The 2012 Atlantic Hurricane Season began on June 1st and has already delivered one serious tropical storm to the east coast, making landfall in Florida. Real estate investing companies need to get serious about hurricane preparation or face losing everything.
Forecasts for this year’s hurricane season have ranged from an average number of storms to as much as 50% more active than the average over the last 12 years. That would place investment properties and real estate investing businesses in the gulf and east coast in the path of more than 14 tropical storms, 7 hurricanes and 3-4 major hurricanes over the next few months.
Are you really ready?
In past years buy and hold investors have seen entire portfolios wiped out without ever receiving a penny back in insurance money. Flippers and rehabbers have also experienced their share of woes with deals being stalled and property damage delaying sales and acquisitions.
However, even more threatening than physical danger and property damage from hurricanes is the horrific impact it can have on real estate investing business’ revenues and cash flow.
Once a storm is in the box no one will write insurance so that properties can be bought or sold. After a hurricane passes through waiting times for appraisals can stretch for months and construction materials and labor can be in seriously short supply. Having to wait 2 years for a new roof isn’t unheard of. Still this doesn’t even come close to the threat of disrupted cash flow from crippled businesses.
Unless your real estate investing business is prepared and organized with enough flexibility to operate virtually from anywhere on a couple of hours’ notice your company, cash flow and nest egg is a sitting duck in front of a 100’ tsunami wave.
Power and phone lines can be downed for over a month in the wake of a hurricane. You need cloud computing, VOIP call forwarding, back up internet connections, a mobile workforce and backup team members spread out in different locations so that nothing can stall your business. Individual properties may fall but providing you have the ability to keep on buying and selling you can keep money coming in the door. If documents and communications are inaccessible it is often only a matter of days before most investors start falling in a financial whole that can bankrupt the entire operation.