Does anyone invest in Murphy’s Ca.?

[Heather Fultz]

I was thinking, despite my better judgement, about investing in Murphy’s California. It could do great numbers, mountain wine region near ski resort, but huge wildfire risk. Not to mention, insurance could be upwards of $10k yearly. I live in the Bay Area and am really trying to find something a little easier for me to get to than having to trek to the Midwest for my investments. If you’re going to talk me off the ledge, any other suggestions at $550k or under that can do $90+ somewhere near the west side?

[Arman Ahmed]

Quote from @Heather Fultz:

I was thinking, despite my better judgement, about investing in Murphy’s California. It could do great numbers, mountain wine region near ski resort, but huge wildfire risk. Not to mention, insurance could be upwards of $10k yearly. I live in the Bay Area and am really trying to find something a little easier for me to get to than having to trek to the Midwest for my investments. If you’re going to talk me off the ledge, any other suggestions at $550k or under that can do $90+ somewhere near the west side?

Murphy’s definitely has the “vacation appeal” piece going for it, but your concern about wildfire risk and insurance is very real because those costs can quietly destroy otherwise solid STR numbers. A lot of investors right now are realizing that gross revenue means less if insurance, regulations, and seasonality keep tightening margins every year. Honestly, there’s nothing wrong with wanting something closer to home, but I’d probably stress test the deal hard with worst-case insurance and occupancy assumptions before jumping in. Some investors end up compromising by keeping appreciation-focused properties near home while buying stronger cash-flow rentals in Midwest markets where the numbers are more predictable and operating risk is lower.