Hello everybody, it's Sam from Financial Samurai and I am recording from the hot tub because I'm trying to get some work done and relax at the same time. And it's funny because one of the things that has exploded in terms of spending during the coronavirus pandemic and the lockdown is one, online purchases, right?

But two, it's home improvement stuff. So a lot of people are doing a lot of work on their homes and a lot of people are spending money on hot tubs and pools and so forth. So if you're thinking about getting a hot tub and you live in a moderate climate area or a couple of the seasons are kind of cold, like below 60 degrees, I highly recommend getting a hot tub.

The hot tub is amazing. It's a place to relax. It's a place to meditate. I think about a lot of ideas from my hot tub and it's really, really helpful. So the topic I want to talk about in this episode is on climate change and how it might affect real estate values.

Because for the longest time, well not the longest time, for the past, I'd say five or six years, since 2014 at least, but actually since I was a kid, I've always wanted to own beachfront property. You know, beachfront, you walk out onto your deck and then you go down the stairs and then you just take a dip in the ocean and then come out.

Or you just walk across your lawn and into the ocean. I mean, that was always a dream of mine and it always sounded so amazing. However, what I've realized after looking at beachfront properties and talking to my parents and experiencing several natural disasters is that there's just more maintenance and risk required.

So if you are able to walk out of your home, you know, you're on this nice lawn, of course there's a pool and a jacuzzi spa, and you just walk out off your lawn into the sand, I mean that's amazing, right? Amazing. You can see those little crabs, you know, going sideways, crawling up and down.

You can see these little fish, the small fish swimming around. It's pretty amazing, but the water, if it just rises like a foot, I would say your home might be flooded. And so flood insurance does cost money. I did talk to one of these agents in Hawaii in the Kahala area, which is a really nice area in Oahu, about how much flood insurance costs for this one home.

And he was saying it was about $3,000 or so. And this was an expensive home. I was just looking for fun. It was a $7 million home. But it's always fun to look at these nice homes, right? And just kind of dream and imagine to motivate yourself. It motivates me to try to, you know, think about these things so that I can just figure out a way to get there.

So flood insurance is something important to think about. And the other thing is just the maintenance of owning this home near the beach or on the beach, right? You've got wind and maybe more moisture, actually definitely more moisture, pounding away at the walls and at the windows and the seams that are going to crack.

So when you've got wind and you've got sun just baking the stucco or the wood, causing it to expand and then shrink at night, there's just a lot more maintenance work to be done. So the question is, is owning beachfront property or lakefront property worth it with climate change on the horizon?

It's tough to say because climate change is a slow-moving phenomenon. And there's this one study that I highlight in the Post that says they estimate maybe 13 million people will move away from the coast and head inland by the year 2100. And unfortunately, most of us will be dead by 2100.

So it really doesn't matter to us. And that's just kind of the thinking a lot with climate change for many people. Is it really going to matter if we're not going to be here? You know, it's so slow-moving. But as an investor, you've got to think about the future, especially if you want to buy real estate for generations to come.

So if you're buying real estate, if you're going to follow my strategy of buying, let's say, one property per child you have to make sure that at least when you're gone, you can provide shelter for them if they need shelter. It's an insurance mechanism that many of the people that I know have done, buying one property per child.

You know, some people buy dozens of properties. I don't know who these people are, but hey, you can go that route and build passive income through real estate that way. But I like the goal of everybody who has kids to try to buy one property per child. And if you do buy one property per child, then you've got to think longer term.

You know, your life is probably going to last maybe until 80 to 100. And then your kids' lives are probably going to last 80 to 100 or maybe longer. Who knows? So you've got to be thinking about 30 to 100 years from now if you want to keep these properties in the family.

So I was thinking, instead of owning beachfront property or lakeside property, it's probably better to own hillside property, property that has a wonderful view of the ocean or the body of water you're thinking about. From a price comparison point of view, you can see how eventually, or maybe right now, ocean view property, properties with a view on a hill might start outperforming beachfront property.

People say there's only so much beachfront you can build on. And that's true. So there's less of a supply of beachfront homes. But you can see that balance change over time, especially if there's more disasters, warmer climates and so forth. So it's just something to think about as you go and pursue your next property, your next dream property where you want to retire or just enjoy life.

It's really interesting during the coronavirus pandemic that we've been locked up for so many months. There's this palpable and I think obvious through the data desire to own a nicer home, to live in your nicer home because you're spending more time in your home. This is what I've been going through since 2012.

In the past, I used to spend, I don't know, eight to 10 hours a day in the home. After 2012, I'm probably spending 20 hours a day in the home. So that's a doubling of the time I spent at home. And that means, hey, why not spend more on the things you spend more time on and that you value more of?

So I think most people are going to place a higher value on shelter. And given you place a higher value on shelter, the value of shelter should go up. And you are seeing demand spread out towards less centrally located parts of your city, right? If you don't have to commute every single day downtown, then what's the point of living close to downtown?

So definitely take a look around your city and see if there are better deals on the outskirts of your city or the suburbs of your city. If you can get more space and pay less, that's a no brainer. I think that trend is going to continue concurrently with the trend of relocating to different cities and states to really lower your cost of living.

But I think first of all, you got to look within your city. And I'm sure you can save 20 to 40% on living costs because that's what I did. And I see it all around in many cities, you just drive 15, 30 minutes further and you'd save boatloads of money.

And further, you won't be at risk of a salary cut as some companies will wisely try to do if you decide to relocate and work remotely forever. So back to climate change. Climate change, it's going to take a while to really take effect. But you are seeing erosion of land on lakefront properties, beachfront properties.

So that's something to be aware of. You will have to pay for flood insurance if you're in the flood zone. And if you're in the hills, be aware there might be fires if you're surrounded by a lot of trees. So you've got to inquire about fire insurance as well.

So at the end of the day, nobody knows exactly what's going to happen, which is why we have homeowners insurance. Ask your insurance carrier what type of homeowners insurance you have currently. Hopefully you do have homeowners insurance and what it covers. During this lockdown, it's good to get an idea of what your policies are covering.

Life insurance, homeowners insurance, renters insurance, auto insurance, umbrella policy, personal liability insurance, and so forth. You got to get these insurance policies downright because as we have all realized now, anything and everything can happen and you just have no idea so you might as well get protected. As for future property purchases, I think I'm just going to stick with what I like and that is owning a single family home on the top of a hill with a view of the water.

I didn't realize, I didn't realize until just now that every single one of my properties is on a hill with a view. You know, we're talking Lake Tahoe, Honolulu, San Francisco, they are all on a hill and they're elevated. And I think it's because my grandparents bought a property on the hill in Honolulu and I've been going back there my entire life and I've just been accustomed to that.

Driving up the hill, sitting on a deck, just kind of surveying the landscape and relaxing outside. It's just that indoor/outdoor living that I really like. And you've got to find what's good for you. If you've been used to just looking outside the window at another building, I'm telling you straight up folks that it is so much better and so much more relaxing and so much more calming to have that view.

So I do believe that view properties will outperform going forward. And it's funny because the only property I did sell in my portfolio was in 2017 and it was a house without a view. It was just facing another building. And so the feng shui, as I really, really care about, wasn't really there.

Yeah, it faced east-west, it had three bedrooms on one floor and stuff like that. But there's really a difference when you enter a property and you can just feel the positive energy and the negative energy. And this is why anybody listing a property during the coronavirus pandemic and the shelter in place is probably not doing themselves a good job in terms of getting the maximum price.

It's very hard to buy property without walking through the property and feeling the property, seeing the property, touching the property. And so if you're listing now, it's tough because open houses aren't back to normal. You just can't rush in to take a look at a property on a Sunday afternoon between 2 to 4 p.m.

You've got to make a private appointment. And so when you create that friction of buying property, that demand is just not going to be there. And that emotional buying that many sellers count on to get that top price is not going to be there. So on the flip side, if you're a buyer and you're pre-approved, this is your time.

This is your time to hunt aggressively, to look for those deals or look for those amazing properties that you couldn't have gotten before the pandemic because there would be just a bidding frenzy. This happens a lot in San Francisco. And I know it's happening in a lot of other places because I've surveyed my followers on Twitter.

I've asked people on my newsletter, what are you seeing? And people from Connecticut to Michigan to Indianapolis to Seattle to Las Vegas to Tahoe are all saying that the uptick in buying interest is really high right now. And this is mid-June 2020. And you're seeing the U.S. Mortgage Purchase Index really ramp in May as well.

So a lot of people are interested in buying. They're getting pre-approved. And it sure seems like there is a suppression and pent up demand for real estate. And the spring buying season is just going to shift to the summer and fall. So just be prepared. Watch out. Of course, who knows what will happen.

But people do want to own nicer properties because they're spending more time in their properties and maybe they're thinking, well, stocks have had their rebound in their run. They're so volatile. Let's just spend money and buy something that we can actually utilize and enjoy. And it might go up in value.

And if it doesn't, at least we'll have a good time in the process. So anyway, I hope everyone enjoyed this episode. It's really tough thinking about climate change and buying and all this stuff during this uncertain time. There's just more uncertainty, right, with climate change. And we really just have to think about the present.

How well do we want to live right now? And I think more and more people are thinking we've been cooped up. Let's live a better life right now. And how should we think about our investments in the future if we're going to pass them down to our children? And finally, I just realized something.

It's tough to continue to record episodes and write posts while taking care of two kids and all that. So if you're struggling to get your work done while taking care of a family, I feel you. I hear you. I've been waking up by 5 a.m. every single morning trying to write and record and stay committed to the Financial Samurai community and to stay committed to my goal of trying to bring knowledge and financial freedom to as many people as possible.

So if you can couple something enjoyable with something that takes work, I think you're going to be able to work much easier. For example, I love going to the hot tub. I can be in the hot tub for two hours. It's kind of nuts. I don't know. Maybe in another life I was a hot tub critter.

But from now on, I'm going to make it a mission to say that every single time I go to the hot tub, I'm going to record an episode. Maybe it's only five minutes or maybe it's 10 to 15 minutes. Whatever the case may be, what's 10 to 15 minutes of recording if I'm going to be there for one hour?

So find something you enjoy doing and couple it with some work that you have to do. If you do that, I think you're going to do better work, more enjoyable work, and you're going to last for a much longer time. Thanks so much. If you enjoyed this episode and this podcast, please share it around and I'd appreciate a great review.