As extreme weather events continue to grow in frequency and intensity, it’s essential for real estate investors to consider the impact of climate change to mitigate risk and protect long-term portfolio value. Location, insurance and sustainable home features are among the items to consider.
Research location
Before investing in a property, research the location and consider the risks of natural disasters such as hurricanes, floods, wildfires, and tornadoes. The National Oceanic and Atmospheric Administration regularly reports on weather and climate disasters that result in significant economic losses. Over the years, the United States has experienced numerous such events, with some causing individual losses exceeding billions of dollars. These disasters can include a range of weather phenomena such as:
- Droughts
- Floods
- Severe storms
- Tropical cyclones
- Wildfires
- Winter storms
The frequency and severity of these events can vary from year to year and region to region. As a property investor, understanding the historical patterns and potential risks in your target area is essential for making informed decisions and protecting your investment.
Consider insurance
Investing in a comprehensive insurance policy may help protect your investment property from damage caused by natural disasters. Make sure to review your policy carefully and understand what is covered and what isn’t.
Choose sustainable features
Consider investing in properties that have sustainable features such as energy-efficient appliances, solar panels, and low-flow water fixtures. These not only reduce the carbon footprint of your property but can also increase its long-term value.
Plan to adapt
Consider the long-term impacts of climate change on your investment property and plan to adapt. This could include elevating the property to protect against flooding, reinforcing the roof to withstand high winds, or investing in fire-resistant landscaping.
Work with experts
Consult with professionals who specialize in climate-resilient properties and seek advice from experts in related fields such as environmental science, engineering, and insurance.