What Landlords can do to increase their Property Appeal in a Weed-Driven Economy
It’s crazy to say “Weed-driven economy” but for the real estate industry – cannabis has had some crazy impact on how people are buying/renting and selling their properties. For starters – there is a definitive uptick in demand for warehouses in states that have legalized cannabis. In fact, a recent study found that there was a 34% increase in demand for those kinds of properties.
Roughly 25% increase in demand for storefronts and 20% increase for land in the area. Why would this be?
Well – the cannabis industry requires those three things to effectively run its operations;
1 – Places to grow [land/warehouses]
2 – Places to process [warehouses]
3 – Places to sell [storefronts]
For realtors who are living in cannabis-friendly states, or soon to be cannabis-friendly states – perhaps it’s time to start looking into these options.
What about residential properties?
When it comes to residential properties, some realtors believe it’s negatively affecting prices, while other say it’s positively impacting them. Most of the nay-sayers are ideologically opposed to cannabis and thus they perceive the decline in property value simply by approximation to a cannabis business.
Those who are ideologically in favor of cannabis – sees this as an “increase in property values”, so in terms of residential areas – it depends on where you lean.
Side Effects of Legalization
One real concern for property owners – especially within the rental space – relate to damages to the property due to “cannabis growing”.
And this is something that land owners should consider. Many landlords will simply ban cannabis from being grown on their properties. While they are totally within their right to do so – the problem comes with enforcing your ban.
A landlord does not have a legal right to come onto the property if it is being rented, meaning that enforcing cannabis bans is impossible. Furthermore, a ban would mean that the growers would have to “hide” and “create special circumstances” to ensure that they aren’t caught.
This could mean that they need to “modify” the property, meaning unsanctioned destruction.
However, what would happen if a landlord decided to go Pro Cannabis.
Pro-Cannabis Rentals – a new thing?
While this would certainly be a risk – under current federal law – the future of creating “cannabis-friendly rentals” is something that you should not dismiss without analyzing the idea.
For instance – many landlords are facing property damages due to the unsanctioned growing of cannabis. Amateurs who aren’t savvy in setting up irrigation, lighting, controlling humidity levels, etc – can lead to making modifications that could result in massive destruction such as house fires etc.
What if – you as a landlord contemplated that? What if – a legal grow room is included into the property? How much would a tenant be willing to pay to have a “pre-made grow room” in their rental? A few hundred dollars more? A few thousand dollars more?
As a landlord – you have the ability to modify your property and create standards. If you know that there is a big chance that someone [in a legal cannabis state] will exercise their right to grow cannabis at home – why not create the conditions so that you can reduce the impact of the grow on the site.
With proper installation – lights, water, etc – you can ensure that there will be minimal damages to the property because “you have set it up”. Most probably with a professional.
All the wires will be properly grounded, all the fixtures installed correctly. All the tenant would need is to buy their “lights” and nutrients/soil and utilize the space.
In fact, one could argue that you could simply divide the total cost of the modification and divide it by 12 – which would give you an average “monthly increase” to the rent for anyone interested in growing at home.
But what if they don’t grow
If they don’t grow – then it’s no loss, but if they do – you could be reducing the negative impact of amateurs significantly. If they don’t grow ‘cannabis’ – the space could easily be converted to an “indoor greenhouse” where you can grow food and so forth.
In fact – simply adding a space where folks have the ability to grow things will increase the value of your property.
Where to be careful
While cannabis is still federally illegal – we advise you to NOT do this yet. In places such as Colorado and California – where home growing is sanctioned – the risks are greatly reduced. However, in states where it is not legal – we recommend you NOT do this.
Why? Because thanks to “now presidential candidate” Joe Biden – RICO laws were attached to the drug war – meaning that if your tenants are committing a crime [selling illegally] – your property could be seized.
Unfair? Yes! Is it the way things are…also yes!
Nonetheless – for those who are savvy enough and prepare grow rooms might have an edge when it comes to cannabis-real estate.