Hundreds, if not thousands, of real estate investors will be battling against storm damage to their investment properties this year, if they aren’t already. So what are some of the unforeseen threats that sometimes catch those new to real estate investing off guard, and what are the best practices for protecting against storms? Investors facing crippling weather conditions are advised to read the following:
Navigating the Storm for Real Estate Investors
Few real estate investors are actually hit with major damage in most storms. However, it is sometimes those little minor issues that can ultimately become big problems if left unchecked or not handled well. Roof issues are probably among the most common. Homes can lose a few tiles and incur minor leaks which don’t appear to be structural threatening immediately. Of course, more snow or rain often continues to follow, making matters worse in the future.
What many new real estate investors don’t get is how scarce supplies can be and how long of a wait it can be for contractors after a storm. That’s not to mention the bump in prices and premiums placed on services due to intense demand. Have materials and a plan to act on as soon as a storm hits. Otherwise, the whole property and asset can be jeopardized.
Trees are another one of the most common problems during storms for property owners. Even if they don’t fall onto homes or condos, they leave debris and need to be cleared. Most green real estate investors may think nothing of this and simply get to clearing. However, in many areas, permitting issues can arise. In Florida, this has sometimes turned into a lien on a property preventing it from being sold, even without the owners’ knowledge.
You may even get to the real estate closing table only to be told you can’t sell until a permit is obtained to ‘remove’ the tree, a new permit is approved and paid for replacing the tree and a new tree is planted. It’s one of those crazy, but true stories. So know which trees on your properties could need permits to be removed.
Homeowner’s insurance is just one of those things real estate investing pros need to have. Of course, in the wake of a storm or disaster, insurance companies can be slow to pay out. Expect money to come slowly, but don’t forget to have a copy of your policy and an attorney’s number handy in case you have to evacuate. Perhaps being stored online and in paper form in your emergency kit is the best move. Also, don’t be shy about fighting back for the money you should receive from your insurer.
Business interruptions are probably the biggest threat to real estate investing from storms. Property damage is usually pretty straightforward to deal with, and even losing a single home in a portfolio may not be a big deal, especially if insured, providing income keeps coming in.
However, if banking is interrupted and investors have no alternative access to cash, cash flow from rents stall from tenants, real estate closings are delayed, files are lost and communications are down, it can be a crippling scenario some won’t recover from. So have a plan for these things in order to weather even the worst storms and stay operational.