In the wake of Hurricane Katrina, a significant number of outside investors cherry-picked which areas to invest in, leaving less desirable real estate sitting untouched. Some of those properties are still vacant, experiencing flooding and pervasive mold issues almost 20 years later. Profit is the priority of any investment. However, within this niche area of real estate, it is also important to consider the impact your intended project will have on the community. This type of investment should contribute to the restoration of the neighborhood just as much as it should focus on an investor’s returns. By providing much-needed housing options and injecting capital into the struggling community, investors can end up being perceived in a very favorable light. FISCAL BENEFITS Although the moral implications of investing in disaster-affected real estate are complex, there are undeniable fiscal benefits to consider. Whether it’s a hurricane, tornado, wildfire, or other natural disaster, these events can create unique investment opportunities with the potential for significant financial returns. The initial attraction is the prospect of acquiring a property at a below-market price. With many damaged businesses and homes flooding the market, there is a temporary downturn in property prices. Even property that is relatively undamaged by the disaster may see a dip in price due to the overall condition of the neighborhood. When searching for the perfect property for your investment, it would be wise to seek out an experienced local inspector and contractor to provide an analysis
on whether the intended renovation is financially feasible given the current structural integrity. Whether a full demolition and rebuild is intended or a renovation, it is also important to review the permitting process with the local municipality. Some of the red tape surrounding the rebuilding of disaster properties can elongate the timeline, so an investor needs to ensure the timeline aligns with the overall investment strategy. Nonetheless, purchasing a property well below market value provides an opportunity to build equity and generate large returns once the market stabilizes. GOVERNMENT ASSISTANCE PROGRAMS Another attractive facet of disaster investment is the potential for government assistance programs. In many cases, governments will offer incentives and assistance programs to property owners in a presidentially declared emergency zone. These incentives could include tax credits, grants, or low-interest loans for property rehabilitation. By taking advantage of these programs, investors can offset costs and maximize their returns on investment. The social impact of investing in disaster property is the key to balancing the complex moral dilemma with the perceived returns. Investors can come out looking like rock stars if they navigate their community impact with grace. For example, there have been instances where an investor will buy several properties, some that only need to be renovated and others that will require a full demolition and rebuild. The renovation properties are completed first, and the investor agrees to rent
these spaces at a discounted rate to the desperately needed contractors who come in from out of state to assist with the community rebuild. This shows the community the investor is committed to the revitalization of the community, not just the profits. Investing in real estate recently impacted by natural disasters is a complex and nuanced endeavor that requires careful consideration of both moral and financial factors. Although there are valid concerns about insensitivity and opportunism, there’s also the potential for positive social impact and financial gain. By approaching disaster investing with empathy, integrity, and a commitment to community redevelopment, investors can navigate this challenging landscape while realizing the fiscal benefits of their investments. Ultimately, the decision to invest in disaster-affected real estate should be guided by a balance of ethical considerations and financial goals, to create value for both investors and the communities they serve. •
TAYLOR MILLER
Taylor Miller is a project specialist and marketing coordinator for Owner Builder Advisors, where he helps developers and owners navigate the construction process. He has been actively involved in the construction and inspection industries since 2016. He also manages marketing campaigns, social media, and document generation/
compilation for both formal and informal application processes.
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