Columns Newswire

How to Invest in California Land Affected by Wildfires

Bobcat Wildfire 2020, Monrovia, California

California saw unprecedented wildfires in 2020, which is saying something given the conflagrations of the past few years. As of November 18, according to the National Large Incident Year-to-Date Report, more than 9,279 fires have burned 4,359,517 acres (1,764,234 hectares), more than 4% of the state’s roughly 100 million acres of land.

The devastation to many different types of land in the state has been enormous. In order for land investors to understand what they are to make of the destruction in California, they would do well to distinguish between the different types of land that have been affected by the wildfires. In what follows, we take a look at the idiosyncratic consequences of the wildfires for the value of ranch land, hunting land and home sites.

Ranchland
Burning is advantageous to ranch land and helps clear out old brush. Controlled burns are a powerful way to ensure that land remains fertile and provides good feed for stock. In fact, some studies of grasslands in the Flint Hills, Kansas, demonstrate how controlled burns help maintain the integrity of the land. All that being said, wildfires are not controlled burns, and that makes them problematic. Quick action to round up herds and move them to safety is challenging. As such, there is a high probability of losing stock during wildfires. Furthermore, the loss of feed creates issues for ranchers to supplement, increasing maintenance costs.

Because it is somewhat part of the program for ranchers, the wildfires do not really make a significant switch 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, California needs about 10 acres per head. Ranchers may be looking to buy out smaller parcel owners (recreational and hunting) to help add to their acreage for grazing.

Hunting Land
While controlled fires can help clear out unwanted, old brush, wildfires can easily destroy wildlife and their natural habitats. After a wildfire, it’s not uncommon for deer and other game herds to leave burned areas for extended periods of time. A reduction in prey will consequently reduce the predators (mountain lions and bears) as well, 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 larger landowners to purchase contingent parcels to build future feedlots.

Homesites
Burned suburban land sites could prove to be a clever 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 three to five 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.

The infrastructure, such as utilities, are already in place and do not require significant costs to reconnect. The purchase at reduced rates appears to recover over time. There are also the exclusive areas that become affordable after a fire. Imagine being able to buy land or a vineyard in San Luis Obispo, Paso Robles, Napa or Sonoma!

Bottom Line
Depending on the type of land affected and once they are contained, wildfires can present attractive buying opportunities for real estate and land investors in California. The wildfires do not make for a significant switch to sell or buy property where ranch land is concerned. Looking at hunting land, it’s possible that small hunting plots may seek to sell so they could present an opportunity for larger landowners to purchase contingent parcels. Finally, there are home sites which tend to retain the infrastructure that is needed to rebuild. This latter category will often make for the most profitable investment in burned land.

Tom Smart
National Land Realty
1196 Rambling Road
Simi Valley, CA 93065
855-384-5263

 

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