Sinkholes and Real Estate Investing

[Joshua Cook]

I live and have been buying properties in Florida. I currently own a duplex and primary residence in Pasco, and I'm scheduled to buy a new build next week in Hernando, and another in Citrus Springs.

One of my biggest worries have started to plague my mind once again: a sinkhole opening up on my property. Imagine me as Gandalf, clinging onto the stony edge of an abyss with fear in my eyes, "Fly, you fools," before I plummet into the depths of the earth.

I'm aware of Pasco, Hernando, and Hillsborough counties having issues with sink holes; apparently these areas make up 2/3 of the amount of claims in FL. Heck, when I first moved to Florida from WA, USAA would not provide me with a home-owner's policy because of the risk of sink holes (of course I found this out after I already moved!).

How do any of you other Florida investors protect yourself mentally or investment physically? I'm aware that standard policies have to have catastrophic coverage, but that, ironically, is the worst-case scenario: you'll get a check for the house and your principal is safe essentially. Whereas minor sinkhole openings on your property not only leave you the bill to remedy the problem, but also permanently tank the value of your property unto eternity.

To all the other investors here: am I crazy for even contemplating owning more houses in Florida? The market is hot, indeed, and there's good deals in crazy-growing areas, like here in Pasco county. Yet it feels like the gamble might be too big, especially once you open up state databases and visually see sinkhole incidents throughout the neighborhoods. I was drawn to real estate investing to avoid high investment risks. I can insure flood, hurricane, termite damage, but sinkhole damage seems absolute, unknown, and permanent. Should I just invest in Apple from now on and call it good?

Thanks!