How Wildfires Will Present Investment Opportunities This Summer
By Tom Smart
July 11, 2022 (Investorideas.com Newswire) In March 2022, scientists predicted 2022 would be among the ten hottest years on record. While this might be a cause for relief in some parts of the planet, in others-such as in drought-stricken California-people are bracing for another season of intense wildfires. The devastation to many different types of land in the Golden State has been enormous in the last few years. In 2021 alone, 8,619 fires have been recorded, burning 2,569,009 acres across the state.
While land investors are rightly cautious about burning their fingers on land ravaged by wildfires, they should also know that the destruction caused by the fires creates plenty of investment opportunities. In what follows, we look at how wildfires hitting ranch land, hunting land, and homesites create unique opportunities for investors.
Burning Can Be a Boon to Ranch Land
Burning can be a boon to ranch land as it helps clear old brush. In addition, controlled burns ensure that land remains fertile and provides good feed for stock. Some studies of grasslands in Kansas, the Flint Hills, even show how controlled burns help the land keep its integrity. However, wildfires are not controlled burns, making them unpredictable and problematic. Quickly rounding up herds to move them to safety can be challenging. As such, there is a high probability of losing stock during wildfires. Furthermore, feed loss leads to increased maintenance costs, placing a financial burden on the rancher.
Because it is to some degree an expected part of life for them, the wildfires do not cause ranchers to sell or buy property. If anything, the fires increase the need for more usable land to help offset the loss of feedlots. For example, semi-arid to arid environments (like the West) requires about 10 acres per head. So, ranchers may be looking to buy out smaller parcel owners to help add to their acreage for grazing.
One important caveat is that elderly ranchers whom a fire has hit, and for which rebuilding will be a daunting task, will on many occasions decide to sell their property, providing an opportunity for new ranchers to buy that land at a discounted rate.
Fire Brings Hunting Land Opportunities
While controlled fires can help clear out unwanted, old brush, wildfires can quickly destroy natural wildlife habitats. After a wildfire, it's not uncommon for deer and other game herds to leave burnt areas for extended periods. A reduction in prey will consequently reduce the predators (mountain lions and bears), allowing pesky wildlife like wild boar to permeate the area. It's possible that smaller hunting plots may seek to sell and could present an opportunity for more prominent landowners to purchase contingent parcels to build future feedlots.
Homesites Can Go on "Fire Sale"
Burnt suburban land sites could prove to be a brilliant investment opportunity. Homeowners who wish to leave and not return are often open to selling at literal "fire sale" prices. While the property values typically dip for 3-5 years, these could be opportunities for investors willing to buy for a longer haul and either rebuild and sell or simply sell as buildable lots. We saw this happen recently in Paradise and again in historic Greenville.
The utility infrastructure is still in place, and reconnection costs are low. The purchase at reduced rates appears to recover over time. Exclusive areas become affordable after a fire. Imagine buying land in SLO, Paso Robles, Napa, and Sonoma!
Depending on the type of land affected and once contained, wildfires are poised to present attractive buying opportunities for real estate and land investors this year. The wildfires do not trigger a significant switch to sell or buy property where ranch land is concerned. Owners of small hunting plots may seek to sell, so they could present an opportunity for more prominent landowners to purchase contingent parcels. Finally, some homesites tend to retain the infrastructure needed to rebuild. This latter category will often make for the most profitable investment in burnt land.
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