Projecting Major Disaster areas when investing
2006 may be a dangers time when investing in real estate so projecting your potential for disaster can be a great aid to your success.
History shows the following over the last 7 years
2006 has had 15 Disaster Declarations
2005 has had 48 Disaster Declarations
2004 has had 68 Disaster Declarations
2003 has had 56 Disaster Declarations
2002 has had 49 Disaster Declarations
2001 has had 45 Disaster Declarations
2000 has had 45 Disaster Declarations
This year is off and running with Major Disasters and we will be looking at severe Storms that will produce Tornadoes, Flooding Landslides, and Mudslides. Along the path we are and will be facing Severe Winter and Ice Storms and to top it off Extreme Wildfire Threats.
We have already seen this year with Jan producing 7 Major Disasters, Feb producing 3 Major Disasters, March producing 3 Major Disasters and April producing 2 Major Disasters. Based upon this data we are looking at a projection of over 50 Major Disasters to hit the US by the end of 2006
In addition, we are still recovering from fires in California, Colorado, New New Mexico, Oklahoma and Texas.
Yet, we are still going to have to deal with past Hurricane damage.
And we still face dry conditions in various parts of the United States that produce fires and we have yet to step into the Atlantic hurricane season that lasts from June to November, with the peak season from mid-August to late October.
On top of all this over 350 tornadoes have been recorded as of April and this could be one of the most active and deadly seasons in history
For more data see: http://www.spc.noaa.gov
and To compare from 2005 to 2006 see: http://www.spc.noaa.gov/climo/online/monthly/index.html
As an investor we are tough to research property titles, market value and market trends but one major area that is left out is storm trends.
Why storm trends. Vary simple by projecting possible areas of Major Disasters you can determine areas of possible financial loss as an investor. When Major Disasters occur it creates fear and fear will cause folks to move this can be good or bad for your investments.
I use http://www.fema.gov
as an aid site to determine areas to avoid for my future investments.
Let me give you an example:
State of Missouri research has showed me by looking at Fema's map service in regards to tornado's for example that I may want to exercise caution in the western and northern areas of Missouri. Now to take it even one step further I can review area's of great concern by researching Fema's web site for Major Disasters in 2000 and 2006 or even further if I wish. This data tells me to be concerned with the following counties in 2006:
Benton, Boone, Carroll, Cass, Cedar, Christian, Cooper, Greene, Henry, Hickory, Iron, Johnson, Lawrence, Lincoln, Mississippi, Monroe, Morgan, New Madrid, Newton, Perry, Pettis, Phelps, Putnam, Randolph, Scott, St. Clair, Ste. Genevieve, Saline Counties, Taney, Vernon, Webster, and Wright Counties
In 2004, the following counties showed concern:
Adair, Andrew, Bates, Benton, Buchanan, Caldwell, Carroll, Cass, Cedar, Chariton, Clay, Clinton, Daviess, DeKalb, Gentry, Grundy, Harrison, Henry, Hickory, Jackson, Johnson, Knox, Linn, Livingston, Macon, Mercer, Monroe, Nodaway, Platte, Polk, Randolph, Ray, Shelby, St. Clair, Sullivan, Vernon, and Worth Counties.
In 2003, the following counties showed concern:
Barry, Barton, Bates, Benton, Bollinger, Buchanan, Camden, Cape Cass, Cedar, Christian, Clay, Clinton, Cooper, Crawford, Dade, Dallas, Dent, Douglas, Franklin, Knox, Gasconade, Girardeau, Greene, Henry, Hickory, Iron, Jackson, Jasper, Jefferson, Johnson, Laclede, Lafayette, Lawrence, Marion, McDonald, Miller, Monroe, Morgan, Newton, Osage, Perry, Pettis, Phelps, Platte, Polk, Pulaski, Ray, Saint Francois, Saint Louis, Sainte Genevieve, Saline, Scott, St. Clair, Stoddard, Stone, Taney, Vernon, Washington and Webster Counties.
Now what I will be looking for is repeat counties over this time period.
Benton, Cass, Cedar, Henry, Hickory, Johnson, Monroe, St Clair, and Vernon counties all have a higher risk for Severe Storms that will produce Tornadoes and Flooding so what will I do in areas of concern?
I will evaluate my risk factors
Buy based upon my risk factor
Insure based upon my risk factor
Why would I want to do this?
To many move outs will cause property values to decline, underinsured properties in potential areas of Disaster could cause financial loss for investors and one big issue is supply and demand.
Supply and demand affects rehabbers and builders as material cost continue to rise as demand for materials increase.
Real estate investing is all about the numbers and your risk and you make the determine!
Keep one vary important statement in the back of your mind when investing "The Devil is In the Details".