How did Tampa investors fair after Milton?

[Ben Stanley]

Been hearing a lot of investors had their properties royally screwed up from Milton. My neighbors on the first floor where I live, got close to 4 feet of flooding.

How did the storm effect your local portfolio?

[Eric Fernwood]

Hello @Ben Stanley,

I want to share some thoughts on purchasing properties in areas with a high potential for natural disasters. This is a topic that investors rarely seem to consider. I suspect most people assume it won't happen to their property. And if it does, they believe their insurance will cover them.

Your property isn't the issue. When a natural disaster strikes, it affects the entire area—not just your property. This leads to widespread job losses and closures of schools, shops, and businesses. People are forced to relocate due to the loss of both homes and essential services.

While insurance should cover the reconstruction of your property, until the community recovers, there is no reason for people to move back and rent your property. The community's recovery could take months, years or, in some cases, never. Meanwhile, your expenses, like debt service, taxes, insurance, and maintenance, continue.

Another concern with investing in disaster-prone areas is the high cost of insurance. In fact, some insurance companies now refuse to write new policies in these regions. As property reconstruction costs climb due to inflation, I anticipate more insurance providers will follow suit in the coming years.

Therefore, investors with properties in high-risk areas might consider a 1031 exchange to a safer investment location as a prudent option.