After the Storms Pass, the Disaster Investors Arrive
NEW YORK – Disaster investors – real-estate speculators seeking to profit from hurricanes, wildfires and tornadoes – increasingly snap up
homes in Florida, California and other markets hit hard by catastrophes.
After a disaster, homeowners without insurance are often forced to sell their damaged homes. Sometimes, those with insurance will sell as well. This offers a rare chance for these investors to buy properties on the cheap, fix them up and flip them for a profit.
Despite challenges such as hostile locals, a shortage of contractors and materials, and volatile property prices, disaster investors argue that they’re helping these communities begin the rebuilding process, especially when most developers and lenders are reluctant to be involved.
David Dey, a real-estate investor based in Lakeland, currently is buying houses and properties in Panama City, which was hit hard by Hurricane Michael. Some he flipped without doing any work, making an average profit of $10,000 to $15,000 apiece. He is rebuilding some and renting out others to contractors who arrived after the storm looking for work.
However, Mexico Beach resident Scott McElroy hopes to discourage disaster investors like Dey, concerned that they will take advantage of vulnerable homeowners, build bigger dwellings, bring in outsiders and change the character of the town.
“You’re already looking at monetary loss,” he said. “And then somebody offers you some ridiculously low price.”
McElroy said he has had more than 10 investors stop by his home in a day, and now his and many others in Mexico Beach sport “Not for Sale” signs.
Panama City saw home sales fall after Michael hit, but they have since increased, and the median sale price dipped 5.3% between October 2018 and April 2019.
Source: Wall Street Journal (07/30/19) Putzier, Konrad
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