Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
If you didn't catch the "Seeing Greene" episode recently, an excellent question was presented that I thought would be worth discussing. Every area you invest in has risks of natural disasters of all kinds, but these disasters seem to be more common and stronger than ever. While we all know that investments always have risks, it may be worth considering in regards to your strategy. Are you concerned about issues such as droughts, fires, and hurricanes when looking at properties?
Please remember that political discussions are acceptable in relation to laws and policies only, not political positions.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
4y
It is commonly known that devastating 1906 San Francisco earthquake caused everyone to abandon the city permanently. It is now a ghost town on the edge of the sea.
Of course, I'm being sarcastic. I've seen people rebuild houses on shorelines wiped clean by hurricanes. People have short memories. I don't foresee much immediate impact.
If you didn't catch the "Seeing Greene" episode recently, an excellent question was presented that I thought would be worth discussing. Every area you invest in has risks of natural disasters of all kinds, but the effects of climate change are making those disasters more common and stronger than ever. While we all know that investments always have risks, it may be worth considering in regards to your strategy. Are you concerned about issues such as droughts, fires, and hurricanes when looking at properties?
Please remember that political discussions are acceptable in relation to laws and policies only, not political positions.
Honestly, being in a landlocked state like Ohio and with how much the market here in Columbus is appreciating. I am not worried at all about that at the moment. It’s always a good thing to keep in mind and make sure you are ensured in all areas though.
Rental Property Investor · Pocatello, ID · Member since 2021 · 15 posts · 10 votes
4y
I have yet to invest out of the market I live in, but I have thought about climate change and the natural disasters when I finally make the jump. I have looked up natural disaster maps to see where they are most common, and where they are headed in the future. Lots of people are moving to where natural disasters are becoming more common and could cause big problems down the road. Something I think that should be worked into your analysis. Here soon we may have to have a bigger budget or emergency fund for properties in the higher natural disaster areas. Insurance companies might catch on too and raise their rates as well. I also look to benefit the area I'm in by trying to be eco-friendly. Plant a local indigenous tree, if the area has a recycling program, make sure that the property has those bins, have a sheet for tenets of ways to save power, water, etc. Doesn't add much to the overall maintenance of the property and mother nature will be grateful as well. To better the place we all live, has to start somewhere, and right now the way we're headed, it's going to get worse
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Well, according the all those in the "no", climate change will effect everything as we "know" it today. For the life of me, I can't seem to figure out the specifics of how it will impact REI. If you are going to make a statement like you did, don't make a general one that assumes facts not given, and thus no way of knowing the specific "how" of where you're going.
So, tell us "how",...specifically climate change will impact REI. Otherwise, I would suggest you leave the media hocus pocus to political boards.
Rental Property Investor · Ogden, UT · Member since 2018 · 20 posts · 27 votes
4y
This really is an exceptional question that I feel like people want to avoid because its uncomfortable to think about or talk about, just like Climate change itself.
The most significant factor I see happening is human migration. Globally a significant portion of humanity lives near oceans and as oceans rise (whether you believe climate scientists or not, evidence is showing that oceans are rising) there will ultimately be migration away from these areas. Similarly, as parts of the country become drier migration will also happen (Think Las Vegas when Lake Mead is gone). I like David's belief that technology will solve a lot of these problems (Miami has already been spending a lot of money to pump ocean water back to the ocean) but ultimately the cost may become prohibitive.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
4y
It is commonly known that devastating 1906 San Francisco earthquake caused everyone to abandon the city permanently. It is now a ghost town on the edge of the sea.
Of course, I'm being sarcastic. I've seen people rebuild houses on shorelines wiped clean by hurricanes. People have short memories. I don't foresee much immediate impact.
Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
4y
Not as concerned about natural disasters as I am about the rising sea levels. I'd be hesitant to buy any kind of beachfront property because I don't know how well a patch of ocean is going to appreciate; chances are, it'll be underwater by the time I retire. Guess I could let folks park their houseboats on it. I do eventually want to move toward STR's, but I feel more secure investing inland.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
4y
Deaths over the last 100 years from weather and natural disasters are DOWN 99%. So it will affect RE and people 1/100th of what it did in the past. Damage from tornados in the US has remained about constant in adjusted dollars. Global weather related damages is actually decreasing as a percent of Of GDP.
We are building better and giving better warnings. The biggest thing you can do to help is make people richer. Poor people are killed by weather, the rich lose property. Every billion you spend on some pet climate policy is a billion that could have helped changed a million lives, every trillion could have helped a billion people instead
I’m pretty sure this article will make all the doomsday preppers (most of whom still live on the coast in flood zones or earthquake zones.) feel much better and get on with real problems. After all the only “proof” they have the world is getting worse is the press and now they know they are being lied to. After all we know people love to admit they’ve been misled and are wrong. Even if the people they listened to never presented any facts just feelings.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
4y
I've experienced fire. It is nothing to joke about. I rebuilt. Insurance doesn't cover everything. The West continues to see year round fire season, which keeps four members of my extended family in job security as fire-fighters.
@Bill B. makes a point that poor people are hit the worst.
Our infrastructure: dams, levies, shelters, bridges need a good deal of upgrading. Not political just things built in 1935 probably need more than paint.
Rental Property Investor · Denver, CO · Member since 2019 · 78 posts · 66 votes
4y
@Alicia Marks Yep. I consider it with beach properties by looking at the published coastal erosion rates by the local county. Want to know how many feet I’m losing a year and what’s being done to re-nourish it.
And in Colorado we have tons of fires in State and smoke that seems to blow in from the west every summer. It’s not as desirable as it used to be in the summers when you have to check air quality before going outside.
Investor · Mississippi Gulf Coast · Member since 2019 · 56 posts · 53 votes
4y
I remember as a young lad in SoCal watching the canyon fires which eroded the hillsides causing mudslides. It was the way of the world. Property loss was a constant. And then, miraculously it seemed those same areas were rebuilt to have another round of it the next year. I remember watching on the news, people always said they would rebuild. I was baffled at their resilience.
Now, I am purchasing properties on the gulf coast. I know the hurricanes will come... its the way of the world down there, but its not stopping me. Guess I have become the resilient.
Many areas there have pretty stringent flood insurance requirements. It can inflate the cost of the investment. That drives my decision making as much as anything else climate-wise.
Investor · Charleston, SC · Member since 2022 · 234 posts · 198 votes
4y
As we consider investment opportunities, especially ones where the potential off taker could be institutional (keep in mind that nearly 20% of even SFR is investment property) the ESG (Environmental, Social and Governance) mandates that are being both driven by large PE and institutional funding and now even the SEC will weigh in on the values of portfolios of properties going forward.
Maybe I've been fortunate to see this playing out in real time and have a glimpse of the future, but I can say that biggest investors care and are looking for a strategy that considers the Environmental piece, and not that's not just about carbon footprints, but risk mitigation as well. So, it plays into my investment criteria as well. Having a plan and being able to address potential investors concerns at exit is part of my strategy going into investments.
If you didn't catch the "Seeing Greene" episode recently, an excellent question was presented that I thought would be worth discussing. Every area you invest in has risks of natural disasters of all kinds, but these disasters seem to be more common and stronger than ever. While we all know that investments always have risks, it may be worth considering in regards to your strategy. Are you concerned about issues such as droughts, fires, and hurricanes when looking at properties?
Please remember that political discussions are acceptable in relation to laws and policies only, not political positions.
I believe a good practice in investing in real estate it's start doing it. Many people think too much about doing it or not doing it based on many factors they cannot control. Fear will paralyze you from acting. Always do your numbers and if it makes sense just act. Move forward, invest. Sometimes even falling is an experience to win.
Rental Property Investor · Chicago and mainly invests in KS remotely · Member since 2018 · 360 posts · 314 votes
4y
There is some stupidity in this thread. I won't add much to the climate change triggered crowd discussion but I'll say that the # of recorded natural disasters have increased dramatically over the past century. The deaths resulting from natural disasters have not increased as a % of population, but this is very likely due to enhanced preventative measures, ease of mobility, and technology.
Going to the question posed by @Alicia Marks, there is an interesting trend of the "eye" of natural disaster in the US migrating eastward. Historically Oklahoma was this eye, but in recent decades, it's been close to AR and TN.
As an RE investor, I am always afraid of 2 risks:
1. flooding in areas not marked flood zone
2. earth quakes
Should I pay to cover these risks? I don't know.
I believe a general fire/dwelling policy with wind/hail coverage covers the other ones but correct me if I'm missing any natural disasters.
I lost my Bahamian (Elbow Cay) rental house to Hurricane Dorian, and experienced the storm myself. No Insurance as it was prohibitively expensive . It was making over $100K a year and I used the home all the time. It was a 48 hour long storm moving at 2mph with 225 mph winds. The eye was over us for almost half an hour.
So, yes, I think about natural disasters more than I used to. I sold my Oakland, CA rental buildings after that storm because of earthquake fears. I put the money into NNN commercial properties with rent increases tied to the CPI in both Denver and Tampa. I sleep well at night now.
I also just moved from Boulder, where the fires destroy at will. The past two summers were so smokey that you couldn't enjoy the outdoors half the time.
I believe it is wise to think about natural disasters when making real estate investments.
Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes
4y
I thought about this too. I have a property in portsmouth Va near the water and I had to pay extra for flood insurance to make the bank happy. However people will always be drawn to the ocean regardless of seal level rise and storms. Its an addiction we have that's hard to explain. Protect your asset as best you can, but the people will come back, they always do.
I lost my Bahamian (Elbow Cay) rental house to Hurricane Dorian, and experienced the storm myself. No Insurance as it was prohibitively expensive . It was making over $100K a year and I used the home all the time. It was a 48 hour long storm moving at 2mph with 225 mph winds. The eye was over us for almost half an hour.
So, yes, I think about natural disasters more than I used to. I sold my Oakland, CA rental buildings after that storm because of earthquake fears. I put the money into NNN commercial properties with rent increases tied to the CPI in both Denver and Tampa. I sleep well at night now.
I also just moved from Boulder, where the fires destroy at will. The past two summers were so smokey that you couldn't enjoy the outdoors half the time.
I believe it is wise to think about natural disasters when making real estate investments.
I'd just say that insurance should be taken into account. If insurance is unavailable, I wouldn't invest.
Like David, I too do not know enough about the topic to offer any expert advice. I have not looked too much into the topic of Climate Change, but as someone who lives and plans to invest in Charleston, SC I see several structures and buildings that have been established on the water since the early 1700s. These structures have not been impacted by a significant increase in sea levels and have withstood multiple hurricanes. Granted this may be a result of creative ingenuity and preservation techniques, but to David's point, humans do find solutions to things that concern them. I do not want to devalue anyone's experiences or considerations so I would say factor these items into your investment strategy as you see fit but it should not be a lingering consideration that prevents you from getting into the game.
New to Real Estate · PA · Member since 2021 · 21 posts · 2 votes
4y
If you are looking for higher ROI in some places it may not be the best fit. You really have to put your feet into the buyers shoes when considering this. So the real question you should be asking your sealf is, "would I want to live here for XYZ years or months?"
Rental Property Investor · Northern California · Member since 2019 · 5 posts · 3 votes
4y
Here in California we've got some properties that are uninsurable now through conventional insurance companies due to all the wild fires. You can blame it on climate change, PGE (our power company), mismanagement of the forests, or all three. We're now forced to pay over twice as much and buy the states "Fair Plan" Insurance. Definitely has us rethinking which areas to buy.
Real Estate Agent · Outer Banks, NC · Member since 2019 · 168 posts · 116 votes
4y
I invest at the beach and in the mountains of North Carolina. I certainly keep them in mind, and it was one reason for diversifying away from just investing at the beach - and starting to invest in the mountains. Like David mentioned in that episode, if investing in an area prone to hurricanes, flooding, and anything other disaster, I make sure the home is set up to weather those storms (built on pilings, allow water to pass under freely, withstand heavy wind, etc.