What to do after homes flood.

Question

David S. · Answer

@Justin Fox

You may be eligible for FEMA grants for your personal home for contents and damage (not income based).  For the rentals, you can get a low interest SBA loan of around 4% (no grants).  You can get a SBA loan for your personal home of around one or two percent.  Tenants can file with FEMA for contents.  Rarely does a tenant have FLOOD renter's insurance.  Many people think normal renter's insurance covers this, but most agents leave off the flood rider in my experience.

Take pictures of everything before you gut, save all materials.  FEMA actually needs to visibly verify the presence of the flooded appliances to give you credit for it.  Folks were fighting over flooded appliances in Baton Rouge after our flood. Unbelievable...

The faster you gut the better. Do it now and you can gut to only about a foot above the flood line if it did not siphon up the insulation.  Wait and you may have to do the whole wall.  Get your wood moisture below 12% (some contractors use 15%) before any rebuilding.  Sounds like you have a good plan....Get a moisture tester for wood.  You can get COMMERCIAL dehumidifiers and blowers off of ebay in package deals. I do stress, commercial grade dehumidifiers. Home Depot or equipment rental places rent them as well.  But go now to rent them because they will be wait listed.  Or hire Servepro...Treat chemically for mold as well.

Justin Fox · Answer

@David S.

@Brandon Johnson

So just an update,

We've gotten our mold clearance certificate with an insurance stamp as well for the two rentals.  Drywall is going up this weekend and should be textured and trimmed out next week, and ready to paint!  We found a more competitive guy and we're going to see how that goes.  600 to hang the bottom 4' in both houses and 1800.00 each to tape, float, texture and do the trim-out.  He showed us some pictures and it looked like painted, textured sheet rock to me.  If he does well, we'll get him to do the next two houses.

We ended up getting flood insurance on the two rentals that did flood.  It is ~550.00/year.

The houses around the empty lots we bought in a neighboring town had 8-10" so that won't be too much to put the elevation 2' above that mark and skirt the 550/year with no worries.  We're going to compare the cost of dirt/slab vs pier and beam though.

We did get money from FEMA for our personal residence, but it will only cover windows, siding and flooring.  All of our windows were wood-core Anderson windows and the replacement windows bid (just for the windows) was 8,000.00.  We figure getting our siding redone to cement plank siding and putting in standard-sized new construction windows for 10,000 - 12,000 is a better deal.

Our SBA loan for our house is still processing but we were approved for 125,000 for damages and 38,000 for contents @ 1.75% for 30 years, payments deferred for the first year.  There is an option for the SBA to refinance your mortgage and bundle it with the amount taken for damages, so we're looking into that as well.

Things are moving along now : )

Brandon Johnson · Answer

@Justin Fox

If you got 5.5' of flood water I recommend you go ahead and cut another 2' of sheet rock.  The mold experts who really know what they are talking about IMO say bleach is one of the worst things you can put on mold, but it sounds like you probably got to the gutting before it had a chance to mold.  Be sure your house is completely dry via moisture readings all around before you treat for mold and hang sheet rock.

I would also advise you to hire a profession to spray for mold and get a certificate.  You can probably find someone to do it for $500-800 per house depending on the size.  A lot of the pest control companies are certified to do the work.  If you don't hire a professional and you decide to sell you may regret it when you have trouble selling.  A buyer needs to have a really warm and fuzzy about the flooded house having been repaired correctly.Don't make the mistake of not getting a building permit either because that could come back to bite you because FEMA keeps track of whether or not houses were repaired with a permit and the risk is that they could declare it uninsurable by a future owner, in which case they could come back after you for it.  It's a pain in the butt, but its a necessary evil.  I tried to learn this the hard way.

Also if you are not in a flood zone, that flood insurance is way too cheap to pass up.  Considering this event, I would not be without it again.  I insured everything I own in Baton Rouge because you never know what could happen.

I also had tenants with renters insurance get screwed when they would not pay for anything.  What a racket!

In order to find good sheet rock crews just go drive flooded neighborhoods and go visit other houses where you see work going on.  If the work is being done well, then ask what they charge.  Be sure to mention you are an investor with more than one house so you get good pricing.

It may sound silly, but this event happened for you, not to you and the sooner you can find a way to see it that way the  better off you'll be.  Good luck, you'll be back on top in no time!

David S. · Answer

@Justin Fox

Great job. Sounds like you have it under control.  I see the parallels with price gougers.  The folks around here did the same thing you did, do it yourself or get friends and family to help.  Here is some price information from our event (geographical areas may differ in pricing):

"Database price for labor to hang ½”

taped, floated, and ready for paint  $1.06/SF

Heavy Texture, ready for paint 1.22/SF

Smooth Wall finish  1.55/SF

Ready for Texture .90/SF

Unfinished, hung only  .54/SF"

There is normally a 10 to 15% increase in labor prices the insurance companies give you in a disaster.  I know you didn't have insurance, but this can be a guideline for labor costs.

I would recommend the use of 100% ceramic tile for flooring (or maybe even stained concrete) since you are self-insuring. I use wood looking porcelain tile if it is a house.  It looks great, almost like wood floors.

How much was the flood insurance quote?  If at all possible, I would get the flood insurance.  Maybe getting a high deductible or lower coverage may get the quote lower.  Or an elevation certificate can also get it lower. I would  at least have something in place.  I had some rentals that did not have coverage and it sucked bigtime.  I had coverage on most of them though.

Brandon Johnson · Answer

This may not be the most appropriate forum for this topic, but there are several other posts going with the same topic and a lot of good and pertinent info being shared.

https://www.biggerpockets.com/forums/48/topics/481926-hurricane-harvey-now-what?page=3#p2975956

https://www.biggerpockets.com/forums/311/topics/482438-what-will-the-hurricane-do-to-houston-re?page=2#p2975926

Good luck with your rentals man and I hope your house doesn't flood.  Take advantage of some of this opportunity that will be surrounding you if you can.  There is always a silver lining if you're looking for it.

David S. · Answer

@Justin Fox

It sounds like everything is going your way.  Thanks for the update.  This is good information for the community.

Justin Fox · Answer

@David S.

Yeah, we're still getting quotes from drywall installers.  Will still be a couple weeks until <15% everywhere, the dehumidifiers may accelerate that though.

Both of the rental properties have either stained/sealed or just sealed concrete floors, so that's a plus.

The flood insurance quote was $788/year/house ACV coverage, and that only covered $40,000.  Which from what I've gathered from agents will end up with me getting all the contents and damage evaluated with depreciation and getting squat come claim time.  Unless I can get private business insurance that excludes the extra $250/year mandated by FEMA/NFIP, then I'll probably just pool funds from all the rentals into one for disaster relief savings.  We have an agent friend looking into it now.

The 415 annually we'll have to pay on our personal residence makes sense though:  $200,000 in RC with $80,000 contents.

@Brandon Johnson

We got 5.5' in our personal home and took out two full sheets of rock.   The two rentals got 24.5" and 26" so we just took out 4' of drywall.  We used bleach first because sewers backed up and we wanted to kill as much bacteria as possible.  We're going to spray the Odaband (fungicide) again once the moisture is down more.  We have a meter and are monitoring the moisture.

We got our permits for all three houses pretty quickly, they're taped up in the windows already.  We're going to spray for mold, but we have a buddy that does air quality and mold testing for a living.  So we'll get him to come test the air quality and stuff.

I'm currently looking into flood.  I know with Actual Cash value policies replacement cost is depreciated.  I'm reading and talking to agents.  It's hard to get a straight answer from most agents and it's frustrating.  I'm trying to find out if a ACV policy's prorated payouts will only affect appliances, carpet and things like that, and cost of building materials/labor will NOT be subject to depreciation.  If that's the case, I'll go for it, but I want to make sure I'm adequately covered and don't get the finger if I ever need to make a claim.

Yes, having to have flood and rising water in addition to renter's insurance is pretty lame.

Justin Fox · Answer

@David S., @Brandon Johnson

Yeah one tenant had renter's insurance but you have to have additional flood AND rising water insurance for them to cover anything (if they don't deny deny).

We have them gutted with insulation back in, we just pulled the tape and took off the bottom sheet.  We left the insulation off in some places because the moisture is still high in the corners.  They day after we gutted them we bought 96 sheets of rock, 50lb of screws, insulation, mud, tape, doors, casing and base.  The drywall was 6/sheet now it's 15.  I've gotten enough assistance from fema, red cross and personal interest free loans that I can wait out the gougers until they're starving and need to feed their kids again.  I"m not paying $1/sqft to hang rock haha.  The good thing is that once the gutting is done and the handful of flood claims are done (most people didn't have insurance or adequate coverage) prices will be back to normal because people without insurance don't have anyone willing to pay 5/10x the labor cost for them.

We were lucky in that our HVAC units worked at the rentals so we've been running those and fans.  We first sprayed ~50/50 bleach everywhere to just kill gross bacteria and then went back with odaband (fungicide).  We've been keeping an eye on things and it now looks and smells like new construction again.  Made sure to get my HepA and Tetanus shots.

I've contacted insurance companies about buying flood but the numbers just don't make sense for rental property.  The premiums are higher and aren't eligible for RCV (so either the 80% rule applies or they prorate everything that is damaged into the ground).  I think a smarter thing to do is hike rents across the board now and self-insure.  My plan is to rent for 2/3 more years and then sell.  This eliminates any SBA loans as they'll require same peril mitigation through insurance and it's a waste.

Our house took on way more water though, 5.5' : (.  We talked to the next door neighbor, he's been there 52 years, never flooded until now and had 8' of water in his house, nuts.  But we have it gutted and we are just scraping up tar and airing it out.  The good thing is that our house will be in this situation for a while so we'll be able to get our taxable assessed value down to probably 30/40k (from 210,000) over the next 5/10 years.  Our aerated septic is messed up, the well, entire down stairs HVAC is shot, condensing unit for upstairs is toast and the hot water heater.

This all sucks but having things gutted and cleaned out definitely provides some sort of relief.  Luckily we are frugal Francenes and can afford to get the rentals back up and running pretty quickly, but I'll be more broke than I've ever been.

What to do after homes flood.

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