The devastation caused by SuperStorm Sandy brought back memories of the 3 day thunderstorm that caused a freak flood in Nashville, TN in May of 2010. A common late spring rainstorm became a serious natural disaster when, for no apparent reason, the clouds never pushed off to the East like normal, but instead, hung over Middle Tennessee for several days and dropped more than 14 inches of water. Rivers and creeks rose to levels never before seen in Nashville history. Cars, houses and buildings flooded.
It was financially crippling for the majority of real estate owners because many didn’t have flood insurance on their properties. This wasn’t out of the ordinary considering many of the areas underwater were not in FEMA designated flood plains. Experts later deemed the catastrophe a 500 year flood. No one was prepared for such an event.
My personal home had flooding in the crawl space and I had to replace my outdoor air handling unit as well as the HVAC ducting. After Nashville was declared a national emergency by the Federal Government, FEMA came in and began to help people financially. FEMA didn’t come to my aid though. They said I made too much money. So the repairs were paid for out of “hip national bank”. Our two vehicles went completely underwater and had to be towed away and fully totaled for insurance purposes. Allstate took reasonable care of us during the claims process. All in all, we escaped the madness pretty much unscathed.
Meanwhile, one particular real estate investor I knew wasn’t quite so lucky. He lost everything. Some sixteen years prior, in an attempt to alleviate himself from the uncertainty of Wall Street, this individual moved his retirement funds into a self directed IRA and used the money for down payments on 6 brand new single family homes. All 6 properties were on 15 year mortgages and his retirement plan was simple. He would rent out each property and his tenants would pay off his mortgages over 15 years. Then, he would own the real estate free and clear and the monthly rents less taxes, insurance and maintenance would be his guaranteed long term pension plan.
After only one year into owning those 6 properties free and clear, the 500 year flood of 2010 struck Nashville and all 6 of his properties were underwater for several days. When the deluge subsided, he had no choice but to have the structures bulldozed. A few weeks later, an email was sent out to his network of fellow investors offering to sell his now empty lots at below value. That’s how I learned of this man’s misfortune. I got the “6 Lots For Sale” email. (His wishes to keep his anonymity have been followed here which is why his name is not mentioned).
What happened to that unfortunate real estate investor? He started over. What else can you do in that situation?
Chick-fil-a founder S. Truett Cathy lost his first and only restaurant at the time to a massive fire. He rebuilt it. The rebuilt version of the store still stands today outside of Atlanta as a monument to his business roots. Early on, Thomas Edison watched his laboratory burn to the ground, taking all of his experiments, work, and progress with it. He rebuilt it too.
Our prayers go out to those who have been affected by SuperStorm Sandy. Natural disasters seem to hit when you least expect it and at the worst possible time. But if you have suffered a major personal loss from a natural disaster, be aware that you are in good company. Many of America’s greatest men and women have suffered devastating losses from a natural disaster. In the end, their resilience shined through and they rebuilt what was lost.