Real Estate Squeeze: Revenue Growth vs. Expense Surge #shorts
In this short advisory, Shafiq Hirani CCIM warns multifamily owners and operators to base underwriting on roughly 2% annual revenue growth, cautioning that many budget for higher growth and will therefore fall short. He highlights that operating expenses are rising far faster than revenue, citing RealPage data that landlord insurance premiums have jumped 119% over four years, with operators now budgeting an additional $275‑$356 per unit for insurance and Houston rates exceeding $1,200 per unit. Insurance’s share of revenue has risen from under 2% in 2000 to nearly 5% today. Property taxes have increased over 23% nationwide from 2019‑2023, and repairs & maintenance costs are up more than 28% since 2021. Industry guidance suggests budgeting a 15% insurance premium increase even without claims. Hirani demonstrates that if revenue grows only 2% while expenses rise 8%, net operating income (NOI) will actually shrink, even at full occupancy, creating a quiet financial squeeze across thousands of buildings.
