Natural Disasters and Real Estate Investing
Hurricane Irma slammed into the Caribbean and state of Florida earlier this month. Many islands and areas of Florida sustained significant damage with early estimates totaling over $50 Billion. As bad as the damage is in some of my areas, many experts state Irma could have made a much worse impact in Florida. I am thankful we did not get hit more directly.
How should real estate investors leverage lessons learned from Hurricane Irma and other natural disasters? Here are some of my tips:
Tip 1: Fix and Flip and buy and hold investors should plan ahead and make sure insurance binders are active well before the next storm hits. Once there is even the slightest determination a storm is headed in the direction of Florida, the insurance companies will not bind a new policy or add additional coverage to an existing policy.
Tip 2: Timing of closings can be very important as a storm approaches. Completing closings before an event is recommended. Following a storm, damage may occur, roads and properties can be inaccessible. For these reasons and more, you could end up losing your buyer.
Tip 3: Be ready for new business opportunities following a storm. Some of the most prosperous years for real estate values and investing have followed damaging natural disasters. In many cases, insurance money comes into the market creating opportunities for investors. Likewise, those property owners that don’t have insurance might be motivated to sell their properties.