Bought in a Fire Prone Area, should we sell and consider renting?

[Fetch Phoenix]

Hello community,

We have purchased a home in Nevada City, California that is currently a cash flowing rental, until it becomes our primary home in 1.5 years when our family relocates to the area. The good news is that it will still serve as a house hack when we move, as there are multiple units on the property.

Our concern is that it is in a high fire prone area. We knew this when purchasing a year ago, but because our family has committed to the area we moved forward with the great opportunity when it came up. Given the renewed concern of fire following LA’s fires and the potential insurance consequences, we have begun discussing the potential of reconsidering owning in the area. Here’s why:

Putting aside the actual physical danger of living in a fire prone area. These are the financial concerns:

1. The home burns and the incredibly over taxed CA FAIR plan has either gone bankrupt or takes years to pay out.

2. The home doesn’t burn but the surrounding neighborhoods and town does, severely decreasing the value of our home

3. Insurance is dropped, which is a very real trend these days, and we have an uninsured home that cannot sell. 

We are considering taking a 2-5 year risk of owning the home to collect on appreciation since prices are stagnant right now, and pray fire doesn’t take it. But then moving to actually renting while our children finish school and investing out of state instead. 

I’m writing to get general thoughts on this situation. Is anyone else in climate impacted areas experiencing a similar question of whether to get out? Is it worth waiting the 2-5 years? 

Thank you!