A12| Wednesday, July 31, 2019 THE WALL STREET JOURNAL.
Gregory Owen, who has been buying lots in Santa Rosa, said nearly every lot was so fire-damaged that he couldn’t determine where one ended and another began.RACHEL BUJALSKI FOR THE WALL STREET JOURNALLt. Brandon Schabacker does a deadlift on the USS Boxer.JOHN LUKE MCGOVERN/U.S. NAVYsmall and midsize real-estate
development and investment
companies, appear to be help-
ing drive up property sales in
affected areas. Panama City
saw a dip in the number of
deals after Hurricane Michael
hit in October 2018, but sales
have since increased. In Santa
Rosa, Calif., the monthly num-
ber of home sales rose 17% in
the five months after a 2017
fire destroyed parts of the
city, according to a Wall Street
Journal analysis of data pro-
vided by home-listing site Zil-
low Group, Inc. In both cities,
sales of commercial property,
including apartment buildings,
also have increased.
Part of the increase might
be seasonal. But brokers say in-
terest has been greater than
usual. “It’s crazy. I can’t keep
up,” said Connie Overstreet, a
real-estate broker at Overstreet
Realty in Panama City. “I need
two or three or four of me.”
Home prices can be volatile
after a disaster, creating both
the opportunity to make a fast
buck and the risk of losing a
bundle. In Santa Rosa, the me-
dian home-sale price rose
11.2% in the six months after
the fire, but has fallen 8.8%
since peaking in April 2018,
according to Zillow. In Panama
City, the median sale price fell
by 5.3% between October 2018
and April 2019.
Construction costs in disas-
ter areas often are high be-
cause jobs are plentiful but
workers scarce. Repairs can be
tricky, and building anew isn’t
always as easy as it seems.
Gregory Owen, 60, a real-es-
tate investor who has been
buying properties in Santa
Rosa for more than a year, said
nearly every lot was so dam-
aged by 2017 wildfires that he
couldn’t determine where one
ended and another began. He
had to hire a civil engineer to
mark the corners.
The lots cost him an average
of $250,000, he said, and he in-
tends to spend another
$700,000 or so building each
house. He hopes to turn a profit
of about $50,000 on each one.tour as a disaster investor. He
lost nearly all his remaining
properties and his primary res-
idence to foreclosure, he said.
In the years after the crash,
Mr. Dey rebuilt his business by
flipping foreclosed homes to
hedge funds, making $2,500 to
$3,000 a deal, he said. Then,
starting in 2017, a series of dev-
astating storms hit the South-
east: first Hurricane Irma in
South Florida and Hurricane
Harvey in Houston, then Hurri-
cane Michael in the Florida
Panhandle.
Mr. Dey dusted off his Ka-
trina playbook and went to
work. In Panama City, he
teamed up with a local investor
who acts as his project man-
ager on construction sites and
helps spot new homes to buy.
Investors from California, New
York and other parts of the U.S.
also are buying storm-damaged
homes in the area.Seeking deals
Some disaster investors put
signs on street corners. In Pan-
ama City, traffic-light poles of-
ten have five or six signs
stacked on top of each other.
Some investors place Facebook
ads. Joseph Metz, a property
buyer in the San Francisco Bay
Area, purchased homes in Pan-
ama City after sending letters
to local addresses, more than
10,000 in a single month.
Others buy properties from
people like Eugene Ursu, who
signs contracts to buy homes
with the intention of flipping
them. Mr. Ursu, a 34-year-old
real-estate agent born in the
former Soviet republic of Mol-
dova, spends his days driving
through Panama City’s devas-
tated neighborhoods, jotting
down the locations of ne-
glected-looking houses.
He calls the owners and
tries to get a meeting. In their
homes, often surrounded by
mold and with wind blowing
through missing roofs, he tries
to establish a connection, ask-
ing them about people in the
photos on the walls or other
personal items.Then he makes an offer and
hands them a prewritten con-
tract. The key, he said, is to get
sellers to agree right away. “I
have that advantage, to get
them at that low price right
there on the spot,” he said. If he
gives them a day to think, they
might look for higher offers.
Of the more than 30 home-
owners who signed his con-
tracts, about half did so during
their first meeting, he said.
Mr. Ursu doesn’t tell sellers
he intends to flip their houses
without fixing them up, though
the contract specifies that he
can. Once he has the property
under contract, he places it
with an online listing service
and sells it. He said his average
profit is around $10,000.
In one case, Mr. Ursu
reached a deal to buy a storm-
damaged house outside Panama
City for $25,000 and immedi-
ately flipped it to a local inves-
tor for about a $30,000 profit,
according to Mr. Ursu and a lo-
cal sales broker.
Mr. McElroy, the Mexico
Beach homeowner, said he
sometimes had more than 10 in-
vestors stop by his home in a
day. Now his home sports a
“Not for Sale” sign. Such signs
are found all over Mexico Beach.
In Santa Rosa, there also is
resistance to speculators, re-
flecting local concerns that new
homes going up on devastated
hillsides could fall victim to
wildfires again. In the fall of
2017, the Tubbs fire, the sec-
ond-most destructive wildfire
in California’s history, killed
more than 20 people and de-
stroyed more than 5,600 build-
ings in the area.
“I don’t believe we can keep
the fires from coming,” said Ju-
lie Combs, a member of the city
council. “They’ve gotten worse
and worse.”
Ms. Combs doesn’t object to
locals rebuilding their own
homes, but she is against in-
vestors building in areas vul-
nerable to fire. She voted
against a 237-unit housing de-
velopment planned by a Cali-
fornia firm. The project got
approved anyway.from both the Navy and Ma-
rines. Trapped together in close
quarters for months, the two
branches have experienced cul-
ture clashes—including bicker-
ing over who makes better
bread and who broke the wash-
ing machine.
Commanders have tried to
counter that with activities that
encourage friendly competition
and camaraderie, including gym
competitions, ice-cream socials
and karaoke nights.
The efforts are crucial, the
ship’s leaders say, amid height-
ened tension between the U.S.
and Iran. Two weeks ago, Ira-
nian helicopters and surveil-
lance planes flew alongside the
Boxer as it crossed the Strait of
Hormuz until U.S. aircraft
chased them away. The ship
also downed an Iranian drone
that came too close.
The ship’s commander, Capt.
Ronald Dowdell, praised the
crew’s teamwork, calling it the
“secret sauce” to their success.
Some fallouts are inevitable,
said Navy Master Chief Veron-
ica Holliday. Two-thirds of the
personnel haven’t lived on a
Continued from Page One
ship before, she said, estimat-
ing the average age at 21.
“Some of them don’t know
how to do their laundry,” said
Master Chief Holliday, adding
they put too much clothing in
one machine, while diplomati-
cally declining to single out any
particular group. “They think
they can just do the whole
thing in there, and it’s fine.”
Sgt. Maj. Charles “Chuck”
Bell of the 11th Marine Expedi-
tionary Unit on board coun-
tered: “It’s the sailors who
broke the machine.”
Rivalries between branches
have long bedeviled the U.S.
Armed Forces, from the mess
hall to Washington, where the
Army, Navy, Marines and Air
Force lobby for funding and
clout.
Brig. Gen. Matthew Troll-
inger, who oversees a joint Na-
val and Marine task force at the
U.S. Fifth Fleet in Bahrain, said
the two sides were designed to
work together. The Marines are
officially part of the Depart-
ment of the Navy. In practice
and in combat, commanders
say, they work well together,
though the troops sometimes
feel like they speak different
languages.
“Marines are very different,”
said Sgt. Maj. Bell. “We are
very direct. The Navy is not.”
“We’re probably a little bit
weirder,” said Matt Lewis, an
enlisted sailor and the ship’s
head cook. “We’re stuck on a
ship more often than they are.”The Boxer is one of nine am-
phibious assault ships in ser-
vice around the world that host
the two military branches.
Manned by the sailors, the
Navy ships patrol global wa-
ters, and if required, deploy
Marines to potential conflict or
humanitarian disaster zones.
The 11th Marine Expedition-
ary Unit joined the Boxer for
training exercises in January
after the sailors worked the
vessel themselves for months
before. The ship set sail from
San Diego in May, and is due to
return home around November.
The Boxer’s commandershave merged gym hours, which
were previously separate for
Marines and Navy. The two
sides line up beside one an-
other at the chow hall for
cross-branch conversations.
Olivia Reyes, a culinary spe-
cialist sailor who works in the
ship’s bakery, said the Marines
“lack respect” for the Navy way
of doing things. That includes
how sailors make bread rolls.
Lance Cpl. Jameel Terry, a
Marine working with CS Reyes
in the bakery, didn’t have much
to say about Navy rolls. Sailors
making cakes was another
story: “Sure, they know whatthey’re doing.”
Crammed together in nar-
row, low-ceilinged hallways and
sleeping in bunks stacked upon
bunks in dormitories, the
troops embrace the relative
freedom of the mess hall and
its evening activities. Up to
1,000 people have shown up for
Saturday karaoke.
Soon after setting sail, those
aboard noticed some differ-
ences. Marines, they said, tend
to go up in groups and sing or
rap so everyone can shout
along. The sailors are more
likely to take the microphone
solo for heartfelt songs.“You can look like an asshole
going up after them,” said 22-
year-old Marine Pvt. Justin
Forsell.
The ship’s personnel widely
agree that the Marines are in
better shape, as they need to be
ready for potential combat on
land. Meanwhile, the sailors
have greater freedom over their
appearance. The Marines have
stricter rules over facial hair.
Mustaches “can’t be nearly
as big and glorious,” said Lt.
Schabacker, the ship’s 1,000-
pound record holder and the
proud owner of a thick brown
strip of hair on his upper lip.
“The ’staches are much better
on the Navy side.”
Sgt. Maj. Bell and Master
Chief Holliday say they try to
lead integration on the ship by
setting an example themselves.
About 5-foot-5-inches and
one of a couple of hundred
women on board, Master Chief
Holliday said she was intimi-
dated when she first met the 6-
foot-1 Marine sergeant major
from Denver. “You look at him
and he looks really mean. But
he’s not,” she said, calling him
a teddy bear.
They soon got to know each
other, swapping stories about
their 24 years of service. Sgt.
Maj. Bell is helping Master
Chief Holliday redesign her
kitchen back in California on a
computer program.
“Marines are far more hu-
man than people think,” he
said.sasters since 1980 to cause
damages estimated at $1 billion
or more, according to the Na-
tional Centers for Environmen-
tal Information, a federal data
archive. The top three years
also occurred in the recent
past: 2017, 2011 and 2016.
Many of those disasters hit
areas in California, Florida or
the southeastern U.S. where
populations had been increas-
ing and real-estate prices ris-
ing. Once a disaster hits, those
without insurance often are
forced to sell their damaged
homes. Those with insurance
often do the same.
For a certain type of risk-
taker, this offers a rare chance
to buy properties on the cheap
and flip them for a profit, often
after fixing them up. Disaster
investors also often face hostile
locals, a shortage of contrac-
tors and materials, and volatile
property prices.
“Any place that there’s a
need, there’s an opportunity,”
said Mr. Dey, who is 45 years
old. “I’m not hoping for the
storms, but they happen.”
Disaster investors say they
are helping the communities in
which they invest. They take fi-
nancial risk, they say, and their
money helps towns begin the
rebuilding process when most
property developers and lend-
ers are reluctant to be involved.
Local resistance
Scott McElroy, a retired
army counterintelligence spe-
cialist who owns a storm-dam-
aged home in Mexico Beach,
Fla., couldn’t disagree more.
He is concerned that investors
will take advantage of vulnera-
ble homeowners, as well as
build bigger, bring in outsiders
and change the character of
the town.
When they ask him for di-
rections to potential invest-
ment opportunities, he said, he
sends them in the wrong direc-
tion. He is part of a grass-roots
campaign in Mexico Beach to
make speculators unwelcome.
“It’s insulting,” he said. “You
try to be polite, you try to be
nice, because that’s just the
way we’re raised. But it comes
to a point where everybody has
their limit. You’re already look-
ing at loss. You’re already look-
ing at monetary loss. And then
somebody offers you some ri-
diculously low price.”
Many disaster investors
made millions buying fore-
closed homes in the wake of
the 2008 global financial cri-
sis. In the wreckage of natural
disasters, many believe they
have found a new opening. In
the spring, floods devastated
Midwest towns. In May, there
were 13 consecutive days with
at least nine tornadoes re-
ported in the U.S., according
to the National Weather Ser-
vice’s Storm Prediction Center,
a record. A July hurricane
drenched parts of Louisiana.
Disaster investors, mostly
Continued from Page One
Investors
Follow the
Storms
Cultures
Clash on
The Seas
FROM PAGE ONE
He also plans to buy lots in
Paradise, Ca., which was dev-
astated by a wildfire last No-
vember.
Brian Burke, CEO of real-es-
tate investment firm Praxis
Capital, lives in Santa Rosa. He
woke up on the morning of Oct.
9, 2017, to see flames rising
about half a mile from his
home. His house and his nearby
office building were spared.
Now, Mr. Burke, who bought
foreclosed homes in Northern
California in the wake of the fi-
nancial crisis, is buying up
burned lots with a local part-
ner. Their plan is to start build-
ing two new homes a month.
Investors expect competition
in the sector to intensify. “Un-
fortunately, or fortunately, de-
pending on where you look at
it, everyone is going to go and
follow the storm path,” said
real-estate investor Marc Cox.
Mr. Cox got his start as an
investor buying and renovating
dilapidated homes in Baltimore.
In 2016, he said, he bought two
homes in Suffolk County, N.Y.,
that had been damaged by su-
perstorm Sandy. After Hurri-
cane Harvey hit Houston, he
picked up two properties there.
Now he is looking for storm-
damaged real estate to buy in
New Orleans and Panama City.Mr. Dey, a Florida native, got
into real estate in the late
1990s when he was in his 20s
and working low-wage retail
jobs. He saw an ad for a real-
estate investing class on late-
night TV. He took the class and
became a home flipper.
After Hurricane Katrina
flooded New Orleans, he real-
ized that thousands of evacuees
had no intention of coming
back and that their homescould be up for sale. Over a
span of three years, he said, his
investor group bought more
than 600 properties. They
flipped most of them without
doing any work, making about
$20,000 per property, on aver-
age, he says.
They funded the invest-
ments with high-interest loans,
backed by personal guarantees.
That came to haunt Mr. Dey
during the 2008 financial crisis,
which put an end to his first60%030321012345660%0303210123456Houston,Texas PanamaCity,Fla. SantaRosa,Calif.DisasterSales
Investorshelpdriveupreal-estatesalesinareashitbynatural
disasters.Changeinmonthlypropertysalesvolumefromthree
monthsbeforeadisaster.
Multifamilyandother
commercialpropertysalesSingle-familyhomesalesSources: Zillow (home sales); Reonomy (commercial sales)Disaster occursMONTHS BEFORE AND AFTER DISASTER‘Everyone is going to
go and follow the
storm path,’ said one
disaster investor.