A frustrated California landlord recently took to Reddit to vent about skyrocketing insurance costs, saying his premiums surged 340% while local rent control laws prevent him from raising rent more than 4% annually.
“Just got my insurance renewals and they increased about 340%,” the user wrote in the r/realestateinvesting subreddit. “The city where the properties are located has local rent control capping rental increases at 4% annually. I'm not a corporation or anything, just a mom and pop with a couple of units.”
The post tapped into a growing sentiment among small landlords who feel cornered by rising costs and strict regulations.
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The Cost Crunch
While inflation has hit nearly every sector, insurance costs in parts of California are becoming especially difficult for property owners. Wildfire risk, stricter underwriting, and fewer insurers writing policies in high-risk areas are all contributing.
“Most of California and Florida are high-risk properties these days,” one commenter noted.
Another person chimed in with some insight: “Insurance can only go up that much if you have non-admitted insurance, which is not subject to rate regulation by the state… You're looking for a risk-adjusted return in your business, so are they.”
The landlord later clarified that the policy is actually admitted, adding, “So that gives me another question to ask my agent tomorrow. How can they go up so much being an admitted insurance company?”
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Rent Control and Limited Options
Because the property falls under local rent control rules, the landlord can’t pass much of the cost increase onto tenants.
Some users asked whether breaking out rent components like insurance or taxes could allow landlords to bypass rent caps. “Can it be broken out as individual components?” one person asked. But others pushed back, saying tenants won’t go for that and that it’s not how rent is traditionally structured.
Suggestions to switch from multifamily to single-family homes came up, too. “Single-family homes and separated condos are exempt from rent control laws as long as you list the property as ‘by owner’,” someone said. But that would mean selling existing assets, and as another user pointed out, it would reset the property taxes.
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Bigger Fish Waiting
Several people argued that the system is designed to push out small landlords.
“They do not want mom and pop owners,” one said. “The large companies want to push them out and control the market completely and the government has been helping this happen for a long time.”
OP warned that selling to a corporate buyer won’t help tenants. “Soon it won't make sense to own them, then I will be forced to sell to a large corporate REIT, and let's see how compassionate they are towards tenants.”
Still, some commenters encouraged a level-headed approach. “If you want out of your investment, that's a reasonable choice. You can sell. You make it sound like a threat, but that's not a decision to feel guilty about,” one user said, adding that both landlords and tenants take on different types of risks.
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