong returns are no longer just about rent growth. With operating costs taking center stage, investors are sharpening their focus on what really drives long-term returns. Inside, we cover these rising operating costs, take a quick look at ADUs, and round up the latest headlines shaping the market right now. The Quiet Profit Squeeze: Why Operating Costs Now Matter More Than Rent Growth Something is quietly changing inside single-family rental performance, and it is not something you will find in rent growth headlines! Even in markets where rents are holding steady or slowly growing, many portfolios are seeing a different pattern emerge; Net operating income is tightening, and the pressure is coming less from revenue and more from rising operating costs. Insurance has become one of the most unpredictable expenses for property owners. According to a recent article , premiums across commercial real estate are projected to rise another 8-15% annually in 2026. This is predicted to be driven by severe weather, higher rebuilding costs, and tighter underwriting standards. Bloomberg also recently noted that U.S. home insurance costs continue to rise as insurers adjust to growing climate and replacement cost pressures. For SFR investors, insurance is no longer a predictable line item. It is a cost that can impact cash flow from one renewal to the next. Maintenance and repairs are adding pressure as well. What many owners once viewed as routine upkeep has become a form of invisible inflation. According to a recent report , repair and maintenance costs have risen nearly 14% year over year and roughly 50% since 2020 in many locations. Deferred maintenance is also becoming more expensive to delay, often turning into much larger expenses down the road. Property taxes are another growing concern. Unlike insurance, tax increases tend to move more gradually through reassessments and municipal adjustments, making them easier to underestimate during underwriting. A Business Insider article highlights how taxes, insurance, and fees are becoming a larger share of “hidden costs” for property owners. Another article reported that property taxes and insurance now account for more than 21% of monthly housing costs in many markets. The takeaway for investors is that operational execution matters just as much as acquisition strategy. Strong returns depend on how well expenses are managed through proactive insurance reviews, preventative maintenance, tax monitoring, and disciplined renewal management. With rent growth normalizing in many areas, protecting NOI, rather than focusing only on revenue growth, may be becoming an even more important part of long term rental performance. Did You Know: Accessory Dwelling Unit (ADU) Everything You Need to Know in 60 Seconds! You might have heard them called "granny flats," "carriage houses," or "casitas," but in the real estate world, they are known as Accessory Dwelling Units (ADUs). As housing demand continues to rise nationwide, and many investors are looking for creative ways to maximize returns on existing properties, ADUs are a flexible option that can increase rental income, property value, and long-term investment potential. What is an ADU? An Accessory Dwelling Unit (ADU) is a smaller, secondary living space built on the same property as a primary home. To be a legal ADU, it must have its own kitchen, bathroom, and sleeping area. They can be detached, attached or repurposed from a home. Who uses an ADU? Homeowners and real estate investors often use ADUs to maximize their land and profits. It can provide a secondary housing option for additional tenants, multi-generational families, or short-term guests. For single-family rental investors, ADUs can turn one property into more income. Where are ADUs located? ADUs are appearing in neighborhoods across the country. As housing demand and affordability challenges continue to grow, more local governments are updating zoning rules to allow investors and homeowners to add these secondary living spaces to existing properties. When should an investor consider an ADU? ADUs may make most sense when a property has excess space, rental demand is strong, and local zoning allows secondary units. Many investors use this when they want to increase cash flow without purchasing another property. Why Are ADUs Important? ADUs are becoming a major trend in residential real estate. They can potentially: Increase rental income Help with housing shortages Offer flexible living arrangements Boost overall property value SFR Trending Headlines Stay Up to Date on the Hottest SFR News & Stories Wave of Price Cuts Arrives Before the Summer Heats Up Selena Gomez Eyes $1.6M Profit on Former Tom Petty Home Zillow and Redfin Brace for Major Legal Fight Are Tenants Saving by Not Owning ? Zuckerberg’s $170M Deal Breaks Miami Record Rate Update: We've Partnered with LendingOne to Bring You The Best DSCR Rates & Terms! DSCR Loan Advantages: Rates Often Lower Than Banks No Personal Income Requirement No Tax Returns Needed Not Reported on Credit Faster Closing Times Specialized Loans for Investors Only! Click for Financing Options! Until Next Month! The Florida Property Management Services Team
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An Update in 2026
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In the world of property management, insurance is one of the critical elements that ensure both the landlord’s and the property management company's protection from potential risks and liabilities. One of the common practices in property management is for the management company to be named as an "additional insured" on the landlord’s liability insurance policy. But what exactly does this mean, and what requirements must be met for a property management company to be added as an additional insured? This blog will delve into what it means to be an additional insured, the benefits and coverages it provides, and the steps involved for a property management company to be included in a landlord’s liability insurance. What is an Additional Insured? An "additional insured" is a person or entity that is covered under someone else's insurance policy. In the context of property management, this means that the property management company is protected under the landlord's insurance policy in case of claims or lawsuits related to the management of the property. By being named as an additional insured, the property management company receives many of the same protections as the landlord, particularly when it comes to liability claims. For instance, if a tenant or visitor is injured on the property and decides to file a lawsuit, both the landlord and the property management company could be named in the lawsuit. If the property management company is listed as an additional insured, the insurance policy will provide coverage for both parties in defending against the claim, thus reducing the property manager’s potential exposure to financial loss. Why Should a Property Management Company Be Added as Additional Insured? Adding a property management company as an additional insured is a common industry practice and offers several advantages for both landlords and property managers. Protection Against Liability Claims: One of the primary reasons to add a property management company as an additional insured is to protect them from potential liability claims. Since property managers are responsible for handling various aspects of the property, from repairs and maintenance to tenant relations, they are at risk of being named in lawsuits. As an additional insured, the property management company is shielded from these risks and can rely on the landlord’s insurance policy to handle claims related to their activities. Risk Mitigation: Having a property management company named as an additional insured helps mitigate risks for both the landlord and the property manager. It ensures that there is adequate coverage for potential claims that could arise from the property’s day-to-day management. This reduces the likelihood of disputes between landlords and property managers over who is liable for a particular claim, streamlining the process for addressing legal matters. Cost Savings: If a property management company is added as an additional insured, they do not need to carry separate liability insurance for that specific property. This can result in cost savings for the management company, which can be passed on to landlords in the form of reduced management fees. Of course, property management companies must carry their own general liability and professional liability insurance policies but being named as additional insured on a landlord's liability policy avoids the need of carrying a liability policy for that specific property which results in savings of operating costs and therefore provides the abiity for the management company to pass on those savings to the landlord in the form of lower management fees. What Coverages are Provided When a Property Management Company is Named as Additional Insured? When a property management company is added as an additional insured, they receive coverage for a wide range of potential claims and liabilities, including: General Liability Coverage: This is the core coverage that a property management company benefits from as an additional insured. General liability insurance covers bodily injury and property damage that occurs on the rental property. For example, if a tenant trips and falls due to a poorly maintained stairway, and both the landlord and property management company are sued, the insurance policy will cover the costs of defending the lawsuit, as well as any potential settlements or judgments. Property Damage Claims : If damage occurs to a tenant’s property or personal belongings due to the negligence of the property manager (for instance, a leak that was not promptly repaired), the additional insured coverage can protect the management company from liability. Legal Defense Costs: In the event that a property management company is sued, the insurance policy will cover legal defense costs, including attorney fees, court costs, and any other related expenses. This is particularly important as legal fees can quickly add up, even if the property manager is ultimately not found liable. Errors and Omissions (E&O): In most cases E&O coverage is provided as a separate liability policy that is obtained by the property management company at no cost to the landlord Requirements for Adding a Property Management Company as Additional Insured For a property management company to be added as an additional insured, several steps and requirements need to be met: Landlord Consent: The landlord must first agree to include the property management company as an additional insured on their insurance policy. This is typically negotiated as part of the property management agreement. It is in the best interest of both parties, as it ensures comprehensive coverage for any incidents that occur on the property. Endorsement: Adding a property management company as an additional insured usually requires an endorsement to be added to the landlord’s existing policy. This endorsement officially extends the coverage to include the management company. The landlord must request this endorsement from their insurance provider, and there may be a small fee associated with adding it. Policy Limits and Coverage Types: It is essential that the landlord’s policy has adequate limits and the right types of coverage. Property management companies should ensure that the policy includes sufficient general liability coverage, as well as coverage for property damage, bodily injury, and other risks specific to the management of rental properties. Verification and Documentation: Once the property management company is added as an additional insured, it is important to obtain a certificate of insurance (COI) from the landlord’s insurance provider. This document serves as proof that the management company is covered and can be kept on file for reference. Property managers should periodically verify that the coverage remains active and up-to-date, particularly when policies are renewed or if the landlord changes insurers. Adding a property management company as an additional insured on a landlord’s liability insurance policy is a crucial step in mitigating risks and ensuring comprehensive protection for both parties. By understanding what additional insured status means, what coverages it provides, and the steps involved in obtaining this coverage, property management companies can better protect themselves from potential liabilities and provide landlords with greater peace of mind. For landlords, including their property management company as an additional insured is a relatively simple process that can prevent costly legal battles and ensure seamless management of their rental properties. As with all aspects of property management, clear communication and well-defined agreements are key to protecting both parties and ensuring the long-term success of the property management relationship.
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