Analytics firm CoreLogic says 32M homes in the US are at risk of hurricane damage this year. What does that mean for real estate investors?
June to November each year brings the most active natural disaster season in the US. In addition to hurricanes, there is flooding, tornadoes and wildfires. Hurricane Elsa was a big reminder of that recently.
Miami, Houston, Virginia Beach and New Orleans are some of the obvious disaster prone areas. According to CoreLogic’s analysis this year, New York City is actually one of the metro areas most at risk for damage.
At the same time, real estate investment may have never been so important and valuable in the lifetimes of millions of investors.
Navigating The Storms For Real Estate Investors
Storms and distress bring opportunities. In this case they bring opportunities to acquire and rebuild properties. They also allow older inventory to renovate to today’s higher building standards.
Individuals with significant damage to their homes will typically find that they need to go rent somewhere else. Often for years. This is another opportunity for investors to provide a valuable and much needed service.
This also highlights the importance of diversity for investors. Failing to diversify is one of the critical blunders new investors make. Geographic diversification is a big part of this. You don’t want all of your assets in one hurricane prone slice of coastline. It just begs for everything to be wiped out at one time. Providing you are diversified the chances are that most of your assets will continue to perform and produce consistent yields.
Partnerships and other investment vehicles can help individual and smaller investors achieve greater diversification with their limited capital from the start. It helps to spread your risks, and pair your capital with other high caliber investors.
Finally, this reminds us of the importance and value of professional management for real estate investments. Weathering challenges like this requires planning in advance, optimizing insurance, having the teams to get claims paid out, for preparing assets ahead of storms and securing them afterwards, even if it means entering dangerous situations.
The annual disaster season is here. This may impact millions of homes at some level. Yet, bricks and mortar still present the safest investments out there. Times like these bring investment opportunities. Approached well, the risks can be greatly reduced. Especially through professional management and diversification.