One of the questions I am hearing more often from clients and students deals with where they “should” look for their next opportunity. It is a great and pertinent question, because current local market conditions do not always match the expertise and bandwidth of the investor, developer, or broker I am working with. They sometimes have a list of several cities, states, or areas for consideration.
My initial answer is to remind them of how often the research helps determine the best decision. There are several considerations like zoning, ordinances or legislation, competition, and market demand. As the below linked article shows, recent disaster events around the country continue the growth of insurance rates. The increase is happening in some states most people would not expect to see them.
The rapid rise in insurance costs could be impacting real estate investing decisions more than it ever has. If not already, it should be part of your research. Suppose you are choosing between two opportunities and one of them has an insurance rate which is $2,000 per year higher. Some investors overlook that difference. By doing so, they overlook how the property with the higher insurance cost adds $150 per month in expenses, and could impact the ROI or cash flow. In this instance, cutting back on insurance coverage for investment property should not be part of the equation due to the amount of risk it adds.
Those who are active in more than one state should be on the lookout for data like this to factor into future considerations. Being aware of every possible difference in your expenses is a great “policy”, especially when looking into being “first in” on your next big opportunity.
https://grist.org/economics/is-your-state-becoming-uninsurable-we-have-the-latest-data/
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